The officials of the Finance Ministry on Tuesday briefed Finance Minister Bishnu Prasad Poudel about the country’s economic challenges and the measures to resolve those issues.
“Mainly, there are 46 challenges in Nepal’s economy in the observation of the Finance Ministry. Steps are required in 29 sectors to overcome those challenges,” according to a press note issued by the Ministry.
The ministry’s secretaries and joint secretaries had briefed the minister about the country’s economic status and the ideas to troubleshoot them, according to the ministry.
In response, Minister Poudel has directed to move ahead by prioritizing the challenges to resolve them.
The slow growth rate in the economic sector in comparison to the availability of resources; limited growth rate in savings, consumption and investment; poor investment in the productive sector and a sea gap in the import-export ratio have been mentioned as the key challenges of the economy.
Likewise, unstable and slow economic growth, massive financing gap and limited gross domestic savings and massive internal migration resulting in a decreasing trend of population in mountain, hilly and rural areas have also been identified as challenges of Nepal’s economy.
Limited contribution of the productive sector in economic growth, limited economic growth rate, poor productivity and the decreasing trend of the industrial sector’s contributions to the country’s economy are also equally alarming as stated by the ministry.
Similarly, import-based revenue system, poor status of export, massive trade deficit, marginal growth in revenue collection and expenditure, ineffectiveness in capital expenditure, rising debts and massive financial liability for loan repayment have been mentioned as the country’s economic major challenges.
The ministry has suggested reforms in 29 sectors to resolve the crisis country’s economy is facing.
According to the ministry, reforms should be achieved by ensuring effective public expenditure along with prioritization, improving capacity to increase capital expenditure, giving emphasis on fiscal strengthening, prioritizing production-based revenue, promoting effective use of debts, reducing financing risks, giving momentum to economic growth by creating a conducive environment for investment growth and investing more on the productive sector.
The ministry has also explored ideas for accelerating the current economic slowdown. They include clearing the internal obstacles to bring in FDI, stressing the construction of hydropower projects and transmission lines, developing quality road networks, aligning the rural roads with agricultural production and marketing, promoting effectiveness of capital expenditure and applying austerity measures in administrative costs.
Similarly, the ministry has said government investment should be centered around economic infrastructure development while foreign grants and concessional loans should be mobilized in national priority projects and funds related to climate change should be mobilized.
Likewise, other measures suggested for solution include maintaining the government’s reserve fund, discouraging non-budgetary demand, ensuring loan disbursement in the productive sector and controlling bad debts.
The ministry’s officials have asked to apply relaxed monetary tools to reduce the costs of fiscal tools while maintaining stability, providing project-based loans for SMEs, ensuring effective regulations of the fiscal sector and developing a second layer regulatory mechanism to regulate the cooperative sector.
Other ideas include encouraging the use of remittance in the productive sector, making migration work and devising some policy and legal reforms to increase the inflow of foreign investment in the country.
