Govt mulls tax rebate, subsidy for businesses hit by coronavirus
March 17, 2020 07:31 AM NPT
Finance Minister Yuba Raj Khatiwada and other distinguished guests attend a roundtable meeting organized by Nepal Republic Media at its head office in Sundhara on Monday. Photo: Keshab Raj Thoker/Republica
KATHMANDU, March 17: The government is considering offering tax rebate and subsidy for some businesses and industries hit by the coronavirus pandemic.
Speaking at a roundtable interaction organized by Republica on ‘the impact of coronavirus on Nepal’s economy’ on Monday, Minister for Finance, Yuba Raj Khatiwada, said that the government’s past experiences in addressing various types of economic shocks have made it capable of managing the economy in case it starts to weaken due to the impact of the coronavirus pandemic.
“We have experience in addressing various types of shocks. During and after the long conflict when tourism and other industries faced serious problems, we had brought a separate policy to revive and support the sick industries,” said Finance Minister Khatiwada.
“We are experienced in introducing necessary instruments to protect the economy from various shocks,” he said.
He also spoke about the government’s plan to extend a relief package to the businesses hit by the coronavirus pandemic.
“We already have a subsidy policy for exports. If export-oriented industries face adverse impact, we can even review the subsidy policy. We can redefine the industries that are eligible for government subsidies and add more sectors that can benefit from the government policy,” said Finance Minister Khatiwada. “Currently, we have some sectors that enjoy subsidy on interest on bank loan. We can also revise the policy to provide subsidy on interest on the loans taken by the sectors hit by the coronavirus pandemic.”
The government has also directed the Nepal Rastra Bank and the bankers to ascertain which of their borrowers are impacted by the coronavirus outbreak and be flexible to such borrowers based on the recovery plan submitted by the borrowers, according to Finance Minister Khatiwada.
While claiming that the country’s economy has not faced any major adverse impact, he said that the government is taking steps cautiously.
“There has not been a big impact on revenue. Some sluggishness seen in imports is the result of our own policy on trade to discourage unnecessary imports,” said Finance Minister Khatiwada.
“All indicators show that the economic activities have not been impacted yet. However, there will be a lag effect of this pandemic. In some development projects, the impacts of the coronavirus outbreak has been visible.”
Also speaking at the roundtable, Shekhar Golchha, senior vice president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said that there should be preparedness to deal with a worse-case scenario when the outbreak hits the Indian economy.
“Though the effect of coronavirus is still in stage 1 in India, if it progresses and becomes bad in the country, there might be a total lockdown. It will result in a shortage of essential goods,” said Golchha. “We have suggested to the government that Nepal Rastra Bank should be more generous if somebody wants to reschedule their loans. If there is a delay in the repayment of loans, we have requested the central bank to bar banks from imposing penal interest. The refinancing window should be more flexible and easy.”
Umesh Lal Shrestha, vice president at the FNCCI, said that this is an opportune moment to have a right policy to make the economy self-reliant.
Economist Biswo Poudel said that the government should refrain from tightening taxation and loan repayment. “There are some sectors like tourism which have been hit hard. The government should identify the sectors badly hit by the coronavirus outbreak. Providing relief to these sectors would help contain the poverty rate,” he added.
Bimala Rai Poudel, a member of the National Assembly, called for the government to run fair price shops to ensure that there is no shortage of essentials in the market.
“We need to identify the measures for social security which balances the supply to provide loan packages and subsidies to the needy,” she said.