Double digit inflation, lower capital expenditure stare at new finance minister
Double digit inflation and lower capital expenditure will stare at the face of to be new finance minister.
The new government – under Nepali Congress president Sushil Koirala – that is going to be sworn in tomorrow will find it difficult to contain the inflation that stands at 10.3 per cent in the fifth month – of the current fiscal year – against the government's target of 7.5 per cent. Likewise, the former bureaucrat-government has also failed to expedite the capital expenditure that could have created employment in the rural areas and capital formation to contribute to the economic growth.
However, according to the latest data, around Rs 14 billion capital budget has only been spent, which is less than 15 per cent.
But the economists opined that there is also stark need of redefining priority, bring structural change and look at the policies why they are not working.
"There is an urgent need of serious relook in the policy on why are they not working," said senior economist Prof Dr Bishwhambher Pyakuryal.
"None of the indicators look encouraging," he said, urging for an urgency in structural change in the economy. "Linking agriculture with market, boosting tourism competitiveness index, expanding the NTIS products and services, managing over flow of liquidity in the market and foreign aid are key."
The low consumption capacity of the private sector has swollen the banks and financial institutes vault that is not going to help expand economy, he added.
Likewise, private sector thinks that the increased public investment in infrastructure will help propel economy and create employment for youth, who are forced to go abroad searching for jobs. "The government must regain confidence of the youth," said Federation of Nepalese Chambers of Commerce and Industry (FNCCI) president Suraj Vaidya.
If only the government walks the talk and implement election manifesto, the private sector will gain confidence, he said, adding that the solving energy crisis – that the Nepali Congress had claimed to solve in three years – and expediting the infrastructure projects could be good starter.
However, the real test of Koirala would be what types of ministers – for the key ministries like finance, industry, labour, tourism, and energy he chooses for his cabinet, he added.
In its election manifesto, the Nepali Congress had set an ambitious target of eight to 10 per cent economic growth within four years and pledges like ending load-shedding within three years and taking industrial growth rate to 12 per cent.