"There are promising signs of economic recovery"

Aarthiknews

Dec. 13, 2024, 10:10 a.m.

File Photo of FinMin Poudel

Bishnu Prasad Paudel, Vice Chairman of CPN (UML), is currently Nepal’s Deputy Prime Minister and Finance Minister. He has taken charge at a challenging time, with Nepal facing economic impacts from the global COVID-19 pandemic, the Russia-Ukraine conflict, and other stressors. In this context, Minister Paudel discusses his tenure and plans to address the country's economic challenges. Below are excerpts from an interview conducted by RSS:

Q: Four months into your tenure as Finance Minister, what initiatives have you undertaken to address economic challenges and make the economy vibrant?

A: We began by gathering comprehensive data on the nation’s economic situation, identifying key problems, and addressing them systematically. As a result, signs of improvement are emerging. Confidence in the private sector is rising, and the investment climate is improving.

We implemented a 100-day action plan shortly after assuming office, with over 90% now executed. Additionally, we formed the High-Level Economic Sector Reform Recommendation Commission, including economists, experts, and private sector representatives, to drive economic reforms.

The Insurance Regulation, the Customs Tariff Regulation, the Internal Revenue Mobilization Strategy, and the Policy on Loans and Investments in Public Corporations have been passed

Key achievements include introducing and enforcing policies in insurance, customs, taxation, and revenue mobilization. Notable regulations passed include the Insurance Regulation, the Customs Tariff Regulation, the Internal Revenue Mobilization Strategy, and the Policy on Loans and Investments in Public Corporations.

Operational improvements have also been made. For example, a luggage and vehicle scanner machine has been installed at the Tatopani Customs, and a system has been established to send customs invoice updates to importers and exporters via SMS or email. Initiatives like dematerializing Citizens Saving Bonds and Foreign Employment Saving Bonds are also underway.

Q: While progress is evident, challenges such as unpaid dues, revenue collection issues, and capital expenditure inefficiencies persist. How are these being addressed?

A: When we took office, outstanding dues from the previous fiscal year posed significant challenges. The Finance Ministry has facilitated gradual payment clearance and addressed issues related to project classifications and multi-year resource allocations by establishing clear criteria.

Positive changes are evident in key areas:

Foreign currency reserves and balance of payments have significantly improved.
Remittance inflows and banking liquidity have increased.
Interest rates have stabilized, while the capital market is recovering.
Revenue growth has surged from 3.2% in the first four months of the last fiscal year to 17% in the same period this fiscal year.

Efforts to curb revenue leakage, improve foreign aid mobilization, and control inflation have also yielded results

Efforts to curb revenue leakage, improve foreign aid mobilization, and control inflation have also yielded results. Additionally, capital expenditure has risen by NPR 4 billion compared to last year. Initiatives like the NRNA Development Fund aim to channel investments from non-resident Nepalis into national development.

We are also working on reviving defunct government-owned industries and expanding operational ones. Collaboration with the private sector is a priority to boost industrial production and job creation.

Q: The World Bank estimates Nepal’s economic growth rate will rise from 3.9% to 5.1% this year. What are your thoughts?

A: This growth projection aligns with our efforts. We have prepared the groundwork for Nepal's graduation from a least-developed country to a developing country by 2026. Recent accomplishments, such as achieving a BB-minus sovereign credit rating from Fitch Ratings, demonstrate Nepal’s potential as a favourable investment destination.

Q: The private sector remains sceptical despite your claims. What’s your response?

A: We acknowledge that not all issues have yet been resolved. When we took office, the economy was burdened with resource mismanagement, unrealistic growth targets, and stalled industrial production. Exports and imports had plummeted, and job losses were rampant. However, the situation has improved, and we aim to sustain this progress.

We are focused on enhancing liquidity, reducing interest rates, and promoting productivity to create jobs

We are focused on enhancing liquidity, reducing interest rates, and promoting productivity to create jobs. Genuine concerns of the private sector are being addressed, and we aim to integrate more citizens into employment and self-employment opportunities to boost income levels.

Q: Regarding the political climate, can the coalition between Nepali Congress (NC) and CPN (UML) sustain its full term despite reported tensions?

A: This coalition was formed to ensure political stability and foster development under the framework of the Constitution. Its primary objective is to achieve development, prosperity, and social justice. Despite efforts to undermine it, the alliance has proven resilient and will continue until the 2084 BS elections.

A mechanism has been established, including the Prime Minister, NC President, and top leaders from both parties, to ensure smooth coordination. This mechanism helps prevent misunderstandings and strengthens the partnership.

Q: Prime Minister KP Sharma Oli’s recent visit to China was met with mixed reactions. How do you view its outcomes?

A: The visit was historic and highly successful, elevating Nepal-China relations. It focused on implementing past agreements and forging new ones, particularly in infrastructure development. These agreements hold long-term significance for Nepal’s economic growth.

Q: There are concerns about internal rifts within CPN (UML). How do you address these?

A: The CPN (UML) is unified in its commitment to the principles of people’s multi-party democracy. Minor misunderstandings may arise, but they will be addressed to maintain party unity. Our leader, KP Sharma Oli, has demonstrated capable leadership that is widely respected within and outside the party.