COVID-19 Batters Hopes Of Sound Economic Growth

Economic Survey 2076/77

Kathmandu, May 27: By the end of the first eight months of the Fiscal Year 2019/20, economic indicators remained satisfactory, according to the Economic Survey of the current fiscal presented by Finance Minister Dr Yuba Raj Khatiwada at the Federal Parliament on Tuesday.

“Inflation, foreign trade, balance of payment, investment and financial indicators have gone up due to the political stability. Absolute poverty rate is expected to go down to 16.67 per cent from 18.7 per cent a year earlier,” said the Finance Minister.

Nepal aims to lower the poverty rate to 5 per cent by 2030 and zero by 2043, as per the long-term vision prepared by the National Planning Commission. Increase in export and decline in import of goods has limited trade deficit and improved the reserve of the foreign exchange. The share of export in the foreign trade has increased to 7.5 per cent from 6.4 per cent in the last fiscal 2018/19.

Goods import till mid-March has decreased by 2.6 per cent while export increased by 22.3 per cent. Export of palm oil, cardamom, ayurvedic medicines, herbals and jute has increased. Trade deficit in the last fiscal increased by 24.4 per cent and reached Rs 887.8 billion but it decreased by 4.3 per cent in this fiscal to reach Rs 849.3 billion.

Likewise, financial and insurance indicators registered positive results with the branches of banks and financial institutions reaching 9,640 – one branch catering to 3072 individuals on an average, and insurance reach increasing to 26 per cent – 4 per cent contribution by the foreign employment term employment.

Balance of payment witnessed Rs 37.84 billion surplus in the first eight months of this fiscal against Rs 58.99 billion deficit last year.

However, the growth rate of remittance has slowed this year. It grew by 1.8 per cent against 23.4 per cent of the last fiscal. In monetary terms, the country received Rs 592.4 billion remittance this year while the amount was Rs 582.1 billion.

Despite the slowed growth rate of remittance, the foreign exchange reserve is increased by about Rs 97 billion compared to a year earlier, it was Rs 1136.5 billion in mid-March.

But the positive economic signs have been disturbed by the coronavirus pandemic which affected the businesses, specially the tourism and hospitality sector, as early as January 2020 and the lockdown put in practice to save the lives of people from march 24 has sent more than three-fourths of the industries and businesses out of operation. Most of the development works are also suspended.

“The overall economy before the advent of COVID-19 was on a growth track and development works were moving ahead satisfactorily but its impact on toruism, industry, construction, trade and other sector has slowed down the progress,” said Dr Khatiwada.

The economic growth rate is lowered to 2.3 per cent from earlier projection of 8.5 per cent as the pandemic is ravaging the economy. The first blow was on tourism and the Visit Nepal Year 2020 miserably failed and the government was forced to terminate the campaign, subsequenetly.

In the last three years the coutnry has boarded on a high growth rate trajectory with average 7.3 per cent increment in the Gross Domestic Price in producers’ price.

Rs 20 bl development budget spent in lockdown

Government expenditure went up by 12.9 per cent to Rs 610.6 billion in this fiscal including Rs 450.7 billion recurrent and Rs 96.48 capital expenditure.

Meanwhile, Rs 20.3 billion capital budget was spent after the lockdown. According to the Financial Comptroller General, the capital expenditure has reached Rs 116.8 billion by Monday. Recurrent expenditure stands at Rs 605.2 billion and financial management Rs 74 billion.

Likewise, government income till mid-March is Rs 546.8 billion, a 9.4 per cent increase from the same period of the previous year. The income has gone up by Rs 90 billion by Monday and reached Rs 616.8 billion.

Nepal has received Rs 109.2 billion foreign support – Rs 16.19 billion in grants and Rs 93.09 billion in loans. The country has Rs 1047.9 billion loan outstanding. 

Published in The Rising Nepal daily on 28 May 2020.