Mobilising Rs. 1.5 trillion budget challenging: NRB

Kathmandu, May 7:

The Nepal Rastra Bank (NRB) on Sunday said that mobilising public resources for the Rs. 1.5 trillion budget of the coming fiscal year 2018/19 was challenging.

While the federal government is preparing a Rs. 1.2 trillion budget for the coming fiscal year, subnational governments’ financial estimates will be around Rs. 300 billion, NRB's Executive Director Nara Bahadur Thapa said in a pre-budget discussion programme organised by the central bank.

He said that public investment must be increased to achieve double-digit economic growth, but it was challenging as with the formulation of new governments, people's aspirations have gone up while at the same time, the government is implementing some ambitious programmes and projects to create the foundation for economic prosperity.

The central bank works as an advisor to the government and advises on monetary as well as economic issues.

Nepal achieved 5.7 per cent growth in its Gross Domestic Product (GDP) in 2014/15, 7.4 per cent in 2016/17, and it is projected to witness 5.6 per cent economic growth in the current fiscal year. Due to the devastating Gorkha Earthquake and Indian blockade, the growth had shrunk to 0.2 per cent in 2015/16.

The central bank said that economic growth in the last two years was impressive, and to continue with the growth momentum, both public and private investment should be increased.

It urged the government to address the infrastructure bottlenecks in the tourism sector so that the country could accommodate about 5 million tourists per year.

The country received about a million tourists in 2017, the highest ever.

Vice-president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Shekhar Golchha said that investment in infrastructure should be enhanced to increase business efficiency.

He requested the NRB to develop a mechanism for the predictability of the interest rate.

Urging the government to launch a special support package for small and medium enterprises (SMEs), Golchha said that it was time to assess Nepal's membership in the World Trade Organisation (WTO).

"We need to review the WTO provisions and the benefits that we gained. There are many internal constraints in business development here. We think that the WTO has done more harm than good," he said.

Chairman of the Security Board of Nepal (SEBON) Dr. Rewat Bahadur Karki said that the local governments should be allowed to issue local currency bonds. However, he said the move should be made cautiously, and the local governments should have high integrity for such a programme.

Chairman of the Insurance Board Chiranjibi Chapagain hinted at the need of brining the various micro-insurance schemes, such as health insurance and credit insurance, to a single mechanism.

Former member of the National Planning Commission Prof. Dr. Govinda Nepal said that the government should develop a policy for market promotion of agricultural goods. He also said that the country needed to produce goods that had a good market in India and China.

Chairman of Nepal Bankers' Association Gyanendra Dhungana urged the NRB for the stability of the interest rate.

He said that if the government failed to spend the capital budget, the money should be brought into the financial system. It would address the liquidity crisis in the country's financial system.

Businessmen also asked the NRB for a 20 per cent subsidy to those who buy a house for their family for the first time, Rs. 100 billion refinancing in the productive sector, mobilisation of concessional housing loans to the quake-victims via cooperatives and hiking the incentive on pashmina export to 10 per cent from the current 2 per cent.

Published in The Rising Nepal on 8 May 2018.