By Nirmal Raj Poudel
Like many other countries across the globe, Nepal is also being plagued by the outbreak of the COVID-19 pandemic. More than four dozen people have already been hit by this pandemic, with a constant rise in the cases related to it.
The disease of coronavirus is not posing a serious health threat but also inducing an economic catastrophe in the country. The Nepali economy has been alarmingly bleeding particularly since the national lockdown was imposed on March 24 to contain the very disease. Tourism, remittance inflow, small and medium-sized enterprises (SMEs) are among those sectors hit hardest by the pandemic .
Thanks to the restrictions on the movement of people along with the suspension of international flights (also domestic ones), the arrivals of foreign tourists in the country are virtually nil. This has already led to the annulment of the national campaign of Visit Nepal Year (VNY) 2020, which was ambitiously aimed at brining 2 million foreign tourists in the country. Through it, the government had hoped to generate $ 2 billion in tourist receipts and create thousands of new jobs in order to help bolster the national economy. But, now, such a hope has been simply smashed into smithereens.
The annulment of the VNY 2020 also portends dark days of the Nepali tourism entrepreneurs. The billions of rupees borrowed by them to invest in the tourism related infrastructures and facilities targeting the same are at stake.
It may be noted that as of mid-February this year, the banks and financial institutions (BFIs) had floated credit amounting to Rs 139 billion to the ‘hotel or restaurant’ sector alone, up from Rs 67 billion at mid-July 2017.
This all alludes that the tourism sector, which contributes around 8 percent to the national economy, is in the doldrums.Similarly, the prevailing COVID-19-induced crisis is also severely stifling the inflow of remittances to Nepal.
It has been already predicted the such inflow will plummet by a whopping 14 percent that roughly translates to Rs 145 billion this year. With the entire foreign employment business coming to an indefinite halt, no citizen of Nepal has gone abroad to work for over a month now. Moreover, many Nepali migrant workers are expected to return from after losing their jobs due to the potential contraction of the economy in major destination countries.
Nepal receives around $ 8 billion in remittance annually, which is equivalent to some 28 percent of the national GDP. Such amount is the primary source of not only the import financing of the country but also the income for a large proportion of its population. A sharp drop in remittance inflow would not only reduce household spending and erode living standard, but also trigger a liquidity crisis. If this really happens, it will knock the economy for six.
T he small and medium-sized enterprises (SMEs) is yet another economic sector most affected by the outbreak the coronavirus pandemic.
The SMEs in the country like poultry farms, hatcheries and restaurants are on the edge of a precipice with a steep decline in their sales.Reports have it that the poultry business also is losing Rs 220 million every day, which could soon lead to a total collapse of the sector.
The SMEs employ a lion’s share of the labour force in the country and are major contributors to the socio-economic growth. So, if they continue to go downhill, it is sure to cast a blight on the country’s economy.
There is no doubt that the agriculture, manufacturing and service are other economic sectors that are bearing the brunt of the coronavirus crisis.
When it comes to specifically the agriculture setor, the farmers across the country are not getting the required input on time due to the lockdown. This could result in a decline of the agrictltural output by 20 to 15 perent in this fiscal year.A drop in agricultural yield, especially paddy, will mar the GDP as it accounts for more than a fourth of the country’s total economic output.
An underdeveloped economy like Nepal stands to face worse consequences when the world economy is likely to see the worst recession since the 1930s due to the COVID-19 pandemic, according to the World Bank (WB).The government expects the economy to grow at a rate of more than 8 percent this fiscal year. But that is sure to be a distant dream.
The WB has already predicted the growth rate will be confined to a shocking range of 1.5-2.8 percent in the current 2019-20 fiscal year, followed by 1.4-2.9 percent in 2020-21 and 2.7-3.6 in 2021-22. No doubt, the economic growth might further contract if the prevailing the coronavirus crisis continues to persist indefinitely.
So, it behooves upon the concerned authorities to be sensitive and proactive to prevent the economy from going kaput. Among others, they should effectively the recently announced stimulus packages. This will provide the much needed relief in the forms of relaxation in txy payment period, subsidized loans facility etc to the paralysed businesses. Similarly, the government’s policies and priorities for economic development need to be designed and calibrated to fight the imminent disruptions. For instance, more investment in the mass production, distribution system, and infrastructure development, inter alia, could help crate employment opportunities those Nepali people rendered jobless by the coronavirus pandemic. It is also simply mandatory for the government to coordinate and collaborate with the private sector and other related stakeholders while trying to ramp up the economy. After all, synergistic efforts do go a long way in bringing out the intended results.