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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.

Original courtesy of Wikipedia: http://en.wikipedia.org/wiki/Counterpart_fund — Please support Wikipedia.
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406 news items

 
Global News Network
Sun, 24 May 2015 05:45:00 -0700

The Government of Japan has commended the Ministry of Foreign Affairs for establishing a Monitoring and Evaluation (M&E) Unit for the Counterpart fund, at the Ministry of Foreign Affairs. Speaking at the Ministry of Foreign Affairs during the signing ...
 
AllAfrica
Wed, 20 May 2015 20:00:00 -0700

The Japanese diplomat noted that Japan selected Liberia because the Liberian Government has established the Monitoring and Evaluation Unit for the Counterpart Fund and has good track records to carry out valuable counterpart fund projects for social ...
 
Manila Standard Today
Mon, 25 May 2015 08:11:15 -0700

The Agriculture Department said it would shoulder the value added tax component of the project and the counterpart fund of P50 million. “The proposed construction and rehabilitation of FMRs will contribute to livelihood improvement in terms of ...
 
The New Dawn Liberia
Mon, 18 May 2015 22:47:25 -0700

The Japanese Ambassador highlighted that the Government of Japan selected Liberia because the Liberian Government has established the Monitoring and Evaluation Units for the Counterpart fund and has good track records to carry out valuable ...
 
New York Times
Tue, 05 May 2015 23:41:40 -0700

Tokyo would be willing to let the Afghan government use $25 million from its Counterpart Fund for a "bridging contract" until the end of the year, a Japanese official said. Tokyo's approval, however, is conditional on the contract not facilitating ...

Leadership Newspapers

Leadership Newspapers
Thu, 21 May 2015 08:33:45 -0700

Their counterpart fund brings the total amount for the implementation of the programee to 84.8 million dollars. Jumbo-Ibeakuzie said that even though the programme suffered setbacks due to non-payment of counterpart funds by some states and local ...
 
Daily News
Thu, 07 May 2015 14:11:15 -0700

Between year 1978 and 2014, over 31 bn/- was deposited into the Tanzania/Japan Counterpart Fund as cash over under the programme the funds were used to finance over 200 development projects in the country which were agreed upon by the two ...
 
Daily Trust
Fri, 08 May 2015 01:57:19 -0700

The minister, who also disclosed that $20 billion counterpart fund was sourced from the Subsidy Reinvestment and Empowerment Programme (SURE-P), said about 61 percent of the sum had already been drawn. In a related development, Jonathan, while ...
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