Govt issues white paper on economic crisis

Kathmandu, November 24

Issuing a white paper on the current economic situation, the Ministry of Finance today stressed on the need to realign the budgetary programmes to streamline supplies to prevent possible humanitarian crisis and boost production in the country.

Focusing on two crucial issues of food and energy security that have emerged along with disruptions in supply lines at Nepal-India border, the government has announced number of ways to make people’s lives comfortable in the days ahead.

The government has talked about expediting reconstruction and rehabilitation works in areas devastated by the earthquakes, issuing bonds to build new hydroelectric projects and expanding transmission lines and providing incentives to encourage people towards alternative energy.

Through the white paper, MoF has announced that it will soon release the first instalment or 25 per cent of the relief package amount worth Rs 200,000 announced by the government earlier for the earthquake victims, who had lost their homes during the devastating earthquakes of April and May.

The government plans to release the relief amount to the victims in four instalments 25 per cent, 30 per cent, 35 per cent and 10 per cent. Along with the government’s announcement, the victims will get Rs 50,000 to begin construction of their homes.

The white paper has also said that the government will further arrange for subsidised loan of up to Rs 300,000 in collective guarantee for the families whose houses was fully destroyed by the earthquake.

Releasing the white paper, Finance Minister Bishnu Paudel said the government would adopt all alternatives to avoid humanitarian crisis in the country. He expressed hope that the first instalment of the relief, which will be released at the earliest, will help provide improved shelters for the victims in the hills and high hills, who are still living in tents and transitional shelters made of corrugated sheets.

The government, through the white paper, has pledged effective implementation of incentive packages and subsidies to encourage families to shift towards alternative energy and also promote micro-hydro projects as a tool to ensure energy safety.

The government will launch a campaign to expand solar plants in urban areas and bio-gas plants in the rural areas of Tarai and hills, adds the white paper.

The government has also committed to expediting construction of two reservoir hydroelectric projects Budhi Gandaki (1,200 megawatt) and Nalsing Gad (410 megawatt) to meet the increasing demand of energy in the country.

The white paper has also announced borrowing facility for smallholder farmers in collective guarantee and cash-grant and interest rate subsidy to the landless families to cultivate barren lands and also in contract farming.

The white paper has painted a bleak picture of the economy, with estimation of gross domestic product growth standing at two per cent this fiscal year. “If the unrest in the Tarai and supply system disruption continues longer, the economic growth may be further squeezed,” states the white paper.

Till the first quarter of this fiscal, capital expenditure stood at mere 4.1 per cent of the total budget of Rs 208.88 billion.

The white paper has also identified the challenges to country’s target to graduate to the league of developing nations by 2022 and to be upgraded as middle income country by 2030, since the economic stagnation threatens to push more population below poverty line.

However, the government has said that it is conscious of controlling inflationary pressures, which might sky-rocket due to high production costs, especially in non-agriculture sectors, that will adversely affect the livelihood of vulnerable groups.

Inflation, which had stood at 7.2 per cent in the beginning of this fiscal had surged to 8.3 per cent by mid-October.