President offers suggestions for economic recovery

Kathmandu, Aug. 24

President Ramchandra Paudel has said that the economic development of the country is possible only by encouraging the participation of the private sector in the economy.

"The cooperation between the government and the private sector is necessary for the improvement of the current economic situation. Keeping this fact in mind, I think mutual coexistence and close partnership of equality between the government and the private sector is necessary," he said while talking to a delegation of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) at the Office of the President. 

The delegation comprising the working committee members of the FNCCI called on the President Thursday afternoon.  

President Paudel stated that since the private sector accounts for more than 80 per cent of Nepal's economy, and the current problems in the economy have slowed down economic activities, there is a need for giving support to the businesses and industries, especially the small and medium enterprises (SMEs). He made it clear that he was not ignorant of the challenges faced by the industrialists. 

"Inability to create employment, increasing dependence on remittances, decreasing exports, inability to increase domestic and foreign investment due to lack of policy reforms and harmonisation are major challenges of the business sector. Service delivery has also been hindered from time to time," said President Poudel while adding that he believed that private-public partnership (PPP) could offer some solution in this situation where small and medium industries are becoming sick. 

He emphasised that everyone should pay attention to creating jobs in Nepal and improving the country's economy. According to him, even in the all-party meeting that he called a few days ago, he drew the attention of the parties and leaders to the improvement of the economy. 

"I have drawn everyone's attention to strengthening the economic situation of the country without getting involved in the fabrics of politics," he said. 

According to him, he wanted to meet with the FNCCI leadership earlier, but due to some health problems, the meeting was delayed. 

Chandra Prasad Dhakal, President of the FNCCI, said that although some indicators of the country's economy are positive, stakeholders should focus on making the economy sustainable by increasing the confidence of ordinary citizens and businessmen.

"The government, the central bank and the private sector should forge a strong collaboration to create demand in the market in the current situation where the morale of the private sector and the general public has gone down," he said. 

According to him, the demand in the market has decreased when the government has not been able to spend the capital budget and the banks have not been able to mobilise loans. In such a situation, the private sector needs to be encouraged to increase investment by reducing the cost of capital.

"The government has set the revenue target on the assumption that the business would run at 100 per cent capacity. But the business has shrunk by two-thirds, and after nearly five decades, the government revenue has remained less than that of the previous year. Economic growth rate has also remained poor," said Dhakal demanding that the cost of capital should be reduced and funds should be transferred to the market.

He pointed to the need for special initiatives to promote exports, attract foreign investment and promote tourism.

In the first meeting of the FNCCI executive committee with President Poudel, Senior Vice-President of the organisation Anjan Shrestha said that initiatives from all sectors were necessary for the improvement of the economy.

 Published in The Rising Nepal daily on 24 August 2023.