Radical Shift For Growth

Nepal’s economy has been buffeted by internal and external shocks time and again. The 2015 earthquake and COVID-19 dealt a blow to it that largely relies on foreign aid, grants and loans to spur development. The recurrent natural disasters often add to the woes of fiscal health, slowing down the early recovery. Now the country is struggling to come out of the lingering recession. Its stinging impacts reverberate in the market. Even during the big festival like Dashain, aggregate demands have dropped. This is a period when consumers go on spending spree, buying new clothes and other items needed for celebration of the festival. The market has witnessed low transactions of goods and services. Banks and financial institutions have not performed better when it comes to increasing their loans to different sectors. Their surplus money has been stuck in the banking system, preventing them from mobilising the investable funds as expected.

Nepal's import-based and remittance-driven economy is also prone to the fluctuations in the international financial system and labour market. The ongoing war between Israel and Hamas that is gradually engulfing other Gulf nations might have detrimental consequences to our economy. At home, we have weak manufacturing. This is why it is unable to produce the goods of comparative advantage, which Nepal could export to other nations and earn foreign currencies in return. The share of industry and agriculture to the national GDP is sharply declining over the years. Despite holding investment summits frequently, the potential donors have failed to invest money as per their commitment. Nepal needs foreign investment to build big infrastructures and public utilities.  

The concerned authorities said that the country has amended necessary laws to attract foreign direct investment. However, investors – domestic and foreign – still face hurdles in establishing their companies. So business as usual approach does not inject vigour to flagging economy. In this regard, Prime Minister K P Sharma Oli has called for radical change to address the issues of halted and delayed projects as well as the legal and practical complications associated with them. Prime Minister Oli has asked authorities to make a paradigm shift rather than mere reform in development works at the 59th meeting of the Investment Board Nepal on Tuesday. In order to overcome bureaucratic hassles, the government is implementing a tracking system to supervise work progress made. The concerned offices have to make decisions on documents or files within three days of their arrival there. 

The Board endorsed a strategic and professional action plan for the next four years, presented by its Chief Executive Officer Sushil Gyawali. Created to facilitate the investment from private sector and foreign investors, it has been implementing a single-point service centre so that development works progress swiftly. It is necessary to set up specialised service centres for investment facilitation at the provincial and local level. Meanwhile, a Cabinet meeting on Monday decided to form a five-member high-level Economic Sector Reform Commission under former finance secretary Rameshwar Khanal. It will present suggestions to the government for reviving the economy. The private sector has been demanding government intervention to bring back economy from its current stagnated condition. The commission should focus on creating investment opportunities and enhancing inclusive growth. At the same time, priority also needs to be accorded to public sector investment essential to improve the people's health, education, employment and social security.