FM firm on growth targets

Kathmandu, Dec. 12

The World Bank (WB) has projected 6.5 per cent of economic growth for Nepal for the current fiscal year 2019/20.

The estimates are down by 2 per cent from the projection made by the government in its budget in May this year.

The World Bank in its new report, 'Nepal Development Update: Envisioning a Future Data Ecosystem in Federal Nepal' has maintained that a steady inflow of remittances coupled with high tourist arrivals is expected to drive growth in services.

However, Finance Minister Dr. Yuba Raj Khatiwada said that the economy would not derail from the high growth trajectory, which it had been witnessing in the last three years, and the WB had to revise its own estimates in the future.

"You will have another opportunity to revise your growth targets to upwards," he said to the multilateral donor.

"Many economies are running far below their potential while Nepal is achieving its growth potential and moving higher."

According to him, many indicators are just evolving so the government is working to achieve the set growth targets.

FM Dr. Khatiwada said that the global and regional risks could have implications to Nepal's commodity and labour exports while current account deficit and widening trade deficit were posing challenges to the economy.

He also said that the climate change was not an immediate risk.

The WB said that the Visit Nepal 2020 program; completion of the second international airport; construction of several big hotels; and the increase in air connectivity through the implementation of new or revised air service agreements with different countries including Australia, Cambodia, China, the United Arab Emirates, and Vietnam will support the service sector growth this year.

However, the recent delays in the monsoon coupled with climate-related natural disasters, the outbreak of armyworms that damaged crops, and fake paddy seeds used for growing crops are expected to reduce growth in agricultural production.

Likewise, Construction activities, new investments in the cement and hydropower sectors, and improved capacity utilization in the manufacturing sector will support industrial growth. The WB said that efforts to build subnational capacity and the implementation of performance-based contracts are also likely to improve government spending.

Saying that capacity and staffing challenges persist, particularly at the subnational levels, and this could continue to affect budget execution and service delivery, the WB recommended to strengthen planning and budgeting at the subnational levels, including implementation of subnational Medium-Term Expenditure Frameworks.

The Nepal Development Update highlighted the importance of data for development, particularly in the context of the country’s historic transition to federalism.

"Federalism has created a surge in demand for more and better data. Enhanced data availability is instrument to the success of federalism," said Faris Hadad-Zervos, Country Manager of World Bank for Nepal.

“Engaging all data actors – including civil society, the private sector and government agencies at various levels – can play a greater role in data production, sharing and use. This would help in the design of reforms for better service delivery to citizens and an improved business and investment climate,” he added.

“The need for Nepal is data that is disaggregated, more frequent, reliable and accessible,” said Dr. Khatiwada. “Nepal’s federal structure has added another dimension for data at the provincial level, which is a challenge but very important for development programs to leave no one behind.

 The Statistics Act which is to be approved soon is expected to further empower the Central Bureau of Statistics and provide added responsibility to subnational governments on data for national policy making,” he added.

 In its Special Focus section, the report articulates a vision for a future data ecosystem and the need for short-term reforms to make the most of existing data and long-term reforms that establish an enabling environment that fosters data sharing, integration and use.

 Published in The Rising Nepal daily on 13 December 2019.