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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.


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

Original courtesy of Wikipedia: http://en.wikipedia.org/wiki/Counterpart_fund — Please support Wikipedia.
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Daily Trust
Fri, 06 Mar 2015 04:06:54 -0800

He lamented that the Goodluck Jonathan administration's refusal to pay its counterpart fund had really affected progress of the port. Fashola also told residents of the area that the LFTZ was to their advantage, noting that it would generate employment ...
Mon, 23 Mar 2015 10:16:02 -0700

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Mon, 30 Mar 2015 02:11:32 -0700

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Wed, 18 Mar 2015 01:52:40 -0700

About N3.6 billion was accessed for the rehabilitation of the schools from the Universal Basic Education Fund after Enugu State government reportedly contributed N1.8 billion as its counterpart fund then. However, the House, as part of its oversight ...
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Mon, 09 Mar 2015 07:40:31 -0700

... to the state governor to settle unpaid counterpart contribution to the World Bank, which accumulated since 2011. Mr. John explained that the failure to pay the counterpart fund had slowed down the rate of implementation of HIV/AIDS programme in the ...
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Tue, 24 Mar 2015 17:56:15 -0700

Handing over the site to the contractor, Engr Frank Nnaji, at Nsude in Udi Local Government Area of the state, the Commissioner for Environment, Mr Nnaemeka Chukwuone, said that the state had also approved a counterpart fund of N150 million out the ...
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