Private sector withdraws protests after government assurance

Published On: December 28, 2022 07:58 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Dec 28: The private sector stakeholders, who had been protesting against the government and Nepal Rastra Bank (NRB) for the past one month, have withdrawn their protests after the government pledged to address their demands.

The entrepreneurs from various parts of the country had been demanding the government to reduce the exorbitant interest rates of banks and to revise the working capital loan guidelines implemented by the central bank. The entrepreneurs mainly from Biratnagar, Birgunj, Bhairahawa and Nepalgunj have been seeking government’s intervention citing the adverse impacts that these factors have been imposing on the entire businesses across the country.

After the formation of a new government led by the Maoist Centre Chair Pushpa Kamal Dahal, both Prime Minister Dahal and the Finance Minister Bishnu Prasad Poudel have expressed their commitment to hear the private sectors’ plea and to bring the economy back on track. After a meeting with the Finance Minister Poudel on Wednesday, the private sector has agreed to roll back the protest programmes. 

Expressing his concerns over the ongoing problems faced by the economy, Poudel met the representatives from the private sector’s umbrella organizations—the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and the Confederation of Nepalese Industries (CNI)—separately. Prior to this, Poudel had personally invited the protesting entrepreneurs from Biratnagar for talks.

CNI President Vishnu Agrawal said Minister Poudel is positive about resolving the ongoing economic problems in collaboration with the private sector. “The talk has helped improve the confidence among the entrepreneurs,” he said.

Nepal’s economy has been reeling under a number of problems mainly due to ailing financial sector, real sector and external sector. Although the external sector has recovered marginally due to a slight increase in remittance inflow and import restriction measures, it is still uncertain for its long term stability.

The crucial macroeconomic indicators like inflation rate, government expenditure, government revenue, interest rate, foreign direct investment (FDI), stock market index and aggregate demand do not reveal a healthy picture at present.

The consumer price index escalated to 8.08 percent in the first four months of the current fiscal year. This has made people struggle more to manage their daily requirements. The Nepal Rastra Bank itself has projected inflation to cross 10 percent in the next few months.

While the revenue collection stood one-fourth of the annual target as of mid-November in the current fiscal year, the recurrent expenditure soared 12 percent higher. This has poised a big challenge to the government to manage financial resources and its daily operation. Likewise, the capital expenditure is pathetic at less than 10 percent.

Similarly, the banks’ lending interest rates are as high as 18 percent, while the banks are still under pressure to maintain their liquidity position.

Govt treasury faces a negative balance of Rs 102 billion

The government faced a financial deficit of Rs 102 billion in the first five and a half months of the current fiscal year.

The gap between the government receipts and payments was seen due to the increase in recurrent expenditure compared to the scanty revenue collection. According to the Ministry of Finance (MoF), a total of Rs 377 billion was collected in the state coffers, while the expenditure stood at Rs 479 billion.

The MoF source said the revenue collection this year was down by Rs 98 billion compared to the same period last year. The government has started collecting a notable amount of domestic borrowing to fill the gap.

Govt to announce supplementary budget, terming the present budget exaggerated

The government, in a bid to review the exorbitant size of the present budget, has started homework to announce a supplementary budget.

An official of the Ministry of Finance said that Finance Minister Bishnu Prasad Poudel has started consultation with former finance ministers and economists over the issue. According to the source, Poudel is likely to announce the supplementary budget soon after the government gets the vote of confidence.  

Announcing the annual budget for 2022/23, the then Finance Minister Janardan Sharma maintained the exorbitant economic growth rate of 8 percent, which according to the economists is almost impossible amid the domestic and the global economic crisis. Sharma forwarded Rs 1.79 trillion expense plan and raised the revenue collection target by 18 percent to 1.24 trillion.  


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