Economic meltdown ‘sure to hit Nepal’

Kathmandu, December 6:

Former vice-chairman of National Planning Commission (NPC) Dr Shankar Sharma today said the Maoists’ ‘economic revolution’ had failed.

“The delay in service delivery, tug-of war in the Maoist party — between hardliners and moderate faction — and continuous labour problem have put an end to the Maoist claim of economic revolution,” Dr Sharma said, addressing an interaction on ‘Global Economic Crisis and its impact on Nepal’ organised here today.

“Nepal will feel the heat of global crisis a little late as it is not directly linked to the global financial market. But Nepali exports, tourism sector, foreign direct investment (FDI) and remittances will bear the brunt of the crisis,” Prof Bishwambher Pyakurel said, adding that the government has to cough up Rs 1.9 billion more to pay off foreign debt due to rising US dollar.

Former secretary Dr Bhola Chalise said, “The impact will be felt late but was inevitable. The government’s attitude towards the looming crisis is surprising.” He came down heavily on the government for its lackadaisical approach towards crisis mitigation.

Earlier this week, Finance Minister Dr Baburam Bhattarai claimed that Nepal had not been hit by global crisis. He had presented the first quarter’s data to justify his point.

“However, the crisis started in September,” Dr Sharma said, adding that it will take six months to one year to affect Nepali economy. “It’s obvious that the old data, which the Finance Minister presented, doesn’t show any impact,” the former vice-chairman said.

“The data is encouraging,” Finance Secretary Rameshwor Khanal said, defending the government, and added that there was enough liquidity in the financial system at present. “There might be some impact. That’s why the government has formed a committee to study its impact,” he added.

Kush Kumar Joshi, president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said the entrepreneurs had started paying the price of the global meltdown. “The first impact has been on food commodities,” he said, adding,”Apart from that, the private sector -- despite government’s repeated claims -- is suffering from labour dispute. Around 54 industries were closed or remained closed for a long time in the last six months.” Complaining of lawlessness in the country, Joshi said, “Security is our primary concern.”

“The increase in revenue generation will not sustain in the long run,” Dr Dilli Raj Khanal, another economist said, adding that the government can neither meet the GDP target of seven per cent nor will it be able to curb the price rise.