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[1]

A counterpart fund is a technique for turning foreign aid into reserves of domestic currency. They were used by the UNRRA, and the Marshall Plan in the rebuilding of Western Europe after the Second World War, and today remain a common technique for delivering developmental assistance.

One method of setting up a counterpart fund is to have businesses in the country receiving aid that want to import a commodity place an order with their government and pays for the import in their local currency. The government then uses some of their foreign assistance, still in the foreign currency, to pay for the goods. This makes importing far easier as the unstable currencies in developing nations are often of little international value. Agreements are also usually signed so that these imports can only come from the nation that gave the aid, benefiting the donor's export industry. Another method is for goods to be donated to a developing nation's government and for them to then sell the goods to the population, and use the proceeds to set up a fund.

The recipient government is also then left with the original payment in its domestic currency. These payments are amalgamated into a fund that is used to further fund development. This can take the form of investments in infrastructure or industry, paying down the debt or deficit, or stabilizing the currency. The investment of these funds can take the form of loans rather than grants, creating a permanent pool of investment capital. For instance, Germany's Marshall Plan counterpart funds were used to set up such an investment fund, and it is still in operation today.

References[edit]

  1. ^ Greg Behrman, The Marshal Plan, Aurum Press Ltd., 2008, pp. 178,179,232.

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20 news items

 
DailyPost Nigeria
Fri, 18 Apr 2014 08:11:15 -0700

The State Information boss added that the council also approved the sum of eighty-nine million, nine hundred and eighty-nine thousand, six hundred naira (N 89,989,600) for the payment of the state counterpart fund for the State Rural Access and ...

Philippine Information Agency

Philippine Information Agency
Wed, 16 Apr 2014 00:12:32 -0700

Last month, Mercado had said the DBP loan, once realized, will serve as a standby counterpart fund for the World Bank-funded Philippine Rural Development Program (PRDP). (esg,mmp/IA8-Southern Leyte). Transparency Seal Bayani Challenge Logo.
 
Manila Standard Today
Sun, 13 Apr 2014 09:21:00 -0700

A counterpart fund of P50 million was allocated by the Philippine government, and together with the US$20 million from the USA, was deposited under a new account name, the Industrial Guarantee and Loan Fund. The stated purpose was “to encourage the ...
 
The Swazi Observer
Tue, 08 Apr 2014 18:06:55 -0700

He said the counterpart fund has a separate bank account and that the money would be used to reticulate water further down the canal. EU is SwazilanD's largest single donor - Marwick. LOBAMBA Member of Parliament (MP) Marwick Khumalo has noted that ...

Inquirer.net

Inquirer.net
Sun, 06 Apr 2014 14:46:47 -0700

MANILA, Philippines—The Canadian government has announced an initial allocation of 50 million Canadian dollars (P2.046 billion) to support recovery programs across Eastern Visayas as part of a counterpart fund to match more than C$85 million (P3.5 ...

IPPmedia

IPPmedia
Mon, 31 Mar 2014 22:58:15 -0700

Onishi said the project will benefit underprivileged farmers not only through enhancing access to fertilizer but also supporting local development activities by utilizing the counterpart fund. “It is well known that green revolution requires the ...
 
Sun.Star
Thu, 27 Mar 2014 06:52:30 -0700

The bulk of the said amount came from the Mindanao Rural Development Program (MRDP), while the Provincial Government provided P1 million as its counterpart fund. The Baseas raised P1.2 million as its corresponding equity. MRDP is a special project of ...

P.M. News

Daily Times Nigeria
Mon, 31 Mar 2014 21:18:45 -0700

According to him, the debt stemmed from the withdrawal of the Federal Government from continuing payment of five per cent counterpart fund to the local government pension boards. He then appealed to the three tiers of government in the country to set ...
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