Is foreign-financed Basic Income Guarantee inflationary? The question came up on comments in Politics.SE:

Situation: 


A government of a country sets up an unconditional Basic Income Guarantee (defined as monthly payments to EVERY resident, unconditionally, of a certain sum). 

The sum can be  roughly estimated as "only enough for a person to survive on" as per Wiki definition.
The financing of the program is 100% entirely set up from external, foreign sources - charity donation, or no-strings-attached aid from another government.


Is it a certainty that such an arrangement would be highly inflationary for recipient country, assuming that BIG total financing is a non-trivial compared to recieving country's GDP?



All Wikipedia says on the topic is:


  A common concern with Basic Income among the general public is the risk of inflation raising prices and thus undoing its effect. Economists Ed Dolan and Karl Wilderquist say that since the funding for basic income would come from reductions in public spending and/or taxation, there would be no inflationary effect.[citation needed]


... which seems to NOT address foreign-financed BIG at all.
Assume that a big country decides that, from here on, it will distribute for free 1 Kgr of bread to every citizen of a neighbor small country. The bread will be made, transported and distributed with big country resources (raw materials, labor, equipment, wheels, etc). Moreover, big country's representatives will sit around while local citizens eat it.

Will this create inflation? It doesn't seem so.  

Now assume that instead, the big country gives for free to the local government electronic funds which the local government transfers to its citizens which in turn transfer it to the bakeries of the big country in order to buy bread and have it delivered (and being watched at, while they eat it). Will this create inflation? It doesn't seem so. 

But assume now that the funds are given, always for free and always from the big country, and the citizens of the small country are free to do what they want with them. Will everybody buy bread from abroad? Hmmm, not likely. They may want to go cut their hair with that money. Lots of them. So they rush to all the barber shops and beauty parlors in the country, whose owners start to live this dreadful paradise of every supplier, to be drowning in demand and not have the capacity to fulfill it. And the barbers may think, "hey these people are dying to have their hair cut now. I have two hands and 16 hours a day -They're not enough for all these customers... what if I ask for a little more money per haircut in exchange, say, for a reservation?"  

The moral here is that injecting resources into a country may result in excessive demand in local sectors where the productive capacity is not enough to cover the demand, leading to inflation. This is why the ever-sung mantra is "productive investments" rather than "consumption transfers".  

If one extends the horizon of course, excessive demand will signal "hey! you, productive resources over there! Come over here! There is more demand than anyone can cover!" -but relocating productive resources takes time, more time than it takes for prices to rise.

(I apologize for the fairy-tale approach, it just came out and for once, I thought "let MathJax lie in peace". But it is perfectly valid scientifically.)