Glimmer of hope

The Global Competitiveness Report released last week brought both good and bad news about the problematic Nepali economy. The rare piece of good news is that after many years Nepal has managed to climb five places to rank 125th in the global competitiveness index among 142 countries examined by the World Economic Forum in its annual report for 2011-12. The report attributes the expected promotion to relatively healthy macroeconomic parameters along with slowly improving social indicators.



Despite continuing, in fact worsening in some cases, jitters on the economic front, the report placed Nepal in the 19th position from the top on the criterion of gross national savings, and at 41st position in government budget balance. Similarly, on the criterion of GDP to government debt ratio, an issue that has shaken the stability of the Euro zone, Nepal has been positioned 53th. On social indicators, the report ushers in a glimmer of improvement in areas like HIV prevalence, infant mortality and life expectancy, among other things.



But here comes a long list of bad news that highlights the sorry state of Nepal’s infrastructure. While gauging the quality of electricity and road connectivity - a key factor for growth, Nepal was placed at the very bottom and at 128th position respectively among the 142 countries. According to the report, 22 percent of Nepali executives interviewed for it pointed to political instability as the most problematic factor in doing business. On the labor front, regional comparisons show that the efficiency of Nepali labor is the poorest in South Asia. And the picture is worse still when it comes to labor-employer relations, as Nepal was ranked 139th. In yet another disturbing finding of the report, Nepal is least competitive among all South Asian countries.



Though the overall impression gained from the report is a pathetic one, it is frankly not completely surprisingly for those who have witness the political mess in the country since the last one decade. The country has already seen five prime ministers since April 2006 when Nepal abolished the monarchy to become a republican state. Most social as well as economic indicators have worsened since then.



The law and order situation is still fragile, the power shortage is alarming except in the monsoon season, and most importantly, labor militancy that recently forced two foreign ventures to fold their operations has darkened the environment for doing business in this country. Amid the gloom, the Bhattarai-led government’s new relief package that talks at length about reviving the business environment has brought a glimmer of hope. We urge the government to focus on effective implementation of the relief package.

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