Kathmandu, Dec. 13
Finance Minister Dr. Prakash
Sharan Mahat has said that the current crisis and low confidence in private
sector businesses are the results of haphazard loan mobilisation for which both
the lenders and debtors are responsible.
"The
loan obtained by the private sector went significantly up at a time when there
were problems in making investments. On top of that, investments were parked in real
estate and stock market," he said while interacting with journalists at
the Ministry of Finance (MoF) on the current economic situation of the country
on Wednesday afternoon.
Stock market and real estate are
considered less productive areas for investment as they do not significantly
contribute to capital formation and economic growth.
FM Dr. Mahat said that the crash
in these two markets caused a liquidity crisis and other problems. "The
government is working to reinstall the much-needed confidence in the
market," he said, indicating that the recent steps taken by the Nepal
Rastra Bank through the quarterly review of the Monetary Policy of the current
Fiscal Year 2023/24.
The central bank has announced
lowering the bank rate and policy rate, allowing businesses to restructure the
loans, and reduce the risk weightage for margin lending and real estate loan.
The Finance Minister expressed
confidence that there would be enough liquidity in the market for investment
and with more business activities and growing demand, it would be more dynamic.
According to him, the government
has adopted a policy to promote import substitution industries. Stating that
government expenditure is a small component for economic growth, FM Dr. Mahat
said that capital expenditure had witnessed improvements compared to the
previous year although it's below expectation.
As per the statistics published
by the Financial Comptroller General Office, the government has spent 11.37 per
cent of the annual allocation of the development budget of Rs. 302.07 billion
as the fifth month of the current fiscal is nearing its end.
Capital expenditure during the
same period in the last Fiscal Year 2022/23 was 8.53 per cent of Rs. 380.3
billion development budget.
FM Dr. Mahat also said that a massive
investment made in towers and less important infrastructure in the past years
had also soaked a huge amount of budget but yielded less return.
In the past, Fiscal discipline
was not maintained while borrowing, he said.
"So, projects not delivering
benefits and serving the public won't be taken ahead with foreign loans.
Meanwhile, the country will negotiate to obtain grants on minimisation,
mitigation and adaptation programmes for climate change," he said while
maintaining that donors are positive about it.
Likewise, the government was also
planning to conclude the tendering of development projects by mid-November but the
current working culture created hindrances.
Responding to the questions on
the delay in paying the concessional loans to farmers and clearing the
insurance money against the COVID-19 insurance, he said, "I accept that
the government couldn't address all the liabilities created in the past several
years. But gradually, they will be cleared."
According to him, some claims
made against COVID-19 insurance were exaggerated and the MoF has asked to clean
the statistics.
Meanwhile, he also said that
Nepal couldn't benefit from the provisions of the South Asia Free Trade Areas
(SAFTA), the country should rethink about it. "Since SAARC is not
functioning, why are we following the provisions of SAFTA?" he asked and
stated that he would like to propose for the scrapping of the SAFTA.
FM Dr. Mahat said that the
economic and budgetary system reform programmes started by the government will
be further expanded.
Immediate relief and temporary
accommodation will be provided to those affected by the earthquake and emphasis
will be placed on the rapid restructuring of the destroyed structures and the
creation of employment opportunities for the youth in the country to achieve
the expected economic growth rate.
The government is set to organise
an investment summit in April 2024 and before it, some policy and legal reforms
related to investment will be carried forward, according to FM Dr. Mahat.
"A favourable environment
for investment will be created by formulating and implementing policies and
laws linked to economic reform in the long term. The government will adopt a
policy to attract domestic and foreign investment keeping in mind the abundant
potential of hydropower development, tourism, commercialisation of agriculture,
information technology sector," he said.
Published in The Rising Nepal daily on 14 December 2023.
No comments:
Post a Comment