Economists and experts have urged for survival strategies — guaranteeing stability and peace as key factors to be incorporated in the forthcoming budget 2002-03. They also suggested introducing flexible fiscal policies and more spending on social sectors.

"There will be no more dreamy projects. It mainly will adopt survival strategies and programmes to maintain law and order," Dr Tilak Rawal, governor of Nepal Rastra Bank (NRB) said at a seminar on ‘current economic scenario and forthcoming budget’ organised here on Friday by Nepal Economic Association (NEA).

“The economy is already in doldrums due to the negative impact of depressed tourism industry, trade and industrial sector and the Maoists insurgency. These ailments have left no options but to adopt relevant measures to rescue the economy,” Rawal continued.

Referring to the deteriorating law and order situation, Dr Rawal warned: “If the present political and economic deadlock is not broken, we will be facing a big challenge in the days ahead.”

However, he felt efficient growth inducing practices could help the national economy. "The macroeconomic indicators are a bit satisfactory even in the worst situation. We need to maintain the existing financial scenario from further worsening,” he added.

Dr Rawal said the four per cent revenue generation is a positive indicator for the economy at a time when the country is going through difficult times. “It is somewhat satisfactory when the country’s ordinary expenses have been jumped and development expenses have slumped.”

Ordinary expenses have increased by seven per cent in the first nine months of the current fiscal, while the development expense has gone down by 12.5 per cent. There has been an average growth of five per cent in the GDP over the past three years, but it is expected to drop to two per cent by the end of current fiscal.

According to Dr Rawal, the budget deficit will be 14.31 billion rupees as compared to 16.3 billion of the last year. The rate of inflation will stay around four per cent.

Referring to the unfavourable situation of balance of payment (BOP), Rawal said, "The impact on BOP, which is negative for the first time in 15 years, is deteriorating. Once normality returns, such structural hindrances will be purged."

Exports have declined by eight per cent and import has gone down by 8.5 per cent in the first nine months of the current fiscal. There has been a deficit of four billion rupees in the BOP. Forex reserve still stands at 105 billion rupees, which can maintain imports for about a year, Rawal added.

Speaking on the occasion professor Madan Kumar Dahal, vice president of NEA said the coming budget should bring about change in social sectors as well as adequate resource mobilisation. “The coming budget should be a budget for peace and stability.”

Referring the need on packages to alleviate poverty, strong controlling mechanism for rampant corruption and sustaining good governance, Dahal said, "More money should be allocated to social sectors like education, employment, health and security." He also urged to reduce unproductive expenses and implement the recommendations of Public Expense Review Commission.

The budget should focus on fiscal activities to boost the economy further, as any difficulty to the economy first hits the banking sector, said Narendra Kumar Bhattarai, president of Nepal Bankers Association (NBA).

Professor Pushpa Shrestha, general secretary of NEA also expressed her views on the occasion, presided by NEA president professor Bishwambher Pyakurel.