Human beings are naturally curious creatures who do not take satisfaction with what they get. Therefore, it is natural for the citizens to wish that the economic growth rate was better and the employment growth rate would be even higher. However, Nepal’s economic indicators are not so weak. The external indicator is very good.

Promising stats

The import of raw materials by the industries has also increased. Such an increase in imports is good for the development of the economy. Exports have also increased slightly, which shows that the external sector has improved better than two or three years ago. There is a good improvement in the price situation.

I wish the credit flow was a little higher, but the credit growth rate of 8-9 percent is not considered weak. Because, even though people say that there is no investment environment, there is an increase of 8-9 percent. The important fact of this credit increase is that the amount of credit growth this year seems to have gone mainly to the productive sector. Whereas earlier it used to go to the property market in large quantities. So, I think this indicator is also good.

The price has been around two percent since mid-July. It’s satisfying. In terms of public expenditure, the capital growth rate is lower than last year. The weakening is due to the impact of floods and the Zenji movement.

Compared to the previous year, the revenue has also increased in a surprising way. Compared to July and August, the recovery was more than the target in September. Likewise, customs revenue increased by about 13 percent, VAT by 10 percent and excise duty by 13.84 percent.

However, due to the reduction in the interest rate of the banks, the income tax (tax on interest) has decreased by 15 percent. Other corporate income tax rates have also decreased by about 5 percent. Overall, income tax has decreased by 7.6 percent. The increase in tariff, excise duty and customs duty in double digits, indicates that consumption has increased on the one hand and production has increased on the other. Because, excise duty is directly related to production.

Excise duty on domestic production has increased by 14 percent while excise duty on imports has increased by 13.5 percent. An increase in excise duty on domestic production means an increase in domestic production.

Therefore, international organizations may not be able to predict that economic growth will shrink this time. It doesn’t shrink as they say. Instead, there is a preliminary estimate of 4.2 percent that it will increase to around the same level as last year. Some have even estimated 4.6.

Credit rating agency Fitch has been rated B-B for the first time last year. B-B minus means the right country to invest risk-free. It is said that Nepal’s debt repayment capacity is intact but there is political instability. The comment with which B-B was rated B-B last year is still the same.

There is still political instability.

But, overall, the government’s finances are strong. The ability to repay the loan has not decreased. Although the economic growth rate is slightly weak, everything else is considered to be correct.

Nepali experts have also considered this figure of the economy to be better than expected.

The instability created by the Jenji movement, the apprehension in some quarters that the elections will not take place, some political parties demanding that the parliament be reinstated as this government and the announcement of the elections are unconstitutional, and even a case has been filed in the Supreme Court, the indicators of the economy should be considered good. This was also supported by the policy reforms taken in the last two months. It could have been improved if there was political stability, elections had taken place and there had been a stable government. Because our economic data is not so weak.

{{TAG_OPEN_strong_89}Government Policy

In the wake of the Genji movement, the government has made spending more of a priority. The budget allocated for small and unprepared projects has been suspended. This decision has been taken with the view that the country would benefit if the investment could be diverted to big strategic projects rather than spending money on projects that do not give immediate benefits, do not benefit the price, and do not contribute to economic and employment growth. This government is implementing the concept that the state treasury should not be spent haphazardly.

Although the country’TAG_OPEN_strong_88 s economic growth rate is weak, there is no need to disappoint the economic indicators. The government has already taken some policy reforms and is preparing to bring some far-reaching reform plans, so if the next government follows it, the country’s prosperity will not be far away

Rather, the government is of the view that the country will benefit more from the projects that are included in the mid-term expenditure structure and the projects that have already started their work if they are assured of resources. If these two policy considerations are incorporated in the budget in the future, it will help in the economic growth of the country. It will also help to attract public investment in large strategic infrastructures that will help meet the investment of the private sector.

Government

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Of course, the challenge of resource management has been on the government since the past. Now we are thinking of paying all the liabilities created in the past as much as possible. In the past, the government did not give interest subsidy to the banks and financial sector for the investment made in the primary sector. Grants to the poor in the primary sector were also stopped.

The government has already paid about Rs 10 billion. This will help the medium business.

Second, it also expanded the ability of banks and financial institutions to invest. In particular, the Ministry of Physical Infrastructure, Energy, Irrigation and Water Supply is preparing to transfer the remaining amount from the Tukre project to clear the remaining amount to be paid by working in the past. Some agreements have already been reached for such payments.

Now there is enough liquidity and low interest rates. In such a situation, the government cannot raise debt beyond the limit. If the government can recover its fiscal deficit at a lower cost, then it should be happy.

But that’s not a good thing. The government should make the projects it invests in productive by competing with the private sector that invest in productive sectors in the market. For example, money can be raised in bonds at an interest rate of two percent. It would be better to widen the roads of Pokhara and Bhairahawa by taking a loan at 8 percent interest rate and spending it on concrete projects. It will expand the economic activities of Bhairahawa-Pokhara. It promotes tourism. That’s a big economic growth project. Even if you take a loan at an interest rate of 8 percent, it is not expensive.

However, by taking a loan at two percent interest rate, pitching a normal road connecting one ward to another or making it a good four-lane road will not contribute to economic growth. Look, making TikTok may be good, but it does not play a role in economic growth and job growth. If a road is built to reach a mine or hydropower project, it will directly contribute to economic growth. From this point of view, there is no need to be happy that we have got a loan at a cheap interest rate now.

Overall, high liquidity and weak demand for investment in productive sectors are not a good situation.

If the government is unable to borrow beyond its fiscal deficit limit, then an alternative institution should be set up. Earlier, there was a proposal to set up an alternative finance agency. The bill was not passed in the parliament. Now the government has registered it in the National Assembly, considering it very urgent.

Even if it is passed by the National Assembly, it will not be finalized. As soon as the election is held, it has to be passed by the House of Representatives. Since the government itself cannot do so in the short term, we are preparing whether the international financial institutions can raise such money and create an environment for them to invest in productive sectors.

Although the issue of cash subsidy for exports is not included in the budget, the government has said that it will be given.

The Ministry of Industry, Commerce and Supplies is formulating a work procedure for production-based subsidies. Once the procedure is made, it will be implemented. The Ministry of Finance has already requested the Ministry of Industry, Commerce and Supplies to make arrangements for payment from the budget and the remaining amount should be paid before that.

Steps into Good Governance

Almost all the ministries are working in their respective areas for good governance, controlling corruption and ease service delivery. The Ministry of Finance has also developed an online system in the last two months so that taxpayers can get their personal PAN number from their own municipality.

The system of making a taxpayer identity card by pulling the details of the national identity card has started. This has made it easier for the general public to get services. An online valuation system has been started at the customs. This has reduced the cost of importers at the customs point. Overall, business costs have also decreased.

It also facilitated service delivery and good governance. There will be less unwanted transactions. Now, at various stages, the problem of price hike will be removed. The government did not suffer any tax loss. It was easier for the traders to do business in a transparent manner with honesty. It is a means of maintaining good governance and controlling corruption.

During this period, two agencies under the Office of the Prime Minister, the Department of Money Laundering Investigation and the Department of Revenue Investigation, have been brought under the Ministry of Finance. This decision has been taken because these departments are inefficient.

Both the agencies have intensified the investigation work after it was brought under the Ministry of Finance. After the structural reshuffle, the Department of Money Laundering Investigation alone has taken 5-6 cases worth billions to the court. The Department of Revenue Investigation (DRI) is working to control revenue leakage.

In both these departments, the tradition of unqualified people who do not have expertise in tax administration has been removed. The Public Service Commission (PSC) has decided to establish new qualifications for the newly entered officers to be deployed in revenue and customs.

The eligibility criteria for those who have studied economics, commerce and can do income tax and customs work immediately.

Tourists had to withdraw cash before getting a visa while coming to Nepal from abroad and during that time there was a dispute at the counter. Now online payment system has been launched. We have been carrying out reforms in controlling corruption and promoting good governance at the Office of the Comptroller General, Customs and Revenue at all three levels. The Office of Taxpayer Services has been removed. This reduces the possibility of unfair transactions.

Collaboration with the private sector

There is a need to raise awareness among the citizens for the investment security, policy stability and investment-friendly environment of the private sector. Because, the wealth created by the private sector, the business they do, is a source of revenue, employment and economic growth. It is a source of prosperity. Therefore, the private sector should not be under unwarranted attack. If they do wrong, the regulatory body must monitor and take action. However, the businessman should not be given unnecessary hassle. The main task of the government is to create awareness about judicial proceedings.

The government is committed to protect the private sector businesses. The government has repeatedly reiterated this commitment to the private sector. The government provides security to the private sector as soon as it demands.

The events of September 23 and 24 were unexpected and the commercial sector was also attacked. It should be taken as an exception and believe that the government is capable of providing security. We are in the process of reviewing and correcting the shortcomings by learning from this. The government and the private sector should move ahead as partners rather than blaming each other. The Ministry of Finance is taking steps towards this.

Nepal Society of Economic Journalists (SEJON) from Economics