Reappointment of Yubaraj Khatiwada
In two years since he assumed office, Finance Minister Yubaraj Khatiwada has maintained a mixed legacy. He was instrumental in making the Investment Summit 2019 successful. The Summit, which was held in Kathmandu in March, 2019 had ended with signing of 15 memorandums of understanding (MoUs) with various investors, in addition to investment commitments to 17 various projects. Khatiwada, when he was the governor of Nepal Rastra Bank, was known for maintaining financial discipline. He has not been able to maintain this discipline as the finance minister. Besides, under his leadership, Nepali stock market has not shown signs of improvement. Of course, stock market cannot be the sole criterion to judge the efficacy of the minister but the fact that it has not shown much improvement even after two years of his handling the ministry shows that stock market is not confident about the economy. Positively, under his leadership, macroeconomic indicators have improved and growth seems to be okay.
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Khatiwada has been re-appointed as Minister for Finance on Wednesday, a day after he resigned as his term as National Assembly member expired Tuesday evening. This, however, did not look predictable until a week ago. The ruling Nepal Communist Party (NCP) was bent on elevating Bamdev Gautam to National Assembly, at the cost of Khatiwada’s ouster. And there was a talk of replacing Khatiwada with someone from inside the party. Given the long experience in Nepal’s finance and economic sector, his excellent negotiating and communication skills and sound academic background, the decision of the government to continue him as the finance minister is good. But in his second inning at the Ministry of Finance, Khatiwada has much more to do to sustain the country’s economy. Our economy faces a multitude of challenges.
For one, the coronavirus outbreak that started from China has resulted in global economic slowdown. Supplies and production of goods across the world have virtually come to a standstill. Globally, the countries have injected billions of dollars to stave off possible economic slowdown. The remittance, which has become a mainstay of our economy, is not going to help us much in the situation when Middle East, where most Nepali migrants work, is itself struggling to contain the COVID-19 outbreak. In the worst case, Nepalis may have to return home. As China, a major engine of global economy is slowing down, the world is feeling the ripple effects. Nepal will be no exception. Thus Khatiwada will have to find ways to keep our economy functioning in these critical times. One of the major grievances of general public has been increase of taxes on virtually everything—on income, goods and services. Perhaps the minister will have to review the current taxation system. Despite his promise to expedite it, capital spending has remained slow in the last two years. From now on, his priority should be on enhancing capital spending which is crucial for unleashing infrastructure development and creating jobs. We wish Khatiwada a successful second inning as finance minister but his own success will be measured in terms of how well he will handle the country’s economy in these difficult times.
