Govt seeks cooperation to improve economy

 Kathmandu, Nov. 21

Prime Minister Pushpa Kamal Dahal Prachanda said that the economy is still under pressure and there is a need for greater and cooperation among the stakeholders to find solution.

"Although some indicators of the economy are positive, the economy is not free from pressure. It is necessary to have more intensive discussions to resolve the problems of the economy," he said at a high-level discussion with political parties, private sector and other stakeholders.

He informed that the government is thinking about the current state of Nepal's economy and possible ways to move forward with pragmatic solutions.

According to PM Prachanda, although several indicators of the economy have been positive since last year, the economy has not yet reached a point where it is free from pressure. "Therefore, it is necessary for us to come to a proper conclusion with serious discussion. If we do not face it together, the crisis will deepen," he said while adding there is no need to worry much as the government is serious in managing the crisis with the cooperation from the private sector and other entities.

The Prime Minister said that although problems related to cooperatives, microfinance, bank interest rate, businessmen's loans have arisen in the past due to various reasons, some people are trying to gain political advantage by showing this problem. He said that efforts are being made to spread mistrust and chaos in the society.

Speaking on the occasion, Finance Minister Dr. Prakash sharan Mahat, said that the government will not listen to those who say they will not pay back the loans they have taken.

He asserted that the government will work proactively in the areas of promoting hydropower, agriculture, tourism, IT, and small industries and businesses with a long-term thinking vision.

"We discussed about facilitating businesses that are in trouble. But demands of those who are not ready to pay back their loan will not be heard. Debt must be paid. The government is ready to give some time to facilitate those who are in difficulties," said FM Dr. Mahat.

Governor of the Nepal Rastra Bank, Maha Prasad Adhikari had presented the current status of economy and said that the external sector has become strong while the financial system in the country has enough liquidity. Most of the participants were optimistic that the country's economy will become more dynamic in the days to come.

President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Chandra Prasad Dhakal, said that despite about Rs. 500 billion liquidity in the country's financial system, record high inflow of remittance and tourists, and year-long positive balance of payment status, the government is under pressure due to the current account deficit, poor revenue collection and pathetic use of development budget.

Likewise, the inflation rate has not gone down from 7 per cent in the past 20 months, industries like cement and iron bars are running below 30 per cent of their capacity, small and medium entrepreneurs have been shutting down their businesses, and youth involved in agriculture and small businesses have been leaving the country, he said.

The private sector is also facing the challenges like the contraction in demand and many have been seeking way out from their businesses.

Dhakal said that these impacts were the result of apprehension of high economic expansion in the aftermath of COVID-19 pandemic and both the government and Nepal Rastra Bank opted to reduce the expenditures and financial facilities.

He urged the government to support the private sector in building the confidence by increasing the capital expenditure and creating investment friendly environment. He also suggested to increase the utilisation of the fund that the government raised through domestic borrowing.

"When we have reached the point from where we need to expedite the efforts to bring the economy back to the track, anarchical activities have begun to happen. It must be curbed at any cost as it could potentially harm the foreign investment as well as the tourists," said Dhakal.

The private sector entrepreneurs have also said that the government and central bank should work to facilitate the cottage, small and medium industries. Likewise, the central bank should find ways to bring down the interest rates on fixed deposits. Business sectors like agriculture, tourism infrastructure and ICT need refinancing and concession in taxes.

Likewise, President of the Independent Power Producers Association of Nepal (IPPAN), Ganesh Karki, said that all hydroelectricity projects should have the opportunity of Power Purchase Agreement (PPA).

He also said that if the country has to achieve the national target of 28,000 megawatts of electricity in the next decade, the government should do the PPA with all the projects and some policies related to land and forests should be scrapped.

According to him about Rs. 4.6 trillion is needed to achieve the target of 28,000 MW so there should be a single-digit interest rates for the loans mobilised to energy sector while foreign direct investment should also be attracted. 

  Published in The Rising Nepal on 22 November 2023.