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1<br />
Behavior of Foreign Aid<br />
over a Quarter of a Century<br />
– Keshav Acharya<br />
THIS paper a� empts to examine the behavior of foreign aid with respect<br />
to its support to the na� onal budget, external economy, and the overall<br />
na� onal economy of Nepal over recent poli� cal phases of Nepal. For this<br />
purpose, the paper splits a span of 24 fi scal years (1986/87- 2009/10) into<br />
fi ve dis� nct poli� cal phases. It begins from the last fi ve years (1986/87-1990-<br />
91) of the party-less Panchayat era (P). A mass poli� cal movement resulted<br />
in the restora� on of mul� -party democra� c parliamentary system in 1990<br />
and adop� on of a new cons� tu� on and holding of the general elec� on in<br />
1991.The paper classifi es 1991/92- 1995/96 as the post-democra� c era<br />
(PD). In 1996, the Communist Party of Nepal (Maoists) [UCPN (M)] went<br />
underground and called for the capture of the state power by dint of arms.<br />
The confl ict lasted for over a decade. The paper classifi es armed-confl ict into<br />
Low-Intensity Confl ict (LIC, 1996/97-2000/2001) and High-Intensity Confl ict<br />
(HIC, 2001/02-2005-06). With the signing of the Comprehensive Peace<br />
Agreement (CPA) between CPN (Maoists) and the pro-parliamentary seven<br />
party alliances and the consequent Madhesh uprising, all par� es agreed<br />
to restore the parliament that was dissolved by King Gyanendra in 2004,<br />
dra� an Interim Federal Democra� c Republican Cons� tu� on and form an all<br />
party government in 2006. Even a� er successful elec� on for a Cons� tuent<br />
Assembly in 2008, the people con� nue to endlessly wait for the conclusion<br />
of the peace process and a new cons� tu� on. Hence the period 2006/07-<br />
2009/10 is described as a period of poli� cal transi� on (PT).<br />
There are certain caveats before proceeding. All the sta� s� cs used here<br />
are the average of the numbers of years in each phase, sum total of the fi ve<br />
Changing paradigms of aid eff ec� veness in Nepal 1