Acronyms that contain the term counterpart fund 

Counterpart fund

A counterpart fund is a fund established as part of an arrangement for converting foreign aid (often supplied in $US) into an account in the domestic currency of an aid-recipient country. Counterpart funds 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 development assistance. One method of setting up a counterpart fund is to, first, arrange for businesses in the aid-recipient country that want to import goods pay for imports in local currency. The aid-recipient government can then use foreign assistance (still perhaps in $US) to pay for the goods. This makes importing easier because it is usually easier to make payments in $US than in local currencies. Import funds supplied by donor countries are also often tied to imports from the donor countries. Trade agreements are often arranged so that imports can only come from the nation that provides assistance. This approach benefits the donor's export industry. Another method for establishing counterpart funds is for goods (such as food aid) to be donated to an aid-recipient nation. The recipient government can then sell the goods and use the proceeds (received in local currency) to set up a counterpart fund. In these ways, the recipient government can establish counterpart funds in local currency. These payments are amalgamated into a fund that is used to further fund development spending. Further spending 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.

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