Economists have pointed out that the mal governance and decisions made on whims have increased the possibility of Nepal's economy heading towards a crisis. They stressed on the need for Nepal to be aware of the current situation of Sri Lanka due to mal governance, inefficient policies, financial opacity and other reasons.

Speaking at a discussion on 'Way Forward of Nepali Economy' organised by the Society of Economic Journalists Nepal (SEJON) here today, former vice-president of the National Planning Commission and Chief Economic Adviser of theUnited Nations Development Programme (UNDP) for the Asia-Pacific region, Swarnim Wagle, said that the trend of deteriorating the economy in Nepal has started among its leaders.

He emphasised that the growing mal governance in the country and the tendency to make decisions without indepth study could lead to problems in the country. He also clarified that although the current state of Nepal's economy and indicators are better than that of Sri Lanka, there is still a risk of the country plunging into crisis due to the incompetence of government in proper decision making to move the country in the right way.

"The professionalism of economic institutions, including the Ministry of Finance, has been declining in Nepal," he said. "Although Nepal is not sharing similar issues as its South Asian neighbour (Sri Lanka) there are worrying indicators in the economy regarding debt and the balance of payments deficit."

According to a recent report by the Office of Auditor General, Nepal's public debt was only 22.5 per cent of the size of the total economy (GDP) in 2015. At present, the country's public debt has increased to more than 40 per cent of the GDP, Wagle said.

Meanwhile, the government has claimed that the country's economic growth in the current fiscal year will surpass the projection made by the Central Bureau of Statistics. According to Surendra Upreti, senior economic adviser at the Ministry of Finance, the annual economic growth could be higher than the bureau's projection as economic activity has increased significantly in the recent months.

However, Upreti mentioned that the chances of unseasonal floods, quickening inflation and external pressures remain a challenge for the country's economic growth.

He also claimed that the government was taking policy initiatives to improve the situation by effectively coordinating with the bodies concerned.

He said that the issuance of letters of credit (LCs) of some commodities has been tightened recently, while import of some commodities has been restricted to improve the economic situation of the country.

He also said that the state of the economy would improve in the coming days due to the policy measures taken by the government to reduce imports, along with improvement in remittances and increased exports.

Similarly, addressing the programme, Alice John Brooks, a senior economist at the World Bank, said that as the use of hydropower generation and biogas is increasing in Nepal, the inflation is expected to be tamed. "The state of public debt in Nepal is satisfactory compared to GDP.

Therefore, there is no need to worry about the state of the economy," she said.

Bhuvan Dahal, executive director of Institute for Integrated Development Studies, President of Federation of Nepalese Chamber of Commerce and Industry (FNCCI) Shekhar Golchha, Vice-President of Nepal Bankers' Association (NBA) Sunil KC, senior economist Nara Bahadur Thapa, President of Confederation of Nepalese Industries (CNI) Vishnu Kumar Agrawal, President of Nepal Chamber of Commerce (NCC) Rajendra Malla, among others were present during the programme.

A version of this article appears in the print on May 05, 2022, of The Himalayan Times