KATHMANDU, Jan 8: The High-Level Economic Reforms Advisory Commission has recommended the government not to award new contracts but rather to focus on paying the past dues of the construction entrepreneurs.
Handing over the interim report to the Ministry of Finance (MoF) on Wednesday, the commission has advised the government to clear the dues of the completed projects first before starting a new project.
“If the budget is available even after fulfilling the liabilities of multiyear contract projects, then it will be appropriate to include new projects in the next year's budget,” the high-level commission recommends, according to a press release of the MoF.
The high-level commission has come up with the recommendation at a time when a rift has been created between the government and the contractors due to the non-payment of dues for the completed projects by the authorities concerned. Citing the delayed payments worth around Rs 40 billion, the contractors have called for a national level gathering on January 11 targeting to launch decisive protests.
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The contractors are reluctant to expedite new projects until the government confirms sources of the fund for the projects under construction. Amid ongoing economic slowdown, the tussles between the government and the contractors led to a negative growth of the construction sector in the last two quarters of the fiscal year 2023/24. The growth of this sector stood at a negative 0.3 percent in the first three months of the current FY.
As the country is reeling under economic slowdown caused by a heavy fall in aggregate demand, the government on October 8 formed the high-level commission led by Former Finance Secretary Rameshwar Khanal. The commission has been mandated to carry out in-depth research about the economy and to come up with suggestions.
In its interim report, the commission has advised the government to facilitate loan defaulters in genuine cases to settle their debts. Increase in capital expenditure by the government, expediting reconstruction works of physical infrastructure damaged by natural disasters and promptly providing compensation for land acquisition of projects are among the suggestions to the government. In order to increase the capital expenditure, the commission has advised the government to mobilize an authorized task force to conduct the onsite inspection of projects that are released with amounts worth more than Rs 100 million.
As the banks struggle to recover their bad debts and face an increasing volume of non-banking assets, the commission has suggested making an assets management company under a public-private-partnership model. Increase in premium of health insurance and expansion of insurance coverage under the heading are other areas that the commission talks about.
The high-level commission has also come up with measures to address the ongoing problems in cooperatives. It has suggested restriction on duplication of cooperative members, allowing only one-time credit for a person from a single cooperative and imposing restriction on credit limit to a maximum of 10 percent of the share capital of a cooperative.
