Priority For Reforms

Every country aspires to achieve sustainable growth no matter which economic and political system it has adopted. And there is always room for economic reform to enhance public sector performance and create employment opportunities. Nepal has embraced neoliberal economic order characterised by free trade, privatisation and flow of foreign direct investment. However, privatisation of public enterprises remained disastrous. The unemployment problem continues to be acute. Annually, around half a million people enter the labour market but it is unable to absorb most of them owing to the weak manufacturing base. There has always been a challenge to achieve the objectives announced by the annual budgets. This is a reason why the economists and policy makers stress economic reforms to energise the sluggish fiscal sector. 

Economic reforms take place at both macro and micro-economic levels. The macroeconomic reforms seek to ensure fiscal stability and monetary discipline, contain inflation and cut public debt. Similarly, the micro level reforms include revamping the market infrastructure and enhancing efficiency and competitive edge. Reforms are carried out through the liberalisation of trade and foreign exchange regime and rationalising the tax system. Enhancing the capacity of public sector management is critical for the effective delivery of goods and services to the people. Currently, the low capital spending has become a major concern for the successive governments in Nepal. When the allocated amount of budget is not spent, economy naturally stagnates because low expenditure of development budget means the adequate money is not circulated in the market and job prospects are not promising.  

A recent study jointly conducted by the Confederation of Nepalese Industries (CNI) and the Society of Economic Journalists Nepal (SEJON) revealed that the reform programmes outlined in the current fiscal year budget have not been implemented. Based on the first four-month of the budget implementation, the report entitled 'Budget Watch' shows that infrastructure development is far from satisfaction as reform schemes has taken a backseat. It has pointed to other persistent malaises hindering the development. The development projects have been included in the fiscal budget without proper preparations. Similarly, there is also a problem of ownership of programmes, policy and budget. The reform plans, unveiled by the previous governments, are not owned up by the subsequent government, stated the findings carried by digital edition of this daily. 

As per the 16th periodic plan, the country has to invest Rs. 2000 billion per year in infrastructure but  only Rs. 300 billion has been allocated in the current fiscal year. Likewise, of seven headings under the infrastructures in the current budget, only one heading was implemented. Four programmes were partially implemented while two have zero progress. Issues related to forest clearance, procurement and financial management have been blamed for the slow project executions. The lack of coordination and collaboration among the ministries and their subordinates has led to the poor spending of development outlay. It has become necessary to clearly define powers and jurisdictions among the three-tier of government, which can help sort out the hassles seen in the project executions. 

The tendency of randomly selecting the projects need to be ended. Likewise, the pork-barrel spending must be discouraged because such expenditures undermine the balance and equitable development of the country. The government should not delay implementing the programmes meant for economic reform. Now priority should be given to increase capital spending so that jobs are created and inclusive growth is achieved.