KATHMANDU, Jan 11: Prime Minister Pushpa Kamal Dahal on Tuesday said the government will increase investment in construction of economic infrastructure, at a time when the government is struggling even to spend adequately the funds allocated for the infrastructure development.
Speaking at the House of Representatives while seeking the vote of confidence, Prime Minister Dahal said the government will give priority to promote an investment-friendly environment to attract the private sector’s capital. Dahal expressed his commitment to achieve economic growth rate closer to double digits in the next five years.
The government has forwarded an ambitious growth target when the private sector’s confidence is pretty low, while the government expenses in development projects are also pathetic. The records with the Department of Industry show that Nepal received commitment of foreign direct investment for 95 projects worth Rs 11.60 billion in the first four months of the current fiscal year, which is 53.22 percent less compared to the same period last year.
Revised interest rate corridor system introduced
Likewise, the government’s capital expenditure stood below 11 percent during mid-July and mid-December. In addition, the exorbitant lending rate of banks has further hit the private sectors’ investment.
According to Shekhar Golchha, president of the Federation of Nepalese Chambers of Commerce and Industry, the investors’ confidence is low due to multiple reasons that include ongoing global recession, higher bank interest rates and the dismal performance of a number of macroeconomic indicators.
Prime Minister Dahal himself admitted that the entire circle of financial administration is crisis-ridden now. “Revenue collection falling short of target, very low capital expenditure and increasing arrears in the government accounting system have led to a severe problem in the financial administration,” he said.
While the external sector indicators do not pose a healthy picture, the internal indicators are also pathetic. In the first half of the current fiscal year, revenue collection is just 25 percent of the annual target and foreign grant realization is only six percent. In this context, the government will have a hard time managing financial resources even for its day-to-day operation, according to analysts.
Dahal, however, said the government will put full effort for overall reform to meet the commitments. “I am committed to make Nepal an attractive and competitive destination for investment,” he reiterated.
Promotion of private sector investment will be achieved through coordination among the authorities related to the finance ministry, central bank, capital market, cooperatives, insurance sector and private companies, while the government will maintain legal, procedural, systemic and structural reforms to attract foreign investment, Prime Minister Dahal said.
