'Fiscal policy should reduce inequality'

Kathmandu, July 2

Dr. Prakash Kumar Shrestha, Executive Director, Nepal Rastra Bank (NRB), said that the monetary policy of the next fiscal year 2022/23 should take external sector stability, inflation, and liquidity crisis into consideration.

They are the three major challenges in the macroeconomic front, he said at a policy dialogue on the "Economic and Social Survey of Asia and the Pacific 2022" organized by United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and South Asia Watch on Trade, Economics and Environment (SAWTEE).

He also said that NRB is focusing on interest subsidized concessional loan lending programme to promote inclusiveness.

Richard Howard, Acting UN Resident Coordinator, Office for Nepal began by emphasizing on making the upcoming LDC graduation sustainable. He said, "We as UN system can work together with government to make a smooth and sustainable transition from Nepal's LDC category."

Making a presentation of the findings of the ESCAP flagship report "Economic and Social Survey of Asia and the Pacific 2022", Kiatkanid Pongpanich from ESCAP, said, "Inequalities have always existed but the pandemic made them worse. The pandemic has badly affected around 85 million individuals, with vulnerable sectors being the most seriously affected."

She pointed out that fiscal policy can help reduce inequality but it largely depends upon how the polices are framed. For example, 20-40 per cent spending on health sector among developing counties is found to have been wasted via different means.

Likewise, Dr. Bina Pradhan, Feminist Economist, explored on root cause of inequalities and said that, "Care sector is a huge sector not just in Nepal but in whole of South Asia. Care sector constitutes almost 32 per cent of Nepalese economy. So, it should be addressed especially from the point of human welfare."

Dr. Bishwo Nath Poudel, Vice Chairman of National Planning Commission, said that the tax and transfers is not a good measure to reduce inequality even though it has reduced inequality in developed countries. He also emphasized on the idea that it is better to target growth with jobs rather than jobless growth.

Published in The Rising Nepal daily on 3 July 2022.