A turnaround visible in economy: FM Mahat

 Kathmandu, Nov. 4

Finance Minister Dr. Prakash Sharan Mahat said that the increased foreign exchange reserves due to the boosts in remittance inflow and tourists arrival have been ushering the economy of Nepal on a positive path.

This positive outlook is also supported by the increased property transactions, he said while addressing the 15^th anniversary programme of the Nepal Financial Journalists Association (NAFIJ) in Kathmandu on Saturday.

The country has witnessed a record inflow of remittance Rs. 228.3 billion in the first two months of the current fiscal year 2023/24 which is an increment of 22.1 per cent compared to the same period of the previous fiscal 2022/23, according to the Nepal Rastra Bank (NRB).

Likewise, the tourists arrival returned to the normal situation of pre-COVID era with 117,306 foreigners coming to Nepal by air in October 2023.

According to FM Dr. Mahat, although problems such as natural disasters like the quake of 6.4 magnitude that rocked the western part of the country on Friday night and epidemics occurred from time to time, the economic growth rate should be improved by addressing them. He claimed that the problem in Nepal's economy was not created overnight, but it was the results of various challenges and crises being compiled for years.

Meanwhile, interest rates on deposits are decreasing and I am hopeful that the interest rate on lending will also be moderated soon, he said.
Mahat said that as the economic indicators are getting better, confidence is needed in Nepal's economy and private sector should invest with full confidence so that foreign investment could also be attracted.

“Economic growth projections of the World Bank and the Asian Development Bank also show that Nepal will achieve at least 4 per cent growth. Meanwhile, There is increasing interest in investing in Nepal in the international arena," Finance Minister Dr. Mahat said, “At the investment summit that we recently organised in London of the United Kingdom, many investors showed keen interest in Nepal’s hydropower sector.”

He said that an investment conference will be held in the coming February-April to attract foreign investment, and more Foreign Direct Investment would be attracted in coordination with the private sector and Non-Resident Nepali Association.

According to Dr. Mahat, Nepal offers high potential in four sectors – hydropower, information and communication technology, tourism and agricultural business.

“It is a matter of pride that Nepali private sector’s capacity in developing hydropower has significantly gone up. About a couple of decades ago it was developing 2-3 megawatts projects now it is gearing up for the projects with more than 300 MW capacity,” he said while adding that the World Bank has shown interest in developing the Upper Arun Hydropower Project with a cost of about US$ 1.7 billion while the ADB has interest in investing in Dudhkoshi Reservoir Project.

 

Strong external sector

Speaking on the occasion, Governor of the NRB, Maha Prasad Adhikari, said that since Nepal's external sector is in a strong position, the country should be able to take advantage of it. He stated that Nepal has foreign exchange reserves that can cover more than one year's worth of imports.

"Even a country with a strong economy does not have sufficient reserves that can cover for 12 months of imports of goods and 10 and a half months of imports of goods and services," he said.

However, he said there is a challenge in controlling inflation since there is no price control and market regulation mechanism in place in Nepal.

He also informed that there is liquidity in the country’s financial system that can meet the current demand of the market. According to the financial statements of the last quarter, the non-performing loans of banks seem to have increased, but it is less compared to other countries.

Governor Adhikari suggested that the government agencies and private sector should cooperate in finishing the projects under construction as soon as possible in order to keep the economy running and lead it on the path of sustainable growth.

“There is a positive outlook in the tourism and remittance sector. Since banks have invested in various sectors, there will be no crisis in the bank if there is a problem in any sector,” said Adhikari.

 

‘Create environment of trust’

Chandra Prasad Dhakal, President of the Federation of Nepalese Chambers of Commerce and Industry, said that the tightening in the economic and monetary policies exhibiting apprehension to the Sri Lankan crisis a couple of years ago had caused problems in the economy.

He said that general policy reform will not solve the current problem and that change should be implemented with comprehensive thinking.

“Inflow of tourists and remittance has gone up while liquidity in the bank is also increasing. Now, government should work to create an environment of trust among businessmen and common people." Dhakal said. He also pledged support to the victims of Jajarkot quake.

Rajesh Kumar Agrawal, President of the Confederation of Nepalese Industries, urged the media and journalists to give priority to economic issues over political ones. He urged the government to hold regular dialogues with the private sector and devise ways to address their proelems.

Likewise, President of Nepal Chamber of Commerce, Rajendra Malla, said that although the economy looks positive in the external sector, it is not running well internally. He said that although the issue of natural resource export is mentioned in the budget, legal problems still exist. there is a legal problem. According to him, the trade deficit should be reduced by increasing the export of herbs and natural products.

 

Similarly, NAFIJ awarded three journalists with various prizes. Prayas Shrestha, journalist of Ratopati, received the Shardadevi-Dhundiraj Bhattarai NAFIJ Economic Journalism Award, worth Rs. 100,000. Likewise, Santosh Rokaya of Bikasnews and Royal Acharya of Ktm Voice won CBFIN-NAFIJ Economic and Banking prizes respectively.

On the occasion, the annual journal of NAFIJ ‘Arthachitra’ also launched. The journal includes more than 30 research-based and analytical articles. 

 Published in The Rising Nepal on 5 November 2023.