Government’s stimulus packages inadequate, laments private sector

Kathmandu, May 1

While the government and the central bank have introduced relief packages twice with an aim to support businesses hit by COVID-19, the private sector has said that the announced measures are inadequate and do not fully address the concerns of the business community.

Though the recent decision of the Nepal Rastra Bank to bring down the interest rate on loans by two percentage points and the government’s decision to raise refinancing fund to Rs 100 billion and defer tax payment period are welcome measures, private sector representatives say that there is still a huge void that the government needs to fill to boost the morale of the business community.

“The government seems to be trying to help businesses, but it has failed to address the basic problems that industries are facing. We had notified the government that the firms could pay only 50 per cent salary of Baisakh to workers, but it has indirectly asked us to pay 100 per cent salary for the month, which is not acceptable,” said Shekhar Golchha, senior vice-president of the Federation of Nepalese Chambers of Commerce and Industry.

Assuring businesses that they would be provided subsidised loan facilities in case they face liquidity problem, the government had directed firms to immediately issue 50 per cent salary of workers for Baisakh and gradually pay the remaining amount after their businesses resume. However, Golchha said no business was in a position to pay more than 50 per cent to workers as all firms had been shut for almost one-and-a half months.

He added that the government’s stimulus package had not addressed the concerns of small and medium enterprises, especially at local levels. “Businesses, especially the small scale businesses, require more subsidies on the interest rate than what has been provided. As the government has raised the size of the refinancing fund, it should ensure that SMEs have access to this refinancing facility as only big businesses have had access to such loans so far,” Golchha told THT.

The FNCCI has called a meeting on Saturday to discuss and develop a common opinion on the government’s response towards the private sector’s concerns.

Satis Kumar More, president of the Confederation of Nepalese Industries, said decisions to defer tax payment period and raise the size of the refinancing fund are welcome and are immediate measures required. However, he said businesses had not only suffered during the lockdown, but were likely to suffer for months even after the lockdown was lifted and thus the government package was inadequate.

“While addressing the plight of workers, the government has forgotten the plight of industries that have remained shut for more than a month and whose operation is uncertain in near future,” said More, adding the government had also suggested businesses ways to sustain their staff and operation.

Hoteliers also seem to be dissatisfied with the government. “The tourism industry, especially the hotel sector, has been hit harder than others, but the government’s relief package does not talk much about the problems of the hotel sector,” said Shreejana Rana, president of Hotel Association Nepal.

A version of this article appears in e-paper on May 2, 2020, of The Himalayan Times.