Bureaucratic hurdles caused under disbursement of budget

A recent United Nations (UN) survey pointed that poor project management and bureaucratic hurdles caused the under disbursement of the allocated budgets.

UN Economic and Social Commission for Asia and the Pacific (UN-ESCAP)'s Economic and Social Survey of Asia and Pacific 2016 suggested that to strengthen the role of fiscal policy in supporting social and economic development, there was a need to address persistent under disbursement of budgets.

The survey also advised to make improvements in the tax administration and compliance.

UN-ESCAP said that the devastating earthquakes in the April and May last year not only caused a huge loss of human lives and property but it also pushed a large number of people below the poverty line.

"Official estimates suggests that the April 2015 earthquake may have pushed at least 700,000 more people into poverty in 2016, undermining the country's target of reducing the poverty rate to 18 per cent by 2016 from 25 per cent in 2011," read the report.

However, the UN agency put the growth in output higher than the government estimates.

It said that the growth in output was expected to soften further to 2.2 per cent this year, before rebounding to 4.5 per cent next year while consumer spending might be constrained by relatively high inflation and weak agricultural production.

The report maintained that the trade agreement with the United States, which grants duty-free treatment to certain textile and apparel articles from Nepal, should help to attract greater investment flows.

"Similarly, agreements with India to develop two large-scale hydropower projects could help exploit Nepal's immense hydropower potential and address the issue of power shortages."

The survey calls for continued rebalancing towards domestic and regional demand, as prospects for export-led growth remain subdued. A confluence of macroeconomic risks including shifts in global financial and commodities cycles has also increased uncertainty.

It highlights that despite emerging challenges the region's economic outlook is broadly stable and forecasts a moderate pickup in economic growth in developing Asia and the Pacific to 4.8 per cent in 2016 and 5 per cent in 2017.

The survey notes that progress in reducing poverty has slowed down and inequalities are rising in much of the region while at the same time, an expanding middle class and rapid urbanization are posing complex economic, social, environmental and governance challenges.

ESCAP recommended that if the region was to shift to a more sustainable development strategy driven by domestic demand, greater focus must be placed on productivity along with commensurate increases in real wages.

Speaking at the report launching ceremony Monday, executive chairman of the South Asian Watch on Trade, Economics and Environment (SAWTEE) Dr. Posh Raj Pandey said that in order to diversify the economy and increase productivity, the country needed relentless leadership with clear vision and step by step implementation plan.

Dr. Sudip Ranjan Basu, economic affairs officer at ESCAP Bangkok, Thailand, warned that the macroeconomic risk was rising in the region.

Likewise, UNDP's senior economic advisor, Dr. Basudeb Guha-Khasnobis said that Nepal has a long way to go to fulfill the growth rate required to graduate from the Least Developed Country to the developing one as it required about 10 per cent growth per annum, much higher that its current average of 4 per cent.