Economy in urgent need of transformation: FM

 Kathmandu, Apr. 15

Finance Minister Janardan Sharma said on Friday that the Nepali economy immediately needed transformation in agriculture and government mechanism to implement development programmes.

"The country is lagging in terms of development and growth and currently facing economic challenges because it has failed to manage available resources. There are challenges in utilization of the resources," he said in a meeting with the Nepal Association of Financial Journalists (NAFIJ) at his office.

According to him, revolutionary changes are needed to transform the agriculture sector in order to make it able to substitute the imports that has reached Rs. 300 billion a year. The country is facing pressures on its foreign currency reserves as it is importing the goods that could be grown here.

FM Sharma had initiated his budget-related discussions from agriculture. He believes that the national economy could be strengthened with the development in agriculture, reduction in the imports of petroleum fuel, increase in the generation and consumption of hydroelectricity, and attraction of tourists to Nepal.

Similarly, the government mechanism to implement development budget need an overhaul. Although the country has been ushered to the federalism, the mentality of bureaucracy and leadership is centralized which has created challenge in implementing the rights devolved to the subnational governments, he said while adding, "Reforms are needed to change this scenario. The country wouldn't gain much from the current structure."

FM Sharma expressed worry over the high inflation rates which has severe repercussion on the foreign currency reserves leading to economic challenge for the country. According to him, the country had paid about Rs. 100 billion for petroleum imports although the quantity of goods is more or less the same. Nepal imports petroleum fuel worth about Rs. 1 billion a day. Meanwhile, the government has planned to reduce the use of fossil fuel by 20 per cent in its applications.

Likewise, hike in the price of goods like iron and steel, cooking oil, and vehicle spare parts had inflicted additional burden to the balance of payment.

"We are also planning to shift the subsidy given to the LP gas to the electric cooking appliances in order to strengthen the national economy by reducing imports," said the finance minister.

He said that his vision is to develop Nepal as a productive economy and upcoming budget will have programmes and projects to support this theme.

Meanwhile, FM Sharma indicated that the claims of COVID-19 insurance would be paid in near future.  However, he did not disclose the details.

Published in The Rising Nepal daily on 16 April 2022.