Economy is on path of recovery: DPM Paudel

Vice Chairman of CPN (UML) and Deputy Prime Minister Bishnu Prasad Paudel is handling the responsibility of the Finance Ministry at a time when Nepal is struggling to recover from the impact of COVID-19 pandemic and the Russia-Ukraine war. The following are the excerpts of an interview RSS had with Finance Minister Paudel centering on the performance of the Finance Ministry in the four months since he took charge of the office.

Four months have passed since you took the reins of the Finance Ministry. What initiatives did you take to address the problems of the economy and to make it vibrant during this period?

We are focused getting exact information on the overall economic situation of the country, on identifying the problems and addressing them. As a result, signs of improvement have been seen in the economy. The confidence of the private sector has increased and an investment climate is being created.

    We prepared a 100-day action plan soon after taking charge of the office and we have implemented more than 90 per cent of it. We have formed a High-level Economic Sector Reform Advisory Commission comprising of seasoned economists, experts and the representatives of the umbrella organisations of the private sector for the improvement of the country's economy. In the meantime, we have also carried out some important work in the policy area as well.

Many laws and work procedures related to different sectors as insurance, customs, taxation, and revenue mobilization, among others, have been passed and implemented. 

These include the Insurance Regulation, the Regulation Related to Issuance and Transaction of Shares of Small and Medium Corporations, the Customs Tariff Regulation, the Internal Revenue Mobilisation Strategy, the Policy on Mobilisation of Loans and Investment in Public Corporations and the Work Procedure on Issuance and Management of Internal Loan.     

The luggage and vehicle scanner machine has been brought into use at the Tatopani Customs. The system of sending information about the main stages of the customs invoice to the import and export traders through SMS or e-mail has been operated. 

Works on dematerialsation of the Citizens Saving Bonds and the Foreign Employment Saving Bonds have been initiated.  

You said that many works have been carried out, but payment to the construction entrepreneurs and resolution of problems regarding revenue collection, capital expenditure and others remain, isn't so?

There was this worrying situation of dues remaining to be recovered from the previous year as well when we took responsibility. The Finance Ministry has facilitated in fulfilling the obligation of remaining payments in the meantime and the payments are being made gradually.     

Efforts are being made to remove the existing confusion regarding the classification of projects and ensure the multi-year resources, and to move ahead on the basis of clear criteria. 

There has been a significant improvement in foreign currency reserve, balance of payment, remittance inflow, the liquidity situation of banks and interest rate, among other topics. The capital market has become vibrant and in an improved status. The Chairperson of the Securities Board has been appointed after a long hiatus.

The revenue growth rate which was 3.2 in the first four months of the last fiscal year has increased by 17 per cent in the corresponding period of this fiscal year. Various measures as mobilization of rapid patrol team have been adopted for checking revenue leakage. The situation of foreign aid (grants and loans) mobilization is comparatively becoming positive. 

Similarly, inflation and market price are under control. The capital expenditure has increased by four billion this year as compared to the first four months of the last year. The NRNA Development Fund, which has been established to promote the non-resident Nepalis' investment in the country, is in the implementation phase. 

Preparation works have been moved forward for re-operation of the closed and sick industries and businesses under the government's ownership by determining their condition. Similarly, preparations have been made to expand the capacity of those industries already in operation. Cooperation has been extended and facilitation done in order to boost the morale of every sector of production, including the private sector. 

According to the World Bank (WB), the economic growth rate which was constricted to 3.9 per cent last year is estimated to reach 5.1 per cent this year. 

The basis is being prepared for Nepal's graduation from the status of a least-developed country to a developing one by 2026. Some weeks back, we completed the work related to 'sovereign country rating' by the Fitch Ratings, and achieved a score of BB minus in the ratings. 

This has proved that Nepal is in the second position after India in South Asia. The message that Nepal is a favourable destination for investment has been spread globally by this. 

It seems that you are satisfied with your deliveries. But the mass, especially the private sector, express worries over the situation. What is your say?     

We are not saying that problems are entirely addressed. We are aware of our economic issues. Our responsibility is to take the lead to explore solutions to the issues and make the economy vibrant. Our intention is to say that there were piles of problems when we assumed the responsibility. 

There were numerous questions in regard to resource management, appropriation skills, and budgetary discipline. Numerous projects were added at once and the unrealistic resource management was estimated with the goal of 31 per cent growth.  

Overall, industrial production had decreased up to 60 per cent, not only exports but also imports had plummeted significantly with job cuts heavily. The revenue mobilization and the status of capital expenditures were worrying with the situation forcing the government to sideline from its responsibility for payment.

But now the signs of improvements are visible and they should be further strengthened. Liquidity in banks and the availability of loans at relatively lower interest rates are needed to be utilized for productivity and production growth and the creation of jobs. 

The genuine demands of the private sector should be addressed. Mass citizenship should be encouraged to get connected to employment or self-employment to increase income. And, we are working towards that end.     

We are more focused on achieving economic vibrancy, on revenue mobilization, and on encouraging capital expenditures.

Now let's proceed to a different matter. There are rumours that the coalition government will not complete its full term due to a rift between the Nepali Congress and the CPN (UML). Are you sure to take this coalition to its "destination"?

Social justice is the mass aspiration after the promulgation of the Constitution. But, political instability was preventing us from advancing towards that end. The Nepali Congress and the CPN (UML) with a long history, contributions, and presence had no option but to form a coalition for achieving political stability and finding a path to development within the House of Representatives. 

This coalition is not conditioned by any interests except the protection of the constitution, achievement of development supported by political stability, and the elimination of all sorts of extremism and instability. The primary object of this coalition is to achieve development and prosperity along with social justice.

However, some forces were actively working to make the formation of this alliance impossible. It was formed by overcoming all such efforts. This alliance will go until the 2084 BS elections and we are fully confident about this.

Does it mean that the NC-UML alliance has no problems at all?     

You may be surprised, but it is a fact that to date, we face no such issues. We have already formed a common mechanism comprising the Prime Minister, NC President, and the top leaders of both political parties for the government's operation, and such a mechanism is assisted by a four-member task force. 

We have developed a system of floating any matter before the task force and a mechanism for discussions before reaching a decision and this avoids the emergency of political misunderstanding on the topic. The discussions in the task force, mechanism, and the Council of Ministers are going on affectionately and cordially and this system will be further strengthened. This coalition will be continued till the next general election. 

Prime Minister KP Sharma recently paid an official visit to northern neighbour, the People's Republic of China. How do you assess this visit?     

The Prime Minister's visit to China was highly successful and historic. This has taken the Nepal-China relations to a new height. During the visit, the implementation of past agreements was advanced and some new historic agreements were observed. Such agreements are of special and long-term significance in terms of Nepal's economic development, especially infrastructure development.