Samriddhi Foundation holds dialogue on country’s economic state
KATHMANDU: Samriddhi Foundation today hosted a public-private dialogue with the title 'State of the Economy and Navigating Prudently' in Kathmandu. The event brought together representatives of the private sector, regulatory agencies and experts in a discourse on how they view the current turn of events, where Nepal needs to pay attention at the moment to avoid dramatic decline, and what could be prudent measures to build a resilient economy and secure sustainable growth.
The event was moderated by Saurabh Jyoti, Director, Jyoti Group of Companies; and featured Shreejana Rana, President, Hotel Association Nepal (HAN), Anjan Shrestha (Vice President (Commodity), Federation of Nepalese Chambers of Commerce and Industry (FNCCI); Shankar Prasad Adhikari, former Secretary, Ministry of Finance; and Gunakar Bhatta, Executive Director, BRI Regulation, Nepal Rastra Bank (NRB). The event was conducted on the background that the Nepali economy has been venturing into precarious territories. Months after a number of stringent measures applied by the regulatory authorities to curtail the unchecked expansion of consumption and balance the leniency exhibited during Covid 19 times, many are left questioning the efficacy of the interventions. While our reserves to support imports have indeed bloated, we have not been able to make remarkable progress in reviving the industries that were on the receiving end of covid-induced restrictions. Today, the private sector is unhappy due to the lack of measures to be taken to address problems faced by the industrial sector. Inflation is at an all-time high, industries are operating at only 50% of their capacity, government fiscal balance is dwindling, and borrowing rates have prevented investments; all signs point to a dire need for short-term and long-term measures to be taken. The economic outlook of Nepal demands a concentrated and precise effort from both the fiscal and monetary front. The situation is worrying but not without resolution. As the World Bank report states that Nepal’s risk outlook is balanced, subject to the implementation of reforms.
Speaking at the event, HAN President Rana shared, "During the Covid 19 pandemic, the tourism sector witnessed 94% of companies temporarily shut down, 17% permanently closed, 87% in debt, 65% unemployed, 92% psychologically disturbed, and 80% had zero revenue which highlights that tourism sector was one of the hardest hit sectors." She called for government interventions to help the tourism sector, especially women-run enterprises within the sector. She thanked the government for being extremely supportive by bringing different stimulus packages in 2020 and 2021. However, she also expressed her view that government support has been declining in 2022.
On the occasion, NRB Executive Director Bhatta shared that hopeful times look yonder, and prudent interventions by the central bank have played a positive role in bringing the economy close to normalcy. He opined that the economy could start to bounce back beginning a couple of months from now, given no other external shocks strike.
Likewise, FNCCI Vice President (Commodity) Shrestha shared how the economic liberalisation of the 1990s gave a much-needed push to our economy, but then we lost the momentum. Thirty years on, there should have been second or third rounds of reforms already, he opined. He also pointed out that the central bank’s policies such as promoting 12% interest on deposits for such interventions could discourage investments in the productive sector.
Similarly, former Secretary Adhikari shared that political vested interests have held the country, especially the expenditure performance of the government hostage for decades now, and the same is beginning to permeate into sub-national levels as well. He shared why political stability is crucial for promoting the economy and called for reforms that address the contemporary political economy instead of being guided by technocratic solutions.
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