Low capital spending on donor-funded projects and a decline in reimbursement from donors have forced the government to readjust the target for foreign grants and loans. The government has targeted to receive Rs 2,97.71 billion in foreign aid in the current fiscal year 2022/23. However, as things stand, meeting the target will be a daunting task for the government with only 11.61 percent of the targeted amount in foreign aid has been received during the first half, according to the mid-term review of the current fiscal year's budget. According to the review report, only Rs 34.57 billion including both grants and loans were received in the first six months of the current fiscal year. The country received grants amounting to Rs 8.12 billion (14.63 percent of target) and loans of Rs 25.46 billion (10.92 percent of target).

At a time when the government has been struggling to meet the revenue target, failure to receive foreign aid as targeted will add to the pressure on the government’s treasury.

As a result, the government downsized the budgetary allocation by 14 percent through the mid-term review of the budget. In the review, the target of foreign aid has also been reduced to Rs 38.45 billion in foreign grants, which was earlier Rs 55.45 billion. Likewise, the government expects to receive only Rs 170.53 billion in foreign loans or 70.39 percent of the initial target of Rs 242.26 billion. The finance ministry's statistics show in the last fiscal year, the government received only 45.65 percent of targeted foreign grants and 46.17 percent of target foreign loans. In the mid-term review report of the current fiscal year's budget, the main reason behind the sluggishness in receiving foreign aid is the low capital spending of the donor-funded projects. “The government receives reimbursement from the donors based on the capital spending in donor-funded projects. The impact of the low capital spending resulted in low reimbursement from the donors,” the report says. In terms of receiving foreign aid, it is not the situation of the current fiscal year; the government has hardly been able to receive foreign aid as targeted in the previous years too. In fact, expenditure under the heading of foreign aid usually remains poorer compared to domestic resources. For example, the government spent just 45.46 percent allocated budget for projects to be implemented with foreign grants in the last fiscal year, according to the Financial Comptroller General Office (FCGO). Likewise, only 47.4 percent of the allocated amount under the heading of foreign loans was spent in the last fiscal year. The government’s total expenditure stood at 88.81 percent of the allocated amount, according to the FCGO. “The expenditure from the government’s own resources usually remains higher because its resources are spent in recurrent expenditure heavily,” said a senior FCGO official, adding, "As most of the resources under foreign aid are spent for development activities, low capital expenditure hampers the overall spending of foreign aid.”