As countries rush to announce stabilization measures to insulate economy from the pandemic, Nepal govt keeps mum over relief package
KATHMANDU, March 29: Despite concerns over the risk of Covid-19 wreaking havoc on the economy, the government has become slow over its responses to come up with measures to tackle the economic fallout of the pandemic.
While other countries are coming up with stabilization packages intended to insulate their economies from the impact of the pandemic, the government of Nepal has so far remained conspicuously silent over its plan to cope up with the possible crisis.
Apart from introducing some paltry measures in a piecemeal approach, the government is yet to come up with a package to blunt the economic impact of the Covid-19, protect the poor and vulnerable who lost their livelihoods and provide support to businesses battered by the pandemic.
Economists say that the government should not delay rolling out a package that includes relief to the poor and vulnerable and measures to stabilize the economy in the face of the coronavirus crisis.
“The government has not become proactive in responding to the crisis to the seriousness it deserves,” Chandan Sapkota, an economist, told Republica.
By reallocating the budget that is or likely to be unspent in the remaining three months of the current fiscal year 2019/20, the government should provide an unconditional cash support to these poor households as a social protection to them, according to economist Sapkota.
However, the government has not taken any step to support thousands of daily workers who are struggling for survival after they lost their works. The week-long lockdown imposed by the government to combat the Covid-19 has further worsened their plight.
“It's already late to address the livelihood problem of the daily wage earners and the poor. While the government can transfer conditional cash to them, it can also distribute food ration at free of cost or at subsidized prices if direct cash payment is not feasible now,” said Bimala Rai Poudyal, a member of the National Assembly. “In addition to that, the government can provide pension or social security allowance in advance for the vulnerable people,” added Paudyal, who is also a development expert.
Not only for the poor and vulnerable, the government has remained apathetic toward supporting businesses hit by the pandemic. What the government has done so far is the announcement that businesses impacted by the Covid-19 will not have to worry about the repayment of the loans until mid April. However, the announcement has not been enforced yet as the Nepal Rastra Bank (NRB) has not yet issued any directive to the banks and financial institutions for the deferral of the recovery of the debt.
“Helping the poor through unconditional cash transfers and deferring tax filing and compliance for a certain period should be the fiscal measures. A moratorium for at least three months on loan repayment that does not have implication on classification of such loans for banks or no provisioning requirement for them should be the central bank's measure,” said economist Sapkota.
The central bank should also be on a standby mode to make sure that the banking sector has adequate liquidity during and after the crisis, banking experts say.
Moving forward, business leaders and economists say that the central bank should be flexible in rescheduling and restructuring loans for those businesses that are severely hit by the pandemic.
“There are a number of measures that the government could have taken immediately without any substantial cost,” said economist Sapkota. “However, it seems there is no sense of urgency on the part of the government. The central bank which is an important institution has remained without its governor,” he added.
However, the Ministry of Finance dismisses concerns over the slow response by the government. “The government's first priority has been saving lives and stopping the spread of the coronavirus. At the same time, there are some immediate measures we have taken to help those affected from this,” Uttar Kumar Khatri, the spokesperson for the MoF, told Republica. “The government is working on a package that will help in protecting daily wage earners, poor and vulnerable and support businesses hit by the pandemic. It will be announced in a day or two,” he added.