Economists have cautioned that Nepal need to protect economy amid higher pressure on price inflation in the near future due to the possibility of a global recession.
Speaking at an interaction entitled ‘Economy: Pathway of Now,’ organized by the Nepal Chamber of Commerce (NCC), economist Swarnim Wagle said the shrink in government revenue collection could take the economy to the problem at a time when Nepal is at the risk of facing an economic slowdown. “There is a need to focus on revenue collection at present,” Wagle said.
Wagle stressed the recruitment of technical manpower to speed up the collection of government revenue. “It is not possible to recover the revenue collection fully by just providing training to the bureaucrats,” he said. “If we could not coordinate in the policy departure, the economy could fall further in the coming days.”
In the aftermath of the COVID-19 pandemic followed by the Russia-Ukraine war, a majority of countries in the world have been facing a serious economic crisis, including excessive price hikes. The records with a number of international organizations show that the growth rate of the global economy fell to 3.2 percent in 2022 from six percent in 2021. It is projected to fall further to 2.7 percent in 2023.
Although the country has recently been cushioned in the foreign currency reserves with increased remittance earnings, the national debt has been increasing due to slowdown in the collection of government revenue. In the meantime, the country received foreign grants of only Rs 5 billion against the targeted Rs 55 billion.
Wagle criticized the government for making the budget size for the current fiscal year unrealistic and inflated. “Both the revenue collection and expenses should be made reality-based,” he said.
NCC President Rajendra Malla said the lack of effective coordination between the budget and monetary policy has led to the slow growth of the economy. “The economy has failed to recover because of the liquidity shortage and exorbitant interest rates, low capital expenditure and high recurrent expenditure that surpassed the revenue collection,” Malla said.
Former finance minister Yuba Raj Khatiwada underlined the need for stringent measures at the customs points to minimize the cases of smuggling and improvement in the collection of government revenue.
