Human capital and natural resources are basis of Nepal's economy: Former president of ADB

KATHMANDU: Former President of the Asian Development Bank (ADB), Haruhiko Kuroda, has said Nepal could make the economy stronger through the mobilisation of its human capital and maximum utilisation of natural resources.

The former governor of the Central Bank of Japan said this in a press conference organised in Kathmandu today. He stressed identifying the areas for economic prosperity. He said, Nepal's youth workforce should be linked to production made through utilisation of natural resources.

"Nepal can benefit environmentally through human capital mobilisation, natural sources like water and forests and other resources. Nepal should not lag behind in maximally utilising these resources," he said, adding that Nepal's youth human resources should be linked to various sectors of production and benefit from the same. 

Kuroda stressed the construction of infrastructure like roads, transmission lines, and communication for expanding the economy.

Responding to a question as to what kind of strategic plan should Nepal make in graduating from a least-developed country status, Kuroda suggested Nepal give emphasis to the construction of infrastructure, increasing citizens' access to education and health and work in areas including investment promotion through private sector.  Nepal has set the target of graduating from LDC status until 2026.

He also cautioned against miscalculating Nepal's escalating public debt. The growing public debt due to the constricted economic growth rate, low returns from investment and weak capital formation could be challenging for Nepal.

Kuroda maintained that increasing the ratio of public debt in comparison to GDP and a large chunk of the annual budget being spent on paying the principal and interest of the public debt will impact the economy in the long run.

Japan is a country having very high public debt compared to the GDP. However, according to Kuroda, public debt is not a problem in Japan due to the capital formation and returns from investment, and the credible environment to the investors.

Professor at the National Graduate Institute for Policy Studies (GRIPS), Kuroda also raised the topic of responsibility of the regulator in the financial sector. In his view, the liquidity problem and low demand for loans are witnessed due to the tight monetary policy adopted by Nepal Rastra Bank.

On the occasion, ADB former vice-president Bindunath Lohani shared that green economy is a potential sector of Nepal. He added that Nepal could take initiatives for the development of the green economy through the various development partners and donor agencies.

Lohani emphasized the need to keep the information technology sector in priority, as there is potential in this sector and Nepal can make good progress in it.