KATHMANDU, July 4: At a time when the fate of the US Millennium Challenge Corporation (MCC) is hanging in balance, Finance Minister Dr Yuba Raj Khatiwada on Saturday said that the government has received positive response from the MCC headquarters in terms of extending the deadline for MCC ratification.
In an interview with the National News Agency, the finance minister said that the Ministry of Finance recently urged the MCC headquarters to extend the deadline for its ratification and has received positive response on it.
"The MCC does not release the fund unless it is approved by parliament and the parliament session ended recently due to COIVID-19. So, the ratification of the MCC remains undecided. Therefore, MCC is therefore on hold now," he said.
On the controversies surfacing in Nepal on MCC, he said, "I don’t have any personal thought on it but the government's stand prevails which I adhere to. Such international agreements should not be terminated without any genuine reason. Therefore if there is any ambiguity in the project, that could be clarified through correspondence."
Under the compact, the MCC will provide $500 million in grant while Nepal will chip in $130 million for the implementation of cross-border Electricity Transmission Project (ETP) and Road Maintenance Project (RMP). Altogether 318-kilometer transmission lines of 400kV and three large-capacity substations will be built under the ETP, while the RMP is focused primarily on the maintenance of 100 kilometers of strategic roads.
Consent of India for the construction of India-Nepal cross-border transmission lines, passage of legislation of Electricity Regulatory Commission and formation of the commission and designation of the ETP as a national pride project are the other preconditions that have already been met.
But, the intra-party dispute simmering inside the main ruling Nepal Communist Party (NCP) over the US grant coming through Millennium Challenge Corporation (MCC) lately spilled into parliament, leading to persistent delays in tabling the legislation to ratify the MCC Compact agreement for the voting. In another context, Khatiwada claimed that the Nepali economy which has been affected by the COVID-19 pandemic is reviving gradually.
Khatiwada, who is also the Minister for Communications and Information Technology shared that with the economic and social activities getting restored, the income and expenditure gap is also being narrowed. He however said it is challenging to ensure a dynamic economy in the face of the adverse situation. Minister Khatiwada reiterated that the budget for the coming fiscal year which has also been passed by parliament clearly focused on the strategy and health safety Nepal should adopt to control COVID-19 in the country.
"In addition to the health and safety of the people, protection of lives and revival of economic activities is equal priority. Even the experience of developed countries shows that the economy must be made dynamic despite the crisis. Our efforts are also for the same," he said, adding that the economic burden on the entrepreneurs and common people in the wake of the lockdown has led to depression. "So, saving lives and continuing business with proper safety measures is imperative," he said.
In response to a query relating to the complaint that the budget was a bit traditional and technical one, thereby failing to announce any special relief package and avoiding political value, Minister Khatiwada admitted that budget is not only a principle and speech but an economic and political document in real sense. "Rather than individual interests, it presents the government’s policies, programmes, priorities and principles addressing the national needs and problems," he said. According to him, it was not good to forecast that the intr-aparty feud in the ruling NCP will affect budget implementation. "The government is mandated for five years so the budget has been introduced accordingly. The discussions and debates within the party gives impetus to budget implementation," he believed.
Minister Khatiwada however said it would be too hasty to be elated over the report of the World Bank released recently showing Nepal's progress to a middle income country. "Anyway, Nepal is nearing the stage to graduate to a developing country by 2022. We made progress in per capita income and human development index, but the economy is still at risk," he said, reminding that Nepal was still listed in the category of the least developed countries by the UN.
He shared the gradual revival of economic activities despite idle tourism and no international flights. The international import of the country that was limited to one-fourth in the Nepali month of Baisakh has now increased to 80 percent.
"If the stay-at-home order was not issued on time, COVID-19 could cause a huge damage. Currently, the revenue collection is some Rs 700 to 800 million every day. The collection of internal revenue upped. There is normal liquidity. Although the court order created confusion in the beginning, the industrialists and entrepreneurs began paying taxes. Remittance also grew in Jyestha. We now have a foreign currency reserve of $14 billion. It suffices for one year's import. The balance of payment is good. The inflation is below six percent," Khatiwada said.
Moreover, the minister said the donor countries’ assistance has been encouraging and new contracts are being made. “The present situation is not as nervous as that after the 2015 earthquake. There has been no damage to the infrastructures either,” he said, observing that there is the lack of proper knowledge among critics on budget allocations on agriculture.