Take austerity measures to tackle dwindling revenue collection

Published On: March 6, 2024 07:30 AM NPT By: Republica  | @RepublicaNepal

Nepal finds itself under the critical scrutiny of analysts and economists, who decry its inability to curtail unnecessary expenses in the wake of sluggish revenue collection. As the nation grapples with a soaring public debt, experts are urging the government to take austerity measures to safeguard public finances and foster sustainable economic growth. We join their call for the government to take austerity measures, especially in those unnecessary areas. As a matter of fact, recent deliberations at the Finance Committee under the House of Representatives (HoR) witnessed a chorus of concerns from seasoned economists. They emphasized the urgent need for the government to endorse projects that alleviate the financial burden on the nation, reducing the dependency on public borrowings. Experts including former governors of Nepal Rastra Bank have pointedly criticized the government's past expenditures in unproductive sectors. Such expenditures have contributed to an alarming increase in public debt without commensurate economic growth. Their call for a reevaluation of the government’s spending priorities aligns with the need to enhance the efficiency of budget allocations and divert scarce resources toward initiatives that stimulate economic development.

It is sad to notice that the government is failing to boost private sector confidence. It is high time the government adopted policies that inspire trust and collaboration with the private sector—a critical engine for economic growth. Another glaring concern is the staggering increase in Nepal's public debt, which has surged more than four-fold over the past decade, reaching Rs 2.4 trillion. It is necessary for the government to reevaluate its financial strategies, expanding projects while concurrently reducing reliance on public borrowing. The government must not forget the fact that sustainable economic growth requires a delicate balance between public spending and debt management. Furthermore, the insidious attempts by certain interest groups to undermine the banking sector for personal gain pose a significant threat. The government must remain vigilant and take swift action to safeguard the integrity of the financial and banking sectors.

Despite favorable external indicators, the domestic economy grapples with challenges such as a decline in loan demand, rise in non-performing loans, and the need for a boost in private sector confidence. The government must take into account these internal economic challenges and take a holistic approach to bring economic revival in the country. It is not the time for the government to be complacent. It must heed the call for austerity measures and prudent financial management. By reevaluating spending priorities, endorsing projects with tangible economic benefits, and fostering private sector confidence, the government can tackle the current economic challenges and pave the way for sustainable growth. The time for decisive action is now. We urge the government to heed the problems that confront our economy and act accordingly. 



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