KATHMANDU, Nov 21: The government is seeking measures to resolve the existing economic crisis after the national economy failed to return to its rhythm despite various reformative measures.
Prime Minister Pushpa Kamal Dahal on Monday held discussions with representatives from various line ministries, the National Planning Commission, and Nepal Rastra Bank, among others, to assess the current state of the country’s economy and the ways to address the national economic crisis.
Monday’s meeting of the office-bearers of the ruling Nepali Congress also deliberated on the economic situation of the country. Minister for Finance Dr Prakash Sharan Mahat briefed the meeting about the economic situation of the country.
The participants of the meeting were of the view that the government should take steps immediately to revitalize the national economy. They opined that attention be paid to post-quake relief and reconstruction for the earthquake survivors in Jajarkot and Rukum Paschim.
The internal indexes of the economy are still in crisis although there have been some signs of general improvement in the external indexes lately. Problems plaguing the national economy at present are lax implementation of government's annual policies, programs and budget and low capital expenditure.
Similarly, reduction in credit flow and high interest rate, reduction in the consumers' demand, declining morale of the private sector and failure in increasing domestic productivity among others have also led to a flagging economy.
Governing lawfully in crisis
The private sector has been continuously exerting pressure on the government saying it has been too late to take initiatives to resolve the problems of the country's economy.
The umbrella organization of the private sector, the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), hosted a 'National Economic Talks' on October 12, to find out solutions to the existing economic crisis.
After the proposal of the private sector in the course of discussion, Prime Minister Dahal had said a high-level mechanism could be formed for reforms in the economy.
Soon after, Finance Minister Dr Mahat told media persons at the Tribhuvan International Airport after returning home from London on October 15 that the government could take such a decision if it feels the need to initiate any further efforts to make the economy dynamic.
The government and private sector are univocal that all sides and sectors should move ahead through collective efforts with responsibility in order to resolve the problems seen in the economy. The private sector had been saying that it was necessary to immediately form a Economic Reforms Commission or any high-level mechanism with legal authority.
Although the government through its policies and programs and budget for the current fiscal year had initiated some measures for some policy and procedural reforms, the implementation side has been weak.
The government is preparing to host an international investment summit in the third week of April 2024. A proposal to organize the investment summit has reached the Cabinet.
What is the situation of the economy?
In the first quarter of the current fiscal year, the government's expenditure is just 20 percent of the annual target. According to the Office of the Financial Comptroller General, the government's spending stood at Rs 355.63 billion plus till the second week of November. Categorically, the government spending is 23.75 percent under the general expenditure, 9.93 per cent under the capital expenditure and 17.72 percent under the fiscal management till November 17.
Likewise, the status of revenue collection also paints a dismal picture. In the first quarter, revenue collection is 20.08 per cent of the annual target.
The government has targeted to collect Rs 1422.54 billion in revenue in the current fiscal year but the collection is only Rs 276.64 billion till November 17.
Similarly, the inflation in the country is 7.5 per cent in the first quarter of the current fiscal year against the government target to maintain it within 6.5 per cent.
Moreover, the bank and financial institutions are also struggling to expand their loans.
However, the external sector of the economy has gradually improved with the robust growth in remittance inflow, which recorded 30 per cent growth till November 17. During the first three months of the current fiscal year, Nepal received Rs 365.34 billion in remittances, which is 30 percent more than the corresponding period of the last fiscal year.
Similarly, the balance of payment is in Rs 99.7 billion in surplus. In the first quarter, the import has increased by 1.7 percent while the export has reduced by 2.3 per cent.
