KATHMANDU, NOVEMBER 20
The government is seeking measures to resolve the existing economic crisis, as the national economy has failed to return to its rhythm despite various reformative efforts.
Prime Minister Pushpa Kamal Dahal held discussions today with representatives from various line ministries, the National Planning Commission, and the Nepal Rastra Bank, among others, to assess the current state of the country and discuss ways to address the national economic crisis.
During today's meeting of the ruling Nepali Congress office-bearers, the economic situation of the country was also deliberated upon. Minister for Finance Dr. Prakash Sharan Mahat briefed the meeting about the economic state of the country.
The participants expressed the view that the government should take immediate steps to revitalize the national economy. They suggested a focus on post-quake relief and reconstruction operations for earthquake survivors in Jajarkot and Rukum Paschim.
Despite signs of general improvement in external indexes, internal economic indicators are still in crisis. Problems currently affecting the national economy include the lax implementation of government annual policies, programs, and budget, as well as low capital expenditure.
Other contributing factors are a reduction in credit flow and high-interest rates, a decrease in consumer demand, a declining morale in the private sector, and a failure to increase domestic productivity.
The private sector has been consistently pressuring the government, asserting that it has been too late to take initiatives to resolve the country's economic problems.
The Federation of Nepalese Chambers of Commerce and Industry (FNCCI), the umbrella organization of the private sector, hosted a 'National Economic Talks' on October 12 to explore solutions to the existing economic crisis.
Following discussions, Prime Minister Dahal stated that a high-level mechanism could be formed for economic reforms. Finance Minister Dr. Mahat, upon his return from London on October 15, indicated that the government could make such a decision if deemed necessary to make the economy dynamic.
Both the government and the private sector agree that all sides and sectors should move forward through collective efforts with responsibility to resolve the problems seen in the economy. The private sector has emphasized the immediate need to form an Economic Reforms Commission or any high-level mechanism with legal authority.
Despite the government's initiation of some measures for policy and procedural reforms through its policy, program, and budget for the current fiscal year, implementation is perceived as weak.
The government is preparing to host an international investment summit in the third week of April 2024, with a proposal for organizing the investment summit reaching the cabinet.
Economic Condition Overview:
In the first quarter of the current fiscal year, the government's expenditure is only 20 percent of the annual target.
According to the Office of the Financial Comptroller General, the government's spending is Rs 355.63 billion as of the second week of November. Specifically, the spending is 23.75 percent under general expenditure, 9.93 percent under capital expenditure, and 17.72 percent under fiscal management until November 17.
Similarly, the status of revenue collection also paints a dismal picture. In the first quarter, revenue collection is at 20.08 percent of the annual target. The government aims to collect Rs 1422.54 billion in revenue in the current fiscal year, but the collection is only Rs 276.64 billion until November 17.
Moreover, inflation in the country is at 7.5 percent in the first quarter of the current fiscal year, exceeding the government target of maintaining it within 6.5 percent.
Furthermore, banks and financial institutions are struggling to expand their loans.
However, the external sector of the economy has gradually improved with robust growth in remittance inflow, recording a 30 percent increase until November 17. During the first three months of the current fiscal year, Nepal received Rs 365.34 billion in remittances, which is 30 percent more than the corresponding period of the last fiscal year.
Similarly, the balance of payment is in surplus at Rs 99.7 billion. In the first quarter, imports increased by 1.7 percent while exports reduced by 2.3 percent.
