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Wed, July 17, 2024

Govt seeking measures to address economic crisis

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KATHMANDU: The government is seeking measures to resolve the existing economic crisis as the national economy failed to return to its rhythm despite taking various reformative measures.

Prime Minister Pushpa Kamal Dahal on Monday held discussions with representatives from various line ministries, the National Planning Commission, Nepal Rastra Bank among others to take stock of the current state of the country on the ways to address the national economic crisis.

The Monday's meeting of the office-bearers of the ruling Nepali Congress also deliberated on the economic situation of the country. Minister for Finance Prakash Sharan Mahat briefed the meeting about the economic state of the country.

The participants of the meeting viewed that the government should take a step immediately to revitalise the national economy. They suggested the government pay attention to post-earthquake relief and reconstruction operations for the earthquake survivors in Jajarkot and Rukum West.

The internal indexes of the economy are still in crisis although there were signs of general improvement in the external indexes lately. Problems plaguing the national economy at present are lax implementation of the government's annual policies and programmes, budget and low capital expenditure.

Similarly, reduction in credit flow and high interest rates, reduction in the consumers' demand, declining morale of the private sector and failure in increasing domestic productivity among others have also led to a flagging economy.

The private sector has been continuously pressurising the government citing that it has been too late to take initiatives to resolve the problems of the country's economy.

Federation of Nepalese Chambers of Commerce and Industry (FNCCI), the umbrella organisation of the private sector, hosted a 'National Economic Talks' on October 12, to find out solutions to the existing economic crisis.

After the proposal of the private sector in the course of discussion, Prime Minister Dahal had said a high-level mechanism could be formed for the reforms of the economy.

Soon after, Finance Minister Mahat told mediapersons at Tribhuvan International Airport upon his return from London on October 15, that the government could take such a decision if it feels the need to initiate any further efforts to make the economy dynamic.

The government and private sector are univocal and all sides and sectors should move ahead through collective efforts with responsibility in order to resolve the problems seen in the economy. The private sector had been suggesting to immediately form an Economic Reforms Commission or any high-level mechanism with legal authority.

Although the government through its policies and programmes, and the budget for the current fiscal year had initiated some measures for some policy and procedural reforms, the implementation side is seen as weak. 

The government is preparing to host an international investment summit in the third week of April 2024. A proposal to organise the investment summit has reached the cabinet.

How is the condition of economy?

In the first quarter of the current fiscal year, the government's expenditure is just 20% of the annual target. According to the Office of the Financial Comptroller General, the government's spending is just over Rs 355.63 billion till the second week of November. Categorically, the government spending is 23.75% under the general expenditure, 9.93% under the capital expenditure and 17.72% under the fiscal management till November 17.

Likewise, the status of revenue collection also paints a dismal picture. In the first quarter, revenue collection was 20.08% of the annual target.

The government has targeted to collect Rs 1422.54 billion in revenue in the current fiscal year but the collection is only Rs 276.64 billion till November 17.

Similarly, the inflation in the country stands at 7.5% in the first quarter of the current fiscal year against the government's target to maintain it within 6.5%. 

Moreover, banks and financial institutions (BFIs) are also struggling to expand their loans.

However, the external sector of the economy has gradually improved with the robust growth in remittance inflow, which recorded 30% growth till November 17. During the first three months of the current fiscal year, Nepal received Rs 365.34 billion in remittances, which is 30% more than the corresponding period of the last fiscal year.

Similarly, the balance of payment is Rs 99.7 billion in surplus. In the first quarter, the imports increased by 1.7% while the exports reduced by 2.3%.

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