Kathmandu, December 16:

The cabinet has passed an Immediate Action Plan (IAP) for the fiscal year 2006-07 in an attempt to expedite development process and maintain economic stability in an effective way, as growth still seems discouraging primarily due to low economic activities.

IAP focuses mainly on achieving major economic goals such as high, sustainable and broad economic growth; social sector and rural infrastructure development; good governance and inclusive development, says a source at the ministry of finance.

Under these four areas, the government, through its action plan, has reiterated to take action against the wilful defaulters, which will encourage

the borrowers to repay their outstanding dues — especially of the Rastriya Banijya Bank (RBB) and Nepal Bank Ltd (NBL). Government expects that the overdue loans will be collected from defaulters as the financial health of the banks is yet to be improved.

Similarly, the cabinet has also focused on expediting the establishment of Export Processing Zones (EPZs) and Special Economic Zones (SPZs) with liberalised labour law to see high investment for the increased economic growth, says the high level government source. Currently, the GDP growth is hovering around two per cent, which is very low compared to other South Asian countries.

In a bid to stabilise the growth of financial sector, Insolvency Act, Secured Transaction Act and Financial Transparency Act are also being implemented with appropriate institutional mechanisms, according to the cabinet decision.

As there was a big outcry over the public tendering process due to reportedly increased corruption in the colossal contracts and weak performance of the contractors, Public Procurement Act implementation will improve transparency in public transactions, the government hopes.

It aims to formulate a mechanism to maintain transparency and introduce automatic pricing mechanism in petroleum prices in a hope to sustain Nepal Oil Corporation (NOC) financially maintaining continuous supply of petro-products in the country.

Similarly, one of the major decisions taken by the council of ministers is that the role of a minister and a secretary will be demarcated with a view to boost professional autonomy of the civil servants and ensure responsibility of political leaders and bureaucracy as well, says the source. To see these issues materialised, the government intends to implement Governance Act within 2006.

One of the measures to boost national revenue collection is to encourage large taxpayers along with making revenue administration stronger, action plan states. “The government also plans to complete auditing of 80 big taxpayers with effective working manual.”

IAP has time bound programmes, which will ultimately put pressure on the government institutions to expedite the implementation the programmes and development activities in a vigorous way. The government’s 2006 performance report states that budget implementation has been facing difficulties hampering sustainable growth due to political instability, deteriorated security situation, slow decision making process and delays in procurement decisions. Action Plan may turn out to be a motivating factor for the government, if it could be implemented timely.

Ministry of Finance, Ministry of Industry, Commerce and Supplies, Ministry of Labour, Education Ministry, Ministry of Local Development and Prime Minister’s office will be responsible for the implementation of IAP, according to the source.