It has been worrisome that the domestic prices are still high at a time when prices worldwide including in neighboring India have been easing since the last four months, and the government can no longer tolerate this uneasy situation, he told a gathering organized by the Reporter’s Club on Tuesday.
Khanal claimed that despite the ongoing power crisis and a not very friendly investment environment, the overall outlook for the economy is still good. “However, we need to work hard to improve the investment climate of the country,” he stressed. He warned that the economy might have to face stress if remittance income is hit by the deepening global financial crisis.
The Finance Secretary refuted allegations that the revenue policy of the government has been discouraging fresh investments and argued that continued healthy growth in foreign currency reserves is testimony to the fact that there has been no capital flight across the border.
There is no need to panic over the announcement of VDIS because there were a number of interactions with the private sector before the scheme was implemented, he said.
Constituent Assembly member and industrialist Diwakar Golccha said that the cost of doing business in Nepal has increased a lot in recent months mainly due to frequent shutdowns and strikes and the acute shortage of power.
Golccha urged the government to come up with strict laws to ensure smooth operation of vital national services like highway transport, among others. He also expressed dissatisfaction over the government´s failure to bring in a clear-cut economic policy and over its views about the development of the private sector. He warned that the winter crops might be affected as there has been no rainfall for the last 120 days.
President of Nepal Chamber of Commerce Surendra Bir Malakar was more vocal in underlining that the government has completely failed to create a sound environment for doing business and accused the authorities of being less enthusiastic in addressing the issues raised by the private sector. He also said that the policy of Public Private Partnership has not been lucrative for the private sector because of the government’s wrong policy.
Economist Dr Govinda Bahadur Thapa said that slow capital expenditure is a matter of concern as it will have a big impact on overall economic growth during the current fiscal year. He also expressed doubt that the revenue growth target of 32 percent for the current fiscal year would be achieved as the impact of the global financial crisis on the domestic economy will deepen in the days to come.
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