Ministry of Finance prescribes pills for all economic ills

Kathmandu, January 18

Deputy Prime Minister and Finance Minister Krishna Bahadur Mahara today unveiled an action plan to heal all the economic ills concerned with low growth, slow capital expenditure, supply-side constraints, lack of employment generation, lack of access to finance, ineffective utilisation of foreign assistance, among others.

The action plan titled ‘Immediate Action Plan for Sustainable Economic Development of Nepal’ has recommended actions and schedule for the concerned ministries and agencies for effective implementation of Minister Mahara’s vision. In action plan, emphasis has been laid on proper implementation of budget to move towards higher growth trajectory.

“As retarded growth, slow employment generation and huge trade imbalance have long since been identified as the structural problems facing the economy, we need to address these issues to move forward,” Mahara stated. “We have to diagnose the problems in a timely manner before it becomes chronic and all the ministries and line agencies need to develop their individual action plans and implement carrot-and-stick policy for proper implementation of plans.”

Effective implementation of budget, acceleration of post-earthquake reconstruction works, incentives for banks and financial institutions to float credit to productive sector and expanding credit to rural families, utilisation of remittance in productive sector through issuing the foreign employment bonds are some priority areas of the action plan that was unveiled today.

Minister Mahara prioritised reforms in legal and administrative fronts to harness the results within the stipulated timeframe.

To address the slow capital expenditure, the action plan has authorised the budget division and monitoring and evaluation division under the Ministry of Finance (MoF) to facilitate and intensively monitor the big ticket projects. Those ministries and line agencies that are not able to spend the allocated funds by mid-March would have to surrender such unspent budget to the MoF so that the ministry can transfer the funds to the projects that are showing good progress. The move would ensure that projects with good performance record do not face resource crunch and also prevent rampant mobilisation of resources at the last moment of the fiscal, as per Minister Mahara.

“The Budget Division, from next fiscal, will check absorptive capacity of a particular project before allocating funds to avoid perennial problem of lack of project readiness to spend funds.” The plan has covered a wide range of issues related with developing special purpose vehicle for some crucial projects, private sector development, operational modality of the public corporations, revenue leakage control and supply-side management to tame inflation.