Kathmandu, April 4

The economic experts have emphasised the importance of government action to improve liquidity, support production-based industries, reduce interest rates, and create a business-friendly environment to address the current economic challenges facing Nepal.

During an interaction programme on 'Current Economic Situation of Nepal: Crisis, Challenges and Solutions' organised by RPP Nepal Economic Department, private sector representatives and economic experts recommended that the government inject additional funds into the market to improve liquidity situation and address the current economic crisis.

Economist Achyut Wagle suggested that the government, in collaboration with Nepal Rastra Bank (NRB), inject funds into the market to solve the current liquidity crunch. Wagle emphasised that the government should focus on production-based industries that use domestic raw materials, instead of relying on imports.

'Apart from the cement industry, most domestic industries rely on imported raw materials, which is not a sustainable approach for the economy.

Therefore, the government should prioritise the development of agriculture-based industries to create job opportunities in the country,' said Wagle.

'Furthermore, as the country's budget has been prepared using a template approach for the past seven decades, it is crucial for the government to adopt a more scientific approach to budgeting.'

Similarly, Shekhar Golchha, president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), suggested that the government reduce the interest rate to single digit and increase capital expenditure to tackle the economic downturn.

'I have never witnessed an economic crisis of this magnitude in my 25 years of business experience. The current economic situation has resulted in a decrease in production across various industries due to high interest rates and a liquidity crunch, which has ultimately led to fall in revenue collection. The revenue collection is now lower than the government's expenditure,' said Golchha.

He also stressed on the need to boost the morale of the private sector by spreading a positive message instead of terrorising it in the pretext of increasing revenue.

Hemraj Dhakal, vice-president of Confederation of Nepalese Industries (CNI), highlighted the need for economic reforms and an investment-friendly environment, and called on policymakers and politicians to prioritise them.

A version of this article appears in the print on April 5, 2023, of The Himalayan Times.