‘Remittance decline will be made up with international support’

Kathmandu, May 3

Finance Minister Dr. Yuba Raj Khatiwada said on Sunday that the decline in remittance would not create severe pressure in the foreign exchange reserve of the country.

“The reduction in remittance will impact the demand of imported goods and consumption habits of people, reducing the both,” he said in an exclusive  interview with The Rising Nepal and Gorkhapatra.

Due to the stringent measures against the import of the luxury goods, the foreign trade scenario had started to improve since last year and the export-import ratio was gradually moving down.

The declining trade deficit means less pressure on the balance of payment so although it demands an attention, it’s not a problem, said FM Dr. Khatiwada.

Meanwhile, the gap created by the lowering remittance will be filled up by the international financial support. The country has signed agreement of more than Rs. 150 billion international support that would be mobilised in the next fiscal year.

“We are weak in terms of absorption of the foreign support. Our spending capacity must be enhanced and decision making mechanism should be sound and prompt,” said the finance minister who also holds the portfolio of Minister for Communication and Information Technology.

However, he expressed hope for the quick economic revival in the immediate aftermath of the coronavirus pandemic.

“The crisis has hit the employment, investment, planning, and investors’ confidence, disrupted the entire supply chain of major industrial products and affected every citizen in the country. But we have confidence that we will recover soon,” said Dr. Khatiwada.

Yet he maintained that the lockdown and closure of industries and restriction on economic activities will continue to impact the growth in the next year as well.

“Some large projects were in the stage of completion while some were moving ahead with good momentum but the persisting health crisis has affected most of them. It means we will lose the capital that would have been formulated if the projects were completed,” he said.

Similarly, it would take time for businesses and industries to resume operation in the erstwhile manner after the crisis as it would take time to manage the raw materials, capital and human resources.

Business revival will take some time, he said.

According to him, the country has lost Rs. 200 billion to Rs. 300 billion due to the disruptions created by the coronavirus pandemic.

Published in The Rising Nepal daily on 4 May 2020.