Favourable Investment environment, positive impact on the economy


Kathmandu, May 27 . Environment for investment is gradually becoming favourable as the country is headed towards political stability following the three tiers’ election as per the new constitution.

Improving in the supply system, availability of energy, expansion of the trade sector, and acceleration of construction and reconstruction works have had a positive impact on the economy, with improvement in the economic growth.

The Economy Survey tabled by Finance Minister Dr Yubaraj Khatiwada at the federal parliament today reflects the progress in the economic growth.

The survey also points out the fact that more than 6 million people are still below the absolute poverty line while the multi-dimensional poverty still remains high. The per capita income for the current fiscal year is estimated to be 1,004 US dollars.

The country faces a challenge of upgrading to a developing country in the next four years while additional ways to economic prosperity needs to be explored to transform Nepal into a middle-income nation by 2030.

Though the contribution of the service sector is increasing in the gross domestic product or GDP of the country the decrease in agro productivity is a matter of concern while the contribution of the productive sector is also not encouraging.

The difference of national savings and investment is expected to be 7.8 per cent of the GDP while increasing government expenditure is leading to a rise in budget deficit, which is a matter of serious concern.

In the eight months of the current fiscal year, government expenses increased by 45.9 per cent while capital expenditure rose by 38.9 per cent. Likewise, revenue collection has increased by 21.7 per cent.

Similarly, the aid mobilization in compared to foreign aid commitment is very low, with only Rs. 55.03 billion of the 150 billion committed received in the past eight months. The public credit that the country owes has reached 28 per cent of the GDP in the past eight months while Rs. 104 billion internal debt was mobilized during the same period.

The public corporations continue to remain as a white elephant for the country with 11 of the 37 corporations running in loss.

Inflation is on the high rise, while there is pressure on investment-friendly capital of bank and financial institutions due to higher loan expansion against deposit increment. The total commodity trade has increased by 23 percent to the total Rs 713.9 billion in the past eight months of the current fiscal year, and the balance of payment remaining Rs 24.7 billion is not positive.

Trade loss is increasing day by day with the increment of import in comparison to export.
The gross domestic product is estimated to get to 37 per cent until the end of the current fiscal year with the swelling of trade loss by 21.2 percent. Foreign investment commitment has increased by two folds to reach Rs 38 billion.

Electricity generation has gone up 7.4 percent in the past eight months to sit at 1045 megawatts.

Construction of Gautam Buddha International Airport is gaining pace, while Pokhara Regional International Airport started in the current FY.

Feasibility study of national pride projects like East-West Railway, Kathmandu-Pokhara-Lumbini Railway, and Rasuwagadhi-Kathmandu under Rasuwagadhi-Kathmandu-Pokhara-Lumbini Railway have been completed.

In all, the indicators accelerating the economy are positive, as per the economic survey.