On/Off the Record

By P.R. Pradhan Almost all economists in the country have expressed their worry about the present economic scenario as all economic indicators have gone negative and no serious efforts have been made by the government to improve the economy. The inflation rate is around eight percent. Foreign currency reserve is continuously declining in an alarming way. The balance of payments has gone deficit by 288 billion 500 million rupees in the past 10 months. Presently, the country holds a foreign currency reserve worth 9 billion 280 million US dollars only. There is a trend of a higher rate of foreign currency exit and a lower rate of its entrance into the country. If this trend will continue further, Nepal may face foreign currency scarcity even to import necessary daily consumable goods in the near future. The Nepal Rastra Bank has made public the report that every month the foreign currency reserve is declining at an alarming level. The current account of the government has gone into deficit by 547 billion 360 million rupees. Compared to the 10 months of the previous fiscal year, in the past ten months of the present fiscal year, the foreign currency reserve has declined by 2 billion 410 million US dollars. The trade deficit the country faced in the past ten months amounts to 1.431 trillion rupees. Higher imports, lower exports, the decline in remittance and the decline in tourist arrival have contributed to a negative balance of payments. Despite the government restriction on imports of luxury goods, the trade deficit gap has not been narrowed. The government is talking about becoming self-reliant on agricultural products but farmers are facing an acute shortage of fertilizer during the rice farming season. It has happened due to the negligence of the government and this is not the problem faced by the farmers this year only as every year the farmers are suffering from the fertilizer problem. The Finance Minister is practising policy corruption by changing the customs tariff on imports of goods. He is not serious about encouraging local industries but looking after personal interests by manipulating the custom tariff through a setting. The budget for the new fiscal year presented by the government is not for implementation but for deceiving the nation and the people. Local economists have expressed surprise over the government's intention which has presented a populist, distribution-oriented budget with the plan of influencing voters in the upcoming elections. The budget is highly dominated by the general sector expenditure and the fund allotted for the capital expenditure is based on the hypothesis of foreign loans but which agencies have ensured loan, the government is unaware. The government has talked about reducing 10 percent of the civil servicemen, which makes clear that it is facing an acute shortage of funds to run the government. The reality is that the government is needed to increase the number of the Armed Police Force to monitor Nepal’s international border and successfully conduct jobs assigned to the APF. There is a need to construct more Border Outposts to monitor and save our international border. There is a need to increase the number of the Nepal Army and equip them with sophisticated arms. Unfortunately, the government has no funds and programmes to strengthen the APF and NA. Nepal’s external debt reached 8.8 billion US dollars in December 2021, compared with 8.5 billion US dollars in December 2020. The trend of inclining foreign debt is on the rise. The finance minister is saying that the country needed more foreign loans for upgrading the nation from a less developed to a developing country. In fact, the government needs foreign loans to function this federalism, which has already become a white elephant for the nation. If removed the seven federal structures and reduced local governments according to the recommendation of the state restructuring commission constituted during the drafting of the present constitution, the government can save a big amount of non-productive funds spent as salary for the people’s representatives in the 753 local and seven provincial governments. Already, the provincial governments have failed to justify their presence and importance. In the meantime, those leaders who were directly involved in the drafting of the present constitution have started to say that the elections have become expensive and thus a new system is needed to function the nation. Clear to understand, the very leaders who had written the constitution have felt that the country cannot function under the present political system. All the sections have been dissatisfied with the present political structure, however, those in the government are ashamed to review the pros and cons of the present political system as they are responsible for writing the present political system. Even if conducted a referendum, the agendas of federalism, secularism and republicanism are going to be defeated. If the present-day political actors deny accepting the reality, the country is going to face a serious economic crisis. The only thing is whether to wait until the nation is bankrupted or the political actors become ready to review the situation before the nation would face an economic crisis and a civil war!