Despite facing a spate of problems and challenges, Nepal’s economy is now heading on the path to betterment gradually. The Economic Survey 2022-23 has shown that the economy is oriented towards recovery. Presenting the Economic Survey 2022-23 and the Annual Situation Review of Public Corporations, 2023 in separate meetings of the House of Representatives and the National Assembly on Sunday, Minister for Finance Dr. Prakash Sharan Mahat said that the national economy was in the process of revival. Minister Mahat added that effective policy measures adopted by the government were contributing to improving the economic scenario. The nation’s economy had started to go through a difficult situation since the outbreak of the COVID-19 pandemic. Nepal as well as many other countries worldwide had to opt for harsh measures, including lockdowns and other restrictions, to contain the spread of the deadly viral disease. Although life has already returned to normalcy with the receding of this global public health crisis, its economic fallout still seems to have been taking its toll worldwide.
A number of nations from around the world appear to have been reeling from economic downturn in the aftermath of the pandemic. Supply chain disruptions and growth stagnation are the result of such an adverse situation. The Russia-Ukraine war has further exacerbated the economic troubles. Due to this war, there has been an exorbitant price rise in the petroleum products, food grains and raw materials worldwide. Nepal too has experienced its effects as the country’s economy is connected with the global economy. The national economy had been under additional pressure because of internal structural problems. A liquidity crisis and resultant increase in bank interest rates had dealt a severe blow to the production sector as investors failed to increase their investments. That naturally exacerbated the problem of joblessness in the country.
Because of the inimical global economic situation, and structural problems in Nepal, there was shrinkage in the overall economic activities like the wholesale and retail businesses, construction and industrial productions. With this, the nation’s economic growth rate is estimated to hover around 2.16 per cent. In its budget for the current fiscal year (2022-23), the government had aimed at achieving an ambitious 8 per cent economic growth. It is needless to mention that the nation’s economy is mostly based on remittance. The contribution of the remittance sector to gross domestic product (GDP) is about 20 per cent while the contribution of the agriculture sector accounts for about 24 per cent. As the national economy is import-based, the government depends for its revenue collection on imports. But in view of the fast depletion of the foreign exchange reserves, the government resorted to putting a ban on the import of numerous goods categorised under ‘luxury items’ for several months. With a contraction in imports and a fall in overall demand, the country witnessed a slowdown in economic activities.
The Economic Survey, however, points to some positive indications in the national economy. The balance of payment has remained in surplus, the foreign currency reserve has become stronger and the number of foreign tourists visiting the country has increased considerably. Tourism is undoubtedly the second largest source of foreign exchange earnings after remittance. The nation has also made progress in the construction of roads, expansion of electricity and internet services, among others. Meanwhile, the report states that 25 out of 44 public corporations with the government's investments are in profit. The government has acquired a profit of Rs. 6.16 billion from the public corporations while its shares and loan investments have exceeded Rs. 618 billion as of July 16, 2022.