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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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291 news items

 
AllAfrica.com
Wed, 12 Nov 2014 06:03:30 -0800

Okee Okoro commended Governor Rochas Okorocha for responding to the cries of IMO people by paying the One hundred Million Naira Counterpart Fund to make the project a reality in the State. He assured all that watershed is the best way to control ...
 
AllAfrica.com
Mon, 27 Oct 2014 21:52:30 -0700

The second condition was that the loan came with the counterpart fund component-counterpart fund is the money that will come out from Cross River State government to show commitment that we will use the money judiciously for the purpose for which it ...
 
Himalayan Times
Thu, 20 Nov 2014 12:26:15 -0800

KATHMANDU: The government has concluded negotiations with the World Bank Group on the 'Grid Solar and Energy Efficiency Programme' worth $130 million to minimise power leakage, which is measured at 26 per cent of the installed capacity of 770 ...
 
Mindanao Examiner
Sun, 02 Nov 2014 03:26:15 -0800

Muslim students in Basilan province hold placards thanking the Philippine military for the rehabilitation of a 29-kilometer road project which links the towns of Tipo-Tipo and Maluso to the circumferential road in this library photos. (Mindanao Examiner).
 
Mindanao Examiner
Thu, 06 Nov 2014 04:33:45 -0800

The loan of 75 million Saudi riyals was extended on October 2005 - to revive the project after being stalled for many years - while the Filipino government provided a counterpart fund of 1.118 billion pesos. The circumferential road project is seen as ...
 
Tempo
Wed, 12 Nov 2014 13:46:14 -0800

LWUA will provide P120 million as counterpart fund while the water districts will share about P80 million as their equity contributions. LWUA Administrator Andres Ibarra bared the loan during the financial assistance contract signing held recently at ...
 
Sun.Star
Mon, 03 Nov 2014 00:45:03 -0800

A counterpart fund of at least 20 percent of the cost incurred for feeding programs meanwhile will be provided by local government units where the school districts are located. In case of shortage of funds, the implementation of the school feeding ...
 
Nigerian Bulletin
Fri, 31 Oct 2014 08:09:22 -0700

``“The government is committed towards this project, which informed its decision to pay the required counterpart fund of N112 million for the take-off of the Tax Payers Identification Numbers. ``The workshop signals the formal commencement of the TIN ...
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