– निश्चल ढुङ्गेल

यो लेख बैशाख १४, २०८० को नयाँ पत्रिका (१६औँ वार्षिकोत्सव विशेषांक) मा प्रकाशित भएको थियो। मूल लेख यहाँ पढ्नुहोस्

विश्व अर्थतन्त्र वस्तु, सेवा, पुँजी, मानिस, डाटा र विचारको विश्वव्यापी प्रवाहद्वारा अन्तर्सम्बन्धित छ । वस्तु र सेवाहरूको प्रवाहमा ग्लोबल भ्यालु चेन (विश्वव्यापी मूल्य शृंखला) निर्माण गरिएका छन् । ग्लोबल भ्यालु चेनले अन्तर्राष्ट्रिय उत्पादन साझेदारीलाई जनाउँछ, जहाँ उत्पादनलाई विभिन्न देशमा गरिएका गतिविधि र कार्यमा विभाजन गरिन्छ । हालैका विश्वव्यापी घटना (जस्तै : ऊर्जा संकट, चिप्स अभाव) ले ग्लोबल भ्यालु चेनमा तनाव सिर्जना गरेका थिए । विश्वव्यापीकरण विस्तारको अवधिमा, सस्ता वस्तु र कम श्रम लागतले मुद्रास्फीतिलाई नियन्त्रणमा राख्न मद्दत गथ्र्याे, तर अब यो प्रवृत्ति उल्टिन थालेको छ । युक्रेन युद्धलाई लिएर राष्ट्रहरूले रुससँग सम्बन्ध तोडेपछि तेल र ग्यासको मूल्य एकाएक बढ्यो । आपूर्ति शृंखला पुनर्निर्माण गर्दा व्यवसायले राजनीतिक तनावलाई तौलिरहेका छन् । नीति निर्माता र बजार दुवै महामारीको अस्थायी साइड इफेक्ट भनेर सोचिएको मुद्रास्फीति अनपेक्षित रूपमा बढेको देखेर छक्क परेका छन् ।

अन्तर्राष्ट्रिय मुद्राकोष (आइएमएफ)को ‘विश्व आर्थिक परिदृश्य’ प्रतिवेदनले विश्वव्यापी आर्थिक वृद्धि सन् २०२२ मा ३.४ प्रतिशत (अनुमानित) रहँदै सन् २०२३ मा २.९ प्रतिशत र २०२४ मा ३.१ प्रतिशतमा झर्ने अनुमान गरेको छ । २०२३ को पूर्वानुमान अक्टोबर २०२२ ‘विश्व आर्थिक परिदृश्य’मा गरिएभन्दा ०.२ प्रतिशत बिन्दु बढी तर ऐतिहासिक (२०००/१९) औसत ३.८ प्रतिशतभन्दा कम छ ।

तीन दशकमा प्रगति र समृद्धिलाई सशक्त बनाउने लगभग सबै आर्थिक शक्ति अहिले क्षयीकरणमा छन् । फलस्वरूप २०२२–३० बीचको औसत विश्वव्यापी सम्भावित कुल गार्हस्थ्य उत्पादन (जिडिपी) वृद्धि शताब्दीको पहिलो दशकको तुलनामा करिब एकतिहाइले घटेर वार्षिक २.२५ रहने अनुमान गरिएको छ । विश्वव्यापी वित्तीय संकट वा मन्दीको अवस्थामा यी गिरावट तीव्र हुनेछन् ।

विश्व अर्थतन्त्रमा माग र उत्पादनमा सबलतासँगै धेरै देशमा मुद्रास्फीति विस्तारै घट्ने क्रममा देखिन्छ । अमेरिकी र अन्य देशका केन्द्रीय बैंकहरूले कसिलो वित्तीय नीति अनुसरण जारी राखेका छन् । मुद्रास्फीतिसँग लड्न उन्नत, विकासशील र उदीयमान सबै देशका केन्द्रीय बैंकहरूले ब्याजदर बढाइरहेका छन् । सन् २०२३ को सुरुवातमा आर्थिक गतिविधिमा सुधार हुनुको एक प्रमुख कारक ऊर्जा र खाद्य मूल्यमा गिरावट आउनु हो । महामारीपछि वस्तुको माग क्रमशः बढ्नु र विश्वव्यापी आपूर्ति शृंखलाका अवरोध कम भएकाले अधिकांश देशमा वस्तुको मूल्य र मुद्रास्फीति घट्न थालेको छ । तर, श्रम बजारको लागतले मुद्रास्फीतिमा दबाब परेको देखिन्छ । स्फीतिको स्तर अझै युद्धपूर्वको भन्दा उच्च भए पनि यसले व्यवसाय र घरपरिवारको क्रयशक्ति बढाउँदै छ । विश्वव्यापी मुद्रास्फीति सन् २०२२ मा ८.८ प्रतिशतबाट सन् २०२३ मा ६.६ प्रतिशत र २०२४ मा ४.३ प्रतिशत हाराहारीमा रहने अपेक्षा गरिएको छ । अझै पनि विश्वव्यापी मुद्रास्फीति महामारीपूर्व (२०१७–१९) को स्तर ३.५ प्रतिशतभन्दा उच्च नै हो । चीनमा कोभिड–१९ महामारीको पछिल्लो लहरले सन् २०२२ को वृद्धिलाई कम गरे पनि आर्थिक गतिविधि सुरु गरेसँगै रिकभरी अपेक्षा गरिएभन्दा तीव्र बनेको छ । यसले विश्वव्यापी आर्थिक गतिविधिमा सकारात्मक प्रभाव पार्दै आपूर्ति शृंखलामाथिको दबाब कम गर्ने र अन्तर्राष्ट्रिय पर्यटनलाई बढावा दिनेछ ।

सकारात्मक पक्ष के भने धेरै अर्थतन्त्रमा कृत्रिम मागबाट बलियो वृद्धि वा मुद्रास्फीतिमा तीव्र गिरावट सम्भव छ । नकारात्मक पक्ष चीनमा गम्भीर स्वास्थ्य परिणामहरूले पुनर्बहालीलाई रोक्न सक्छ । युक्रेनमा रुसको युद्ध लम्बिँदा ऋण संकट अझ खराब बन्न सक्छ ।

कोभिड– १९ महामारीको प्रभाव विश्वव्यापी रूपमा कायमै रहेको समयमा युक्रेन युद्धले खाद्य र ऊर्जा बजार अवरुद्ध ग¥यो जसकारण विकासोन्मुख देशहरूमा खाद्य असुरक्षा र कुपोषणमा वृद्धि भयो । यसैबीच, जलवायु संकटले धेरै देशमा असर पर्न थालेको छ । डढेलो, बाढी, आँधी र तुफानहरूले ठूलो मानवीय र आर्थिक क्षति गरिरहेका छन् ।

आइएमएफले विकसित अर्थतन्त्रमा ब्याजदर वृद्धिले उदीयमान बजार र विकासोन्मुख देशहरूको वित्तीय अवस्थालाई असर पार्न थालेको उल्लेख गरेको छ । विशेषगरी अमेरिकाको बढ्दो ब्याजदरबाट मध्यम र न्यून आय भएका देशले थुप्रै दुष्प्रभाव साक्षात्कार गर्नुपर्नेछ । उनीहरूले पुँजी पलायन, ऋण संकट र मुद्रा अवमूल्यनजस्ता समस्या भोग्नुपर्नेछ । ब्याजदरमा तीव्र वृद्धिले विकसित देशहरू विशेषगरी अमेरिकामा ठूलो पुँजी प्रवाह हुन थालेको छ भने विकासोन्मुख देशहरूबाट पुँजी बाहिरिने क्रम बढेको छ । आर्थिक विस्तारका क्रममा देशको ऋण बढ्ने गर्छ । विशेषगरी विकासोन्मुख देशहरू तब ‘ऋण पासो’मा फस्न पुग्छन् जब उत्पादकत्व र ऋण सन्तुलनमा रहँदैन । यस्तो परिस्थितिमा विकसित अर्थतन्त्रमा ब्याजदर वृद्धि विकासोन्मुख अर्थतन्त्रका लागि घातकसिद्ध हुन सक्छ । उदाहरणका लागि सन् १९८० को प्रारम्भमा अमेरिकी केन्द्रीय बैंक (फेड)को ब्याजदर वृद्धिले संयुक्त राज्यमा दोहोरो अंकको मुद्रास्फीतिलाई घटायो, तर धेरै देशमा त्यसको नराम्रो असर प¥यो । विशेषगरी ल्याटिन अमेरिकी देशहरूमा ऋण डिफल्ट भयो । बेरोजगारी र गरिबी बढ्यो । जिडिपीमा ठूलो गिरावट आयो । यसैले त्यो अवधिलाई ‘हराएको दशक (लस्ट डिकेट)’ भन्ने गरिन्छ । ल्याटिन अमेरिकी देशहरू सुस्त र असमान पुनरुत्थानबाट गुज्रिएका थिए । अफ्रिकाका ऋणग्रस्त देशहरूले पनि ल्याटिन अमेरिकै नियति भोग्नुप¥यो । आइएमएफका अनुसार हाल लगभग कम आय भएका १५ प्रतिशत देशहरू ऋण संकटमा छन् र अन्य ४५ प्रतिशतले उच्च ऋण जोखिमको सामना गरिरहेका छन् ।

विशेषगरी अमेरिका र युरोपमा बैंकिङ प्रणालीमा थप उथलपुथलको सम्भावनाले आर्थिक गतिविधिमा असर पर्ने जोखिम छ । बैंक अफ अमेरिकाका अर्थशास्त्री डेभिड हौनरका अनुसार वित्तीय अस्थिरताले उदीयमान बजारमा पर्ने मुख्य असर दुई प्रकारका छन् । सकारात्मक असर, वित्तीय अस्थिरताले मुद्रास्फीति र ब्याजदर घटाउन मद्दत गर्न सक्छ । नकारात्मक असरमा उदीयमान देशहरूले बजारमा पहुँच प्राप्त गर्न कठिन हुन्छ ।

कोभिड– १९ महामारी, रुस–युक्रेन द्वन्द्व र अमेरिका र चीनबीचको बढ्दो तनावका कारण कतिपयले संसार डिग्लोबलाइज भइरहेको अनुमान गर्न थालेका छन् । अमेरिकाका दुई ठूला भूराजनीतिक प्रतिद्वन्द्वी चीन र रुस डलरको प्रभुत्वलाई सन्तुलनमा राख्न चाहन्छन् । रुसले रेन्मिन्बीलाई आफ्नो विदेशी विनिमय सञ्चिति, वैदेशिक व्यापार र केही बैंकिङ सेवामा मुख्य मुद्राका रूपमा अपनाएको छ । पश्चिमी प्रतिबन्धको सामना गर्न ऊ चीनतर्फ अग्रसर भएको छ । भर्खरै भारतले रुसलगायत थुप्रै देशसँगको व्यापारमा भारुको भुक्तानी संयन्त्र ल्याउने घोषणा गरेको छ । सन् २०२२ मा विश्वव्यापी विदेशी मुद्रा सञ्चितिमा डलरको हिस्सा ५५ प्रतिशत रहेको थियो । यसले वासिङटनलाई अतुलनीय आर्थिक र राजनीतिक शक्ति प्रदान गरेको छ । विश्व डिग्लोबलाइज भइरहेको संकेत देखिए पनि अमेरिकी डलरले लामो समयदेखि विश्वबजारमा महŒवपूर्ण भूमिका खेलिरहेको छ र यो कायम नै रहनेछ ।

घरेलु आर्थिक परिदृश्य : चुनौती र अवसर
नेपाल सरकारले आगामी आर्थिक वर्ष ०८०/८१ मा ६ प्रतिशतको वृद्धि प्रक्षेपण गरेको छ । गत आर्थिक वर्षमा नेपालको वृद्धिदर ५.८४ प्रतिशत थियो । विश्व बैंक र एसियाली विकास बैंक दुवैले सन २०२३ का लागि नेपालको आर्थिक वृद्धिदर ४.१ प्रतिशतमा संशोधन गरेका छन् । नेपालको प्रमुख आर्थिक परिसूचकमा केही सुधार आएको छ । यसले वित्तीय घाटालाई बिस्तारै घटाउँदै लगेको छ । जिडिपीमा कृषिको योगदान एकतिहाइबाट घटेर २२–२३ प्रतिशतमा पुगेको छ भने सेवा क्षेत्रको अर्थतन्त्रमा ६१ प्रतिशत र उद्योगको योगदान १३ प्रतिशत छ । औद्योगिक क्षेत्र सुस्त हुनुको मुख्य कारण निर्माण क्षेत्रको कमजोर वृद्धि नै हो । चालू आर्थिक वर्षको पहिलो त्रैमासमा मुलुकको कुल गार्हस्थ्य उत्पादनमा झन्डै सात प्रतिशत योगदान दिने निर्माण क्षेत्र २४ प्रतिशतले ऋणात्मक भएको केन्द्रीय तथ्यांक विभागले जनाएको छ । निर्माण क्षेत्रले विभिन्न समस्या भोगिरहेको छ । निर्माण सामग्रीको मूल्यमा उल्लेखनीय वृद्धि भएको छ ।

मुद्रास्फीति पनि उच्च रहने अनुमान गरिएको छ । मौद्रिक नीतिले मुद्रास्फीति सात प्रतिशतभित्रै सीमित लक्ष्य राखे पनि त्यो लक्ष्यभन्दा माथि नै छ । उपभोक्ता मूल्यस्फीति गत वर्षको ६.२४ प्रतिशतको तुलनामा सन २०२३ को फेब्रुअरीमा ७.८८ प्रतिशत रहेको छ । रुस–युक्रेन युद्धको असर नेपालजस्तो आयातमुखी अर्थतन्त्रमा बढी परेको छ । त्यसैले राष्ट्र बैंकले माग घटाउन ब्याजदर बढायो । बढ्दो ब्याज र घट्दो मागको गुणात्मक असरले बैंकको असुलीमै मार पर्न गयो । नीतिगत निर्णयले अन्योल बढ्नुका साथै व्यापारमा पनि कमी आएको देखिन्छ ।

आयात–निर्यातका साथै समग्र व्यापार घाटा कम भएको छ । चालू आर्थिक वर्षको पहिलो सात महिनामा व्यापार घाटा १८.७ प्रतिशतले घटेको देखिन्छ । आयात प्रतिबन्ध र सुस्त वृद्धिले पहिलो अर्धवार्षिकमा राजस्वमा नकारात्मक योगदान दिएको छ । २०२१/२२ मा लगाइएको आयात प्रतिबन्ध (जुन २०२२/२३ मा हटाइयो) ले चालू खाता घाटा कम गर्न र विदेशी विनिमय सञ्चितिलाई स्थिर राख्न त मद्दत ग¥यो । तर, यस नीतिको अनपेक्षित परिणामस्वरूप वित्तीय राजस्वमा ठूलो गिरावट आयो । २०२२/२३ को पहिलो ६ महिनामा आयात घट्दा वृद्धि सुस्तियो । यसबीच, रेमिट्यान्स आम्दानी २७.५ प्रतिशतले बढेको छ, जसले बाह्य क्षेत्रलाई स्थिर बनाउन मद्दत गरेको छ । पछिल्लो समय नेपालले मासिक एक खर्बभन्दा बढी रेमिट्यान्स भिœयाइरहेको छ । वैदेशिक रोजगारीमा जाने कामदारको संख्या बढेसँगै रेमिट्यान्स बढ्ने अपेक्षा गरिएको छ ।

पर्यटक आगमन पनि कोभिडपूर्वको स्तरमा पुग्न थालेको छ । यस वर्ष निजी क्षेत्रको आम्दानी घटेको र कर्पाेरेट कर पनि घट्दै गएकाले राजस्व बढाउन चुनौतीपूर्ण छ । यस वर्ष आयातबाट राजस्व बढ्ने कुनै संकेत छैन । नेपालको वित्तीय सुशासन निजी र सार्वजनिक दुवै क्षेत्रमा कमजोर भएको छ । देशको व्यापार घाटा बढ्दै गएको अवस्थामा बैंकिङ क्षेत्रको लगानी अनुत्पादक क्षेत्रमा गरिए देशले सोचेजस्तो आर्थिक प्रगति गर्न सक्दैन ।

आर्थिक जटिलता र महामारीका कारण हालै नेपालको सरकारी साधारण खर्च राजस्व आर्जन क्षमताभन्दा छिटो बढेको छ । नेपालले चालू आर्थिक वर्षमा निकै ठूलो राजस्व अभावको सामना गरिरहेको छ । अर्थ मन्त्रालय र महालेखानियन्त्रक कार्यालयका अनुसार चालू आर्थिक वर्षको पहिलो सात महिना (२०२२ को मध्यदेखि २०२३ मार्चसम्म)मा राजस्व परिचालन लक्ष्यको ४० प्रतिशत मात्रै रहेको छ । आव २०१६/१७ मा सार्वजनिक ऋण जिडिपीको २५ प्रतिशत थियो भने २०१९/२० मा उल्लेखनीय सार्वजनिक ऋण वृद्धिका लागि कोभिड महामारीको प्रभाव र त्योसँग जुझ्न अपनाइएका प्रक्रिया जिम्मेवार छन् । ०२०/२१ मा नेपालको ऋण जिडिपी अनुपात ३९ प्रतिशत पुग्यो ।

राजस्व आम्दानी घट्दा नेपाल सरकारलाई ऋण तिर्न र नयाँ ऋण लिन कठिन भएको छ । वैदेशिक सहायता अनुदान घटिरहेको अवस्था छ । आइएमएफले नेपालका लागि विस्तारित ऋण सुविधाअन्तर्गत ३९ करोड ५९ लाख डलर स्वीकृत गरेको थियो । हालैमा आइएमएफको बोर्डले विस्तारित ऋण सुविधालाई औपचारिक रूपमा अनुमोदन गरेको छ । कोभिड– १९ महामारीबाट नेपालको दृढ पुनरुत्थान र दिगो विकासलाई प्रवद्र्धन गर्न विश्व बैंकले १५ करोड डलरको विकास नीति ऋण स्वीकृत गरेको थियो । ब्याजदरमा वृद्धि हुँदै गर्दा बढ्दो ऋणले राष्ट्रको सरकारी बजेटलाई असर गर्छ ।

विदेशी विनिमय सञ्चितिको आधारमा देशको ऋणको अवस्थालाई विश्लेषण गर्नु पनि महŒवपूर्ण हुन्छ । अमेरिकी डलरको तुलनामा नेपाली रुपैयाँ कमजोर हुँदा स्थानीय मुद्रामा नेपालको ऋण दायित्व बढेको छ । अपर्याप्त आन्तरिक स्रोत परिचालन, अत्यधिक वित्तीय घाटा, निर्यात–आयात असन्तुलन, राजस्व र खर्चको अन्तरका कारण वैदेशिक ऋण थप बढेको हो । तसर्थ केही लेखकले दिगो आर्थिक वृद्धि र लगानीलाई हतोत्साहित गर्नुको सट्टा प्रोत्साहन गर्ने सम्भावना रहेसम्म घाटा वित्तपोषणलाई ध्यानमा राख्नुहुँदैन भनी तर्क गर्छन् । यसबाहेक, ऋण चुक्ता गर्ने क्षमतामा कुनै सुधार आउन सकेको छैन । कुल सार्वजनिक ऋणराशि र ब्याजमा वृद्धि भएको छ । अमेरिकी डलरको तुलनामा नेपाली रुपैयाँको अवमूल्यनले वैदेशिक ऋण महँगो साबित हुनेछ ।

नेपालले विदेशी मुद्रा सञ्चिति घट्न नदिन विलासिताका सामानको आयातमा प्रतिबन्ध लगाउनेजस्ता विभिन्न उपाय पनि अपनायो । विदेशी मुद्रा सञ्चिति बढेपछि प्रतिबन्ध हटाएको छ । अमेरिकी डलरको सट्टा भारत–बंगलादेशको व्यापारमा भारतीय रुपैयाँको प्रयोग परीक्षणको चरणमा छ । केही विषयमा द्विपक्षीय निर्णय गरेपछि मात्रै दुवै देशमा रुपैयाँको कारोबार सुरु होला । भारत नेपालको ठूलो व्यापारिक साझेदार हो र यो नीतिबाट नेपालले पनि ठूलो राहत पाउनेछ । यसले नेपाली मुद्राको अवमूल्यन कम बनाउन मद्दत गर्न सक्छ ।

निराशाजनक पक्ष के भने अर्थ मन्त्रालयले जारी गरेको विवरणअनुसार पछिल्लो सात महिनामा ८५ अर्ब ६० करोडभन्दा बढी बजेट सिद्धान्तविपरीत परिचालन भएको छ । राष्ट्रको सार्वजनिक ऋण बढ्ने क्रममा रहेको अवस्थामा सिद्धान्तविपरीत बजेट परिचालन गर्नु कत्ति जायज हुन्छ ? यसको जवाफ देश विकास गर्छु भनेर चुनिई आएका जिम्मेवार जनप्रतिनिधिले संसद्बाट जनतालाई पारदर्शी र जवाफदेही भएर अवगत गराउनुपर्छ ।

नेपालको प्रत्यक्ष वैदेशिक लगानी (एफडिआई) जिडिपीको ०.५ प्रतिशत छ, जुन दक्षिण एसियामा सबैभन्दा कम हो । एफडिआई थ्रेसहोल्ड एनपिआर दुई करोडमा घटाउँदा एफडिआईको प्रवाहमा थप कमी आउनेछ । पुँजी प्रवाहमा प्रतिबन्धले जिडिपीमा नकारात्मक प्रभाव पार्न सक्छ । सरकारले लामो समयदेखि थाती रहेको एफडिआईको सुधार गर्नुपर्छ । नियामक स्वीकृति प्रक्रियालाई सरल बनाउदाँ विदेशी मुद्रा प्रवाह बढ्नेछ । पुँजी र प्रविधिको आप्रवाहलाई प्रोत्साहित गर्नेछ ।

मौद्रिक नीतिले बैंकिङ र निजी क्षेत्रलाई वर्तमान वातावरणमा ऋण प्रयोग गर्दा बढी सावधानी र जवाफदेहिता अपनाउन निर्देशन दिनुपर्छ । तीन दशकसम्म कर्जा वृद्धि उच्च भए पनि आर्थिक वृद्धिदर ४.४ प्रतिशत मात्रै रह्यो । यसले हाम्रो कर्जा वृद्धि नीतिले आर्थिक वृद्धिमा सकारात्मक प्रभाव पार्न नसकेको देखाउँछ । आगामी दशकमा आर्थिक वृद्धिलाई प्रत्यक्ष रूपमा सहयोग गर्ने क्षेत्रमा ऋण प्रवाह केन्द्रित हुनुपर्छ । कर्जाको वृद्धि पनि निक्षेप वृद्धिसँग मिल्दो हुनुपर्छ । बैंकको चर्काे ब्याजविरुद्ध आन्दोलन चल्न थालेको छ र मिटरब्याजपीडित काठमाडौंमै आएर धर्ना दिने स्थिति राम्रो संकेत होइन ।

आइएमएफले नेपाल राष्ट्र बैंकले दिएको कर्जाको गुणस्तर शंकास्पद भएकाले देशका केही ठूला वाणिज्य बैंकलाई अन्तर्राष्ट्रिय लेखापरीक्षण संस्थाबाट लेखापरीक्षण गराउन आग्रह गरेको छ । कागजमा नेपालका बैंक तथा वित्तीय संस्थाको निष्क्रिय कर्जा (एनपिएल) अनुपात सहज छ । पुस मसान्तसम्ममा नेपाली बैंक तथा वित्तीय संस्थाको औसत निष्क्रिय कर्जा अनुपात २.७३ प्रतिशत मात्र रहेको केन्द्रीय बैंकले जनाएको छ । क, ख र ग वर्गका बैंक तथा वित्तीय संस्थामध्ये वित्त कम्पनीको खराब कर्जा (७.८२ प्रतिशत) अनुपात सबैभन्दा धेरै रहेको छ । वाणिज्य बैंक र विकास बैंकको खराब कर्जा अनुपात क्रमशः २.४९ र २.८२ प्रतिशत रहेको छ । आइएमएफले बैंक तथा वित्तीय संस्थाको वित्तीय स्वास्थ्यको वास्तविक तस्बिर जाँच्न गरेको पहल एकदम ठीक हो ।

नेपाल एउटा यस्तो राष्ट्र हो, जसलाई संरचनात्मक परिवर्तनको नितान्त आवश्यकता छ । समस्या मौलिक भएकाले संरचनात्मक सुधार नै छोटो र दीर्घकालीन जवाफ खोज्ने एक मात्र उपाय हो । भुक्तानी सन्तुलन कायम गरी बाह्य क्षेत्रमाथिको दबाब कम गर्न ऋण विस्तार र क्षेत्रगत वितरणको व्यवस्थापन, अत्यधिक आयात घटाउने र औपचारिक माध्यमबाट रेमिट्यान्स आप्रवाहमा सुधार गर्न आवश्यक छ । नयाँ जनगणनाअनुसार १५ देखि ५९ वर्षसम्मको सक्रिय उमेर समूह बढेको छ जुन कुल जनसंख्याको ६१.९६ प्रतिशत रहेको छ । जनसांख्यिक लाभांश पूर्ण रूपमा प्राप्त गर्न नेपाली युवाको सीपमा लगानी आवश्यक छ । हामीले नेपालको श्रमशक्तिलाई कृषि र गैरकृषि क्षेत्रबीच सन्तुलन कायम गर्दै उत्पादनशील क्षेत्रमा कसरी परिचालन गर्ने ? यो अहिलेको ज्वलन्त प्रश्न हो । विशेषगरी आर्थिक रूपमा सक्रिय जनसंख्यालाई रोजगारीको ग्यारेन्टी सरकारहरूको मूल मन्त्र हुनुपर्छ । रोजगारीको ग्यारेन्टी भनेको अर्थतन्त्रको उत्पादनशील क्षेत्रमा रोजगारी प्रवद्र्धन गर्न सरकारले अपनाउन सक्ने संरचनात्मक स्थिरता दिने वित्तीय नीति हो । नेपाली श्रम बजारले धेरै वर्षदेखि उच्च अनैच्छिक बेरोजगारी सामना गरिरहेको छ, जसलाई कोभिड– १९ महामारीले निस्सन्देह बढाएको छ ।

सरकारले यो वर्ष कर छली रोक्न र आफ्नो राजस्वको आधारलाई फराकिलो बनाउन संघर्ष गर्नुपर्नेछ  । अपेक्षितभन्दा उच्च मुद्रास्फीतिले घरायसी क्रयशक्ति घटाउने र आर्थिक वृद्धि घट्ने अनुमान गरिएको छ । नयाँ अर्थमन्त्रीले वित्तीय र मौद्रिक नीतिलाई ‘सिंक्रोनाइज’ गर्दै उत्पादनशील क्षेत्रमा लगानी बढाउन तरलता अभावलाई कम गर्नुपर्छ । व्यापार र प्रत्यक्ष वैदेशिक लगानीलाई प्रोत्साहन गर्ने वातावरण बनाउनुपर्छ । वित्तीय क्षेत्रको वृद्धि, मानव पुँजी निर्माण र सुशासन अभिवृद्धिमार्फत विकासको सम्भावना बढाउनुपर्छ ।

राष्ट्रले ऋण लिएको रकम उत्पादनशील क्षेत्रमा उपयोग गरी सरकारको ऋण न्यूनीकरणमा सहयोग गर्ने कार्यक्रम बनाउनुपर्छ । नेपालले सन् २०२६ मा एलडिसी समूहबाट बाहिरिने योजना बनाएकाले ऋण चुक्ता गर्न उत्पादक क्षेत्रमा लगानी गरेर दिगो अर्थतन्त्र निर्माण गर्नुपर्छ । यसका लागि लामो अवधि र न्यून ब्याजदरका ऋणबाट फाइदा उठाउनुपर्छ ।

– ANKUR SHRESTHA

The opinion piece originally appeared in the February 2023 Issue of New Business Age Magazine. Please read the original article here.

Since the third generation of the Nepal Trade Integration Strategy (NTIS 2016) was introduced, Nepal and its trade policies have undergone significant changes. First, from 2017 onwards, the country formally adopted a federal structure with seven provinces. Second, for two years in a row (2020-2021), Nepal put all of its efforts into managing the COVID-19 pandemic. The pandemic disrupted Nepal’s domestic and international trade in major ways.

Third, Nepal has seen massive fluctuations in the country’s balance of payments in recent years. One of our regional neighbours, Sri Lanka, declared bankruptcy, igniting policy debates in Nepal as to whether we would run aground into the same problems. Despite this, Nepal’s foreign reserves are growing and will last for at least ten months. However, what is worrying is that our trade deficits are also rising to the same levels as during the pre-pandemic phase of 2020.

Nepal suffers from a considerable trade deficit with its biggest trade partners. For example, in the last fiscal year (FY) 2021/22, with India, our largest trade partner, Nepal’s import-export ratio stood at 8:1. With China, our second largest partner, it stood at a massive 327:1. This trend is worrying and shows the need for Nepal to improve its trade balance with its immediate trade partners. Despite opening up more border points with China, if Nepal does not take significant steps to promote exports, it is very likely that Nepal’s current trade deficit with China would further widen in the years to come. Nepal is also graduating to a developing country from a Least Developing Country (LDC) by 2026, and its trade advantages will decrease even further. As a result, bilateral trade treaties will also become essential for Nepal to retain its trade advantages.

Therefore, the Ministry of Industry, Commerce, and Supplies and the Ministry of Finance, together with other related ministries and departments, have been working tirelessly to create a new trade strategy and related industrial policies to promote trade. Examining where the country missed out with the NTIS and what impact it had on the country’s trade situation is necessary. Furthermore, it is also essential to understand the consumer benefits that trade provides and move towards decreasing the tariff and non-tariff barriers of trade. Policies that increase tariffs and implement protectionist measures to promote non-competitive industries will only burden consumers through higher costs of goods.

Nepal Trade Integration Strategy
The Nepal Trade Integration Strategy 2016 (NTIS 2016) was an updated version of NTIS 2010 and its predecessor, Nepal Trade and Competitiveness Study (NTCS) 2004. It was developed together with the complementary Trade Policy 2015. The NTIS 2016 recognized potential for product and value chain development in three priority export sectors: Agro and forest products, Craft and manufacturing products, and the Services sector. Under these, it identified 12 potential export sectors which are: 1. Large Cardamom, 2. Ginger, 3. Tea, 4. Medicinal and Aromatic Plants (MAPs), 5. Fabrics, Textiles, Yarn, and Rope, 6. Leather, 7. Footwear, 8. Chyangra Pashmina, 9. Knotted Carpets, 10. Skilled and Semi-Skilled Professionals at Various Categories (Remittance-Generating Sectors), 11. IT Services and Business Process Outsourcing, and 12. Tourism.

Export of NTIS goods
Data across the years since the fiscal year (FY) 2015/16 shows that Nepal has seen a slight increase in the identified export goods under the NTIS 2016, however, their percentage contributions to total exports have decreased significantly. For example, in FY 2015/16, NTIS goods made up 47.26% of the total exports, but it significantly reduced to 23.39% as of FY 2021/22. While the values of NTIS exports have increased slightly from Rs 33.2 billion to Rs 46.79 billion across this period, total exports reached Rs 200 billion from Rs 70 billion.

Specifically, in the last FY 2021/22, the list of goods identified under NTIS 2016 only made up less than 25% of the country’s total exports. Focusing on FY 2021/22, out of the total export value of Rs 200 billion, soya bean was the top export with Rs 48.12 billion of exports, this makes up 24.06% of our total exports. Products in the NTIS list, such as carpets, came in fifth contributing Rs 9.57 billion, while woven fabrics and cardamom came in sixth and seventh contributing Rs 5.66 billion and Rs 4.81 billion respectively. Other NTIS goods came further down the list. Even after adding all the NTIS goods exports, it falls short by Rs 1.33 billion. This provides evidence of either our incapability to understand the changes throughout the years in Nepal’s export capabilities or the mindset of Nepal’s traders.

– NISCHAL DHUNGEL

The opinion piece originally appeared in The Kathmandu Post on 2 February 2023. Please read the original article here.

The modern globalised ecosystem has increased public debt due to changing economic and political circumstances. Handling public debt goes hand in hand with an effort to balance those circumstances. Public debt is a domestic or foreign loan issued by a government, which remains a viable option to support government spending, and development initiatives, for which the government lacks funding. Owing to economic complexity and the Covid-19 pandemic, government spending has recently increased more quickly than its capacity to generate revenue. With interest rates skyrocketing, the rising debt severely impacts the budgets of developing countries that must invest in their economies.

Nepal started budgeting in 1951, taking debt 11 years after the budgetary practice began. The history of our public debt is not very old. The government started taking domestic loans in 1962, while foreign loans were only accepted beginning in 1963. Post-earthquake and transition to federalism, Nepal’s public debt has increased over the past several years, reaching 42.2 percent of GDP in fiscal 2019-20 from a progressive reduction of 25 percent of GDP in fiscal 2016-17. The impact of Covid-19 and responses to it are responsible for the significant increase in fiscal 2019-20. The debt-to-GDP ratio for Nepal stood at 39 percent in fiscal 2020-21. Due to Nepal’s access to concessional funding (grants or loans less than 2 percent with long repayment periods) from multilateral institutions and foreign countries, its foreign debt servicing needs are low. As per the World Bank, Nepal’s debt distress risk is rated low for both external and total debt. The International Development Cooperation Policy (2019) allows Nepal to obtain a foreign commercial loan, but Nepal has yet to utilise this opportunity. The country needs to be careful while borrowing large commercial foreign loans with highinterest rates.

The impact of public debt on Nepal’s economic growth, examined by the journal Public Debt and Economic Growth of Nepal utilising data from 1978 to 2020, indicates no clear link between public debt levels and economic expansion. The limited revenue sources have resulted in a rise in government spending more quickly than government revenue. The government has borrowed money primarily for weak areas, leaving it cash-strapped and forcing it to take out another loan to repay the previous ones. Some of the current capital loan money is in the stock market and land. Due to insufficient domestic resource mobilisation, excessive fiscal deficit, export-import imbalance, and gaps in revenue and spending, the external debt has worsened. Thus, some authors argue that deficit financing should not be considered as long as there is sustained economic growth and the possibility of encouraging investment rather than discouraging it. Furthermore, there has been no improvement in the country’s capability to repay debt; there has only been an increase in overall public debt and interest.

It is also crucial to analyse the country’s debt condition in light of its foreign exchange reserves. The depreciation of the Nepali rupee against the US dollar has increased Nepal’s debt liability in local currency terms. Foreign currency debt payments may become more challenging at a time of shrinking foreign currency reserves and rising government borrowing from foreign creditors. Nepal’s foreign direct investment (FDI) is the lowest in the region at 0.5 percent of GDP. The impact of lowering the FDI threshold to Rs20 million will further decrease the inflow of FDI. Further, capital flow restrictions may have negative effects on GDP, but FDI offers the extra benefit of not increasing the nation’s debt and relieving strain on foreign exchange reserves. The government should put in place long-delayed FDI reforms, such as simplifying regulatory approval processes, which would lead to foreign currency inflows and spur the transfer of capital and technology to boost growth.

Lesson from Bangladesh

Thanks to a robust economy and a stable government, Bangladesh has avoided relying on foreign forces for domestic survival. Three factors—exports (second largest clothing exporter), remittances (one of the biggest recipients), and fuel prices (relies on imported fuels)—together account for the majority of the economic health of the country. But these factors are in jeopardy due to a global economic slowdown that is particularly destructive in developing nations. Bangladesh has less money to import fuel as exports fall and prices rise simultaneously. It has decided to postpone non-urgent projects and expressed concerns about a growing trade deficit and a decline in remittances.

However, Nepal’s exports are not as strong as Bangladesh’s, and will be less affected by the global slowdown. The government of Nepal is making several efforts to boost foreign reserve exchange. To stop the mounting debt, the newly passed Public Debt Management Act set a limit on external debt at one-third of the GDP. This measure is intended to prevent the government from borrowing carelessly and motivate it to pay down its debts on schedule so it can borrow more money in the future. Nepal also came up with a slew of measures to ban imports of luxury goods to prevent the depletion of its foreign exchange reserves and ended the ban as foreign reserves rose. These underlying traits will continue to shape how Nepal and Bangladesh react to the current global upheavals, including growing prices, impact on remittances, and widened trade imbalance.

State institutions in Nepal are fragile and continue to have problems with checks and balances. The government will struggle in 2023 to stop tax evasion and broaden its revenue base, increasing its need for public borrowing. With a new government in place, synchronising fiscal and monetary policy should ease liquidity shortage to fuel investment in productive sectors. A significant issue with the democratic history of Bangladesh is the absence of robust and viable opposition. Despite political hiccups and mounting public debt, Bangladesh has made commendable economic progress. Nepal and Bangladesh are unlikely to have the same situation as Sri Lanka if their policy measures successfully utilise public debt, and balance national goals and domestic capabilities.

Addressing structural barriers

Building on prior accomplishments and addressing structural barriers will help to accelerate growth, attract private investment, boost productivity, and develop climate resilience to successfully graduate from the least developed country’s (LDC) status and achieve lower middle-income status by 2026. Nepal’s plan for economic growth and how trade, infrastructure, exchange rates, and other economic policies can help with economic development is still unclear. The growth potential will be increased by fostering an environment, encouraging trade and foreign direct investment, growing the financial sector, building human capital, and enhancing good governance. The country must spend the borrowed funds wisely and enact programmes to reduce debt. As Nepal plans to leave the LDC status in 2026, it is crucial to leverage the advantage of a lower interest rate with a long repayment period of borrowed funds. It should then work towards building a sustainable economy by investing in productive sectors with high-efficiency levels to repay the loans over time.

– NISCHAL DHUNGEL

Quality digital infrastructure is the foundation of a fully-functioning digital economy. Digital infrastructure using any form of the technology enables a smooth flow of goods and services in the economy. The Government of Nepal (GoN) considers the advancement of digital technology as a crucial enabler of more resilient, inclusive, and growth-oriented development. The GoN came up with the Digital Nepal Framework (DNF) plan in 2019 to restructure the economy through integration of available ICT tools. It plans to do so by granting all segments of the population equal access to services and infrastructure, encouraging private sector innovation and competitiveness, and enhancing the delivery of public services. The DNF comprises 80 initiatives divided into eight categories – digital foundation, agriculture, health, education, energy, tourism, finance, and urban infrastructure. The Nepal Planning Commission (NPC) has deemed the DNF a game-changing initiative.

Before diving into Nepal’s digital landscape, it is crucial to understand the state of digital-related infrastructures in the country. Electricity is the backbone of digital connectivity in addition to availability of quality infrastructures. In this regard, electricity is fuel to develop any form of digital connectivity. Without proper access to electricity, it is almost impossible to foster digital connectivity in the desired way. Hence, access to electricity directly impacts the availability, adoption, and use of digital connectivity. Digital connectivity may be less readily available if a steady electrical supply is not always available. Even though the electricity supply has reached most of the population, the government needs to deploy base stations in non-electrified areas to ensure affordable and reliable electricity access for all Nepali citizens.

Figure 1: Access to Electricity, Nepal (Percentage of Population)

Source: Nepal Economic Survey 2021/22, Ministry of Finance *Till – Mid March 2022

More than 90 percent of the population have access to electricity as of mid-March 2022 (Figure 1). Access to electricity has considerably increased over past years from 88 percent in 2018/19 to 94 percent till mid-March 2021/21. During the same period, the Madhesh province has the highest access to electricity i.e., 99.66 percent of Madhesh population and the Karnali province has the lowest access to electricity 43.87 percent of Karnali population (Figure 2). In 2021–2022, the installed electricity capacity stood at 2,189.6 megawatts (MW). Increasing the installed capacity of electricity has made it possible to increase access to electricity. Nepal experienced power outages that lasted up to 18 hours a day for more than ten years, from 2006 to the mid of 2017. The country currently has surplus energy, primarily during the wet season, and “load-shedding” has almost been eradicated thanks to better management, leakage control, and increased power generation. Although electricity penetration in Nepal (90 percent of the population) as of 2020 is slightly low in comparison to South Asian (95.7 percent of the population) countries, Nepal stands in an excellent position to strengthen its digital infrastructure. Before the target year of 2030 was established by Sustainable Development Goal 7, the Nepal Electricity Authority (electricity regulatory body)  revealed its plan to achieve 100 percent electricity access by 2024. The plan is realistic to set a strong base for the uptake of other digital infrastructures.

Figure 2: Access to Electricity by Province (Percentage of Province Population)

Source: Nepal Economic Survey 2021/22, Ministry of Finance *Till – Mid March 2022

The Government of Nepal has placed great importance on transforming the potential of ICTs within the broader context of its ambitious developmental objectives, which are based on reducing poverty as its primary goal. The Information Communication Technology (ICT) Policy 2015 outlines the rules and practices for developing IT infrastructures and human resources for a knowledge-based society. ICTs have the potential, among other things, to help create the environment for better governance with more open, transparent and effective bureaucracies. ICTs can also address structural issues in education and health systems, enabling more access to education and health services and bridging quality gaps in education and health.

The internet is a crucial component of the digital economy. Over the past few years, Nepal’s technology and communication sector have experienced significant growth. Nepal Telecommunications Authority (NTA) is the telecommunication regulatory body of Nepal established to provide a favorable and competitive environmentfor the development, expansion, and operation of telecommunications services along with private sector participation. According to NTA Annual Report 2021/22, total broadband (mobile and fixed) internet subscriber has considerably increased over the past years, from 66 percent in 2018/19 to 131.6 percent in 2021/21. According to the same report, there are around 38.3 million broadband subscribers in Nepal, of which 28.7 million are mobile broadband subscribers and 9.6 million fixed (wire and wireless) broadband subscribers in 2021/22. While fixed broadband (wired plus wireless) penetration has reached 33.1 percent of the population, mobile broadband penetration is 99 percent in 2021/22. Mobile broadband peneration has significantly increased over the past years from 52% of population in 2018/19 to 99 percent of population in 2021/22. According to the report, mobile broadband is the most popular means of using the internet, and the trend of mobile broadband users is increasing faster than fixed broadband. With 3G and 4G internet service already in place, the government is advancing the testing of 5G technology.

Figure 3: Broadband Internet Penetration (Percentage of Population)

Source: Nepal Telecommunication Authority, Annual Report 2021/22

Despite the progress in internet and electricity penetration, there are still issues with affordability, the digital divide, and digital illiteracy in many areas of Nepal. With regards to digital governance, the government has taken steps to digitalize public services, including, but not limited to, the digitization of data from land revenue offices, the introduction of the Nagarik App, the launch of the Nepal National Single Window (NNSW) system, the opening of the National ID card, and others. However, service seekers continue to encounter issues due to limited installed technology capacity and improper system management.

Workplace practices are changing due to disruptive technologies like artificial intelligence (AI), robotics, and the Internet of Things. The governments and businesses around the world are now able to fully realize the promise of exponential development because of digital technologies. Since the initial shutdown starting from March 2020 onwards (due to COVID-19), online commerce and digital payments have become more common. Also, the use of digital technology and GDP growth are closely related. A World Bank study found that a country’s economy grows by 1.3 percent for every 10 percent rise in internet access. Nepali pay more for internet connection than people in other South Asian countries, according to the Connectivity in the Least Developed Countries Status Report 2021. The report has emphasized a need for effective solutions in developing nations like Nepal to increase digital access and the need to develop specific policy proposals to hasten the transition to inexpensive and universal connectivity. 

Way Forward

The digital economy highlights the importance of digital technology in improving trade and competitiveness, economic opportunity and efficiency, and international economic integration of an economy. The COVID-19 pandemic and related lockdowns have sped up the uptake of digital services, making remote learning, e-commerce, and digital payments more crucial than ever. The pandemic has also made it clear how vital it is to adapt systems to accommodate shifting preferences, hastening the transition to a cashless and digitally aware society.  Supportive policies and investments in the workforce, vital digital infrastructure, and cybersecurity will have a long-lasting impact on leveraging the digital economy in Nepal. For Nepal to develop into a technologically advanced, rapidly expanding economy, digitalization and digital governance should be implemented, strengthening its digital-related infrastructure.

Recommendations

• Bring stakeholders from the public and corporate sectors and civil society to help shape digital policy in several key areas. 
• Encourage the adoption of inclusive digital policies and collaborate with the appropriate governmental entities. A working group on internet affordability should be established, with representatives from the private sector, civic society, ISPs, and regulators. 
• Build collaborations with the private sector to construct a digital economy that benefits all Nepalis.
• Concentrate on improving transactional efficiency, security, transparency, traceability, and financial inclusion. 
• Work with universities and technical schools to solve the cybersecurity workforce and research and development demands.
• Support the reform of IT curricula in higher education, work with the private sector to start apprenticeship or internship programs, and support the ICT initiatives of the Ministry of Education to increase the skill-building of the digital talent pool to match the demands of IT-sector employers better and increase Nepal’s competitiveness in the IT labor supply.

– SAGOON Bhetwal

The opinion piece originally appeared in the December Issue of New Business Age Magazine. Please read the original article here.

One can easily get glimpses of the informal economy while passing through the streets of Kathmandu. From street vendors to home-based workers, the informal economy accounts for economic activities that are carried out with informality. This refers to activities and enterprises that are not regulated or taxed while they also continue to lose recognition and protection. The International Labor Organisation (ILO) says that ‘the informal economy consists of activities that have market value but are not formally registered’. While this economy is a global phenomenon, it is most prevalent in Emerging Markets and Developing Economies (EMDEs). It has, on average, a 35% contribution to the Gross Domestic Product (GDP) in low and middle-income countries while the contribution is 15% in the advanced economies.

According to the World Bank (WB), 80% of the workers in South Asia are involved in informal economic activities. In this region, more than 90% of businesses are informal. The informal economy is mostly defined by its composition of low funding, low-skilled workers, irregular income, lack of social security, difficult working conditions, low level of productivity and lack of protection, to list a few. At the same time, it is also important to note that despite all the negative attributes, this economy also acts as the only safety net for people who are left out of the formal one. It is often identified as a shock absorber when making ends meet becomes impossible through the formal economy. In Nepal, according to the Central Bureau of Statistics (CBS), 62.2% of the total employed people are engaged in informal jobs. The occupations with the highest informal engagement are elementary occupations, agriculture, forestry, fishery, craft and related trade works.

Gender Composition
Women’s labour force participation continues to stay lower even today. Out of those women who are active, most are engaged in the informal economy. As per the Labour Force Survey, 90.5% of employed women in Nepal have informal jobs. A number of factors can be attributed to their large concentration such as lower educational attainment, low level of skill, and cultural restrictions. Their involvement can be found in the least visible and most vulnerable segments which continue to remain under-valued.

Women lack access to need-based benefits and face continuous safety risks. A study carried out by Centre for Social Change (CSS) found that women in the informal economy of Nepal face a disproportionate load of gender wage gap, discrimination and harassment, and even unpaid labour. The constant fear of Gender Based Violence (GBV) either puts women at continuous risk at their workspace or keeps them totally out of employment. According to a study done by CARE Nepal, 66.5% of women in informal jobs in Nepal are vulnerable to violence and exploitation. Even the existing legal provisions such as Sexual Harassment (Elimination) at Workplace Act, 2015 do not take into account the violence that happens in informal workspaces and lack specific provisions to address them.

When it comes to differences in income, 66.8% of women in informal jobs earn lower than the minimum wage standard in Nepal. This is extremely high when compared to 31.6% of men working in the informal sector. Wage discrimination persists even in formal jobs, while it is worse for those in informal engagements. What is concerning here is that women are the most discriminated-against as they receive the lowest rate of income or even remain unpaid.

Informal Economy and Covid-19
The Covid-19 pandemic, followed by its containment measures, took economies worldwide into contraction. The ILO estimates that globally 1.6 billion workers in the informal economy were hit the hardest. Due to measures such as mobility restrictions, people were confined to their homes. This meant that they faced difficulty in making livelihoods as their income increased. They also faced risk of losing their jobs. A survey conducted by the Kathmandu Metropolitan City (KMC) shows 81% of the respondents living in Kathmandu were unable to pay for their daily necessities, rent, and loans because of the sudden loss of their jobs.

Informal workers engaged in tourism, trade, construction, and manufacturing sectors bore the highest risk as they lost income and lacked protection measures. The ILO estimates that about three-quarters of the total workers in the tourism sector of Nepal are in informal jobs. Even some of those, employed in formal sectors, had to slowly shift to an informal job to make ends meet. COVID-19 further affected their mental and social well being because of the financial insecurity they faced. The pandemic has shown that vulnerability of informal workers can suddenly exacerbate as workers in informal lines of jobs lack social protection and benefits.

Transitioning from Informal to Formal
Shifting to formal standards for wage workers, home-based workers, and self-employed individuals means that they will have to comply under regulations that include both obligations and advantages. This will lead to their contribution to the tax base and GDP as they also receive access, protection and insurance. The ILO in 2015 adopted ‘Transition from the Informal to the Formal Economy Recommendation’. The objectives of ILO Recommendation 204 for the transition are i) creation of decent jobs and sustainable enterprises in formal economy, ii) transition of workers and enterprises to formal economy, and iii) prevention of informalisation of jobs. At the same time, the policy interventions needed to address the existing informality have to be context and stakeholder specific. The strategy that works for wage employees in developed countries might not always work for daily wage earners in Nepal.

However, it is important to realise that this transition is not easy and is rather a long-term process. The informal economy, despite entailing low productivity and low income, has been assisting families to supplement their income and provide a safety net. It has also been absorbing surplus labour and assisting families living on the poverty line when the formal economy excludes them. In the process, the condition of women in the economy and post-pandemic recovery has to be prioritised. It now becomes important for governments to identify how the informal economy can be assisted or decide the extent and process of their formalisation. One thing to remember is that workers need to be provided the incentive for their economic activities.

– ANKUR Shrestha

The opinion piece originally appeared in the 2022 September Issue of New Business Age Magazine. Please read the original article here.

The shift towards online businesses has not been new in Nepal. The COVID-19 pandemic especially helped increase this movement while social media marketing had already been a common thing even before the pandemic. The pandemic has forced even traditional businesses to go online as they searched for new ways to reach consumers. Moreover, online businesses can be set up at a relatively low or no cost, and it is easier to market using social media. Therefore, online businesses became attractive to new entrepreneurs using social media to sell retail goods or services. Most of these new businesses, however, were not registered.

The problems in business registration are, however, not new. According to the latest available National Economic Census 2018, almost half the business establishments are unregistered. Two out of three businesses operated by a single person are not registered.

Then why are we seeing a large number of unregulated establishments, especially small-scale ones? There are various reasons. First, it is a strenuous task to register a business in Nepal. The World Bank ranks Nepal at 94th overall in its Doing Business Rankings in 2020, but 135th in starting a business and 151st in enforcing contracts. These are critical for small businesses.

Secondly, the government has not been able to offer substantial benefits (or impose costs) to warrant registering a business. Regular processes that need to be easy and fast, such as registering a business and paying taxes, come with cumbersome bureaucratic hassles without offering any particular benefits. Additionally, the government’s ability to impose contracts in case of any issues between contracting parties is slow. The people then see no reason to seek help from the government. On the flip side, most unregistered businesses do not face any consequences for not registering.

The third reason is that government regulation is slow to catch up, especially for online businesses. For example, when ride-sharing services like Tootle and Pathao started their services in Nepal, they had no exact regulations to operate under. Riders were arrested by the police as existing laws did not allow private vehicles to provide ride services. But, protests from consumers as well as service providers have forced the government to allow ride-sharing even in the absence of legal provision even though it has been more than five years since these services came into operation.

Even registered small businesses have been known to avoid paying taxes by showing a negative balance sheet. Customers have also contributed to the informal economy by not necessarily demanding VAT or PAN bills from the businesses. This has encouraged newly formed online businesses to operate without staying registered.

A glimpse of a genuinely free market economy in the country can, however, be seen. Albeit informal, the online market has been known to be relatively easier to purchase from, allowing consumers to compare prices across different sellers and choose one that suits them while paying relatively lower costs, all from the comfort of their homes. Sellers are compelled to sell better goods as setting up shops becomes easier through online mediums, and comments and ratings (reviews) in online mediums are viewed by a large number of potential future consumers. These act as incentives for sellers to improve customer service, sell better goods, try and create their niche, and perform better overall.

The government has remained a mute spectator, allowing sellers to provide goods cheaper to consumers while maximising profits. This type of informal arrangement is not covered by the government protection mechanisms for consumer safety. Of late, however, the government has tried to rectify this and drafted an E-commerce Bill intending to create, regulate, and facilitate online trade in Nepal. The first of its kind bill dedicated to e-commerce focuses on consumer protection. The question of allowing a truly free market without government intervention remains. The government needs to do more for both online businesses and consumers to remove the hassles in business registrations and taxes. While the E-commerce Bill is a step in the right direction, it has still not gone through the parliament.

The government’s slow and unresponsive nature, procedural challenges to reduce steps in business registration, and the high tax slabs will always hinder businesses from entering the formal fold of the economy. Questions of the role of government in only acting as an insurer of contracts rather than directly intervening in the market will also remain. Regardless of the arguments, the registration of businesses (online or otherwise) will help the government plan better and invest in easier access to resources for both sellers and consumers. 

– NISCHAL Dhungel, Non-Resident Fellow

The opinion piece originally appeared in The Kathmandu Post on 4 September 2022. Please read the original article here.

Nepal has faced tremendous hitches in the path of economic development. Keeping natural barriers (landlocked externally and challenging topography internally) aside, the nation has been undergoing a protracted era of political change over the past two decades, graduating from a monarchy to multiparty democracy, marred by armed war, ethnic unrest and frequent changes in power. Frequent changes in government, irrespective of a unitary or federal form of government, has directly hampered Nepal’s development path, compounded by poor policy decisions. Poor policy decisions have led to weak performance of the primary agricultural and industrial sectors, low public investment and capital accumulation, and low productivity growth.

Given this context, it is not surprising that foreign employment has become more pervasive, particularly in the years following Maoist conflict. The Department of Foreign Employment started issuing labour permits in the late 1990s. The number of labour permits issued peaked in 2013-14 at a high of 519,638. In 2020-21, the number of labour permits issued plunged to a 16-year low of 72,081 due to the Covid-19 outbreak and the ensuing restrictions on people’s freedom of movement. At present, formal overseas employment procedures have become cumbersome due to the bureaucracy that requires foreign employment agencies to produce authentic labour demand letters, get the demands attested from the Nepali embassies in target countries, and provide several other documents. Despite the cumbersome out-migration procedures, foreign employment has become a lucrative area to escape Nepal’s job market.

Remittance trap

Remittances in Nepal have surged at an unprecedented pace. Personal remittances received were less than 1 percent of GDP up until the late 1990s, lower than Bangladesh and India. This share dramatically increased during the first half of the 2000s, rising from 2 percent in 2000 to 22 percent in 2010 and 30 percent in 2015. Following the pandemic, it was anticipated that Nepal would experience a sharp fall in remittance inflows, impacting imports, the balance of payments, foreign exchange reserves, consumption, savings, loans and interest rates. However, according to the data released for fiscal 2020-21, Nepal performed better in remittance inflows.

Given the extraordinary increase in remittances, they are probably the main driver of the improvement in living standards seen in Nepal, directly (households receiving remittances) and indirectly (increased labour income of those that remained). Research published by Nepal Rastra Bank showed that compared to households that do not get remittances, households that receive remittances have a 2.3 percent lower chance of falling into poverty. With every 10 percent increase in remittance inflows to households, the likelihood of those households falling into poverty lowers by approximately 1.1 percent.

Large-scale migration is a symptom of underlying, long-standing issues rather than a sign of strength. One of the world’s most extensive and dense anti-poverty initiatives is likely to be found in Nepal. Unfortunately, more resources go into the process of delivering benefits to “the poor” rather than achieving impact (making “the poor” rich). Economists Yurendra Basnett, Chandan Sapkota and Sameer Khatiwada have rightly pointed out that much effort is also put into process innovation and complexity (how to get the goodies to “the poor”) while neglecting the apparent reality that a great job with a high salary would go a long way in reducing poverty in one of the chapters of the book entitled Politics of Change.

Large-scale migration and the resulting remittances have facilitated the expansion of low-productivity services. Still, they have also contributed to the low competitiveness (via appreciation of the real exchange rate). As a result, this cycle intensifies already-existing problems that Nepal has faced for a while, further impeding its competitiveness and limiting its economic potential. Because of all these factors, Nepal, home to some of the most hardworking and adventurous people in the world, may remain in a high migration and remittance trap for years to come.

Domestic employment

The pandemic provided the government with a fantastic opportunity to learn a lesson from the existing policy gap to keep the people who had returned to help with the need for the nation’s development. It is a monumental task to switch from foreign employment to domestic employment. Approximately 500,000 young people enter the workforce each year, and 80 percent of them manage to find work abroad. Due to a lack of investment that may have helped produce output, Nepal is now entirely dependent on imports. Ironically, Nepal imports even agricultural items, even though 66 percent of the country’s population is employed in agriculture. Agriculture, which accounts for two-thirds of the workforce and one-third of GDP, has to undergo reforms to increase productivity, reduce poverty and free up labour for new sources of economic growth.

For Nepal, unleashing massive hydropower investments would be a game changer. It would not only result in considerable increases in productivity and new investments, but it also has the potential to raise wages dramatically, reverse migration and boost competition in downstream industries. According to the National Planning Commission and UNICEF report Demographic Changes of Nepal: Trends and Policy Implications, Nepal will have an ageing population by 2028 and an elderly population by 2054. Therefore, Nepal has a very limited window of opportunity to capitalise on the demographic window. It is necessary to invest in the skills of Nepali youth to fully realise the demographic dividend. For Nepal to continue on a more robust and sustainable growth path, more human capital must be put to productive use.

History also shows us that Nepal has implemented significant reforms in the past and is capable of doing so again. The broad-based reforms that Nepal implemented between 1986 and 1996 positively impacted the economy. The share of commerce in GDP and exports, as well as the share of manufacturing, virtually doubled, increasing the economy’s openness and diversification. The political shift to democratically elected administrations, which also gave the populace a new purpose, served as the foundation for these reforms. Today, they serve as a sobering reminder that Nepal can undergo significant and complex reforms. To escape the out-migration and remittance trap, a clear set of plans and policies to increase domestic employment should be the top priority of the federal, provincial and local governments. Without rethinking our development model, the country cannot prosper or graduate to a middle-income country.

– NISCHAL Dhungel, Non-Resident Fellow

The commentary originally appeared on the East Asia Forum, a forum based at the Crawford School of Public Policy at the Australian National University, on 18 August 2022. Read the original article here.

The International Monetary Fund’s recent World Economic Outlook report paints a bleak economic future. It has downgraded global growth predictions from 6.1 per cent in 2021 to 3.2 per cent in 2022. While the global economy is still recovering from the COVID-19 pandemic, central banks in advanced economies are hiking interest rates — a policy change that will have a significant global impact.

The depressing growth predictions are a consequence of tighter monetary policy and the increasing threat of social and economic risks, particularly for emerging and developing nations. Food and fuel prices have skyrocketed due to the Russia–Ukraine war and supply chain bottlenecks. The Russia–Ukraine conflict has made it challenging to balance fighting inflation, supporting the global economic recovery, helping the vulnerable and restoring fiscal buffers.

The US Federal Reserve (Fed) stepped up its fight against inflation after consumer prices increased 8.6 per cent in the United States. On 15 June 2022, the Fed voted to raise the target range for the federal funds rate to 0.75–1 per cent. It plans to implement additional hikes for the rest of 2022. But efforts to reduce inflation by increasing interest rates in the United States could harm the rest of the world.

As interest rates rise in the United States, those who invest in emerging markets to receive higher rates of return may invest in the more appealing US market. This will result in massive capital inflows to the United States and increased outflows from the developing world. Without proportionally tighter domestic monetary policies, the ensuing rise in borrowing costs will deplete foreign reserves, appreciate the US dollar and result in balance sheet losses for nations with US dollar-denominated net obligations.

Rising US interest rates have the greatest impact on economies with higher macroeconomic vulnerabilities. Between 2019 and 2021, the COVID-19 pandemic caused a sharp rise in public debt in developing economies — on average increasing from 54 per cent to 65 per cent of GDP.

Thirty-eight emerging economies are now in danger of a debt crisis or are currently experiencing one. At least 25 developing economies spend over 20 per cent of government income on servicing foreign public debt. This is why interest rate hikes in advanced economies could tighten external financial conditions for emerging markets and developing countries.

There is a worrying comparability between today’s economy and the economy of the 1970s and early 1980s which was rife with high inflation, slow growth and rising borrowing costs. In the 1970s, oil exporters benefitting from increasing energy prices used their surpluses to increase funding for debt markets in emerging market economies. Fed rate hikes in the early 1980s reduced inflation in the United States but drove up global interest rates, causing many emerging economies to default on their debts.

The debt crisis that followed the Volcker shock was distressing for developing nations. The Fed interest rate hike had a devastating effect on Latin America. The region experienced plummeting GDP and ballooning unemployment and poverty. The subsequent decade was lost to gradual and uneven economic recovery. The consequences of the Latin American debt crisis were similarly experienced in Africa’s heavily indebted nations. The Fed did not pay enough attention to how its choices would affect the rest of the world.

Though today’s economic situation has similar origins to that of the 1970s and 1980s, there are some significant distinctions. Today, oil producers acutely feel the world’s reducing dependence on oil. Real oil price increases are smaller than they have been historically. Policy tightening in response to the economic downturn has also begun sooner than it did in the 1970s and 1980s, especially in certain emerging markets and developing nations. Unlike the 1970s and the 1980s, there has not been as much time for recycled petrodollars to fuel imbalances in developing and emerging market economies.

Despite these encouraging developments, new risks have emerged. Due to increased exposure to sizeable bilateral creditors and the recent COVID-19 pandemic, public debt has risen and stunted the growth potential of many countries.

While international financial institutions are doing their part to provide debt relief and stop punitive measures like surcharges — additional fees imposed on countries that fail to make debt repayments —  there needs to be swift and systematic action on debt resolution. This must involve collaboration with private creditors and large state creditors like China. Major food and fuel businesses must be prevented from profiteering and speculating.

Special drawing rights (SDRs) — a foreign reserve asset issued by the IMF that can be used for foreign exchange stability in addition to gold or US dollars — must be redistributed to those countries that urgently require them. A new release of special drawing rights with an equivalent value of US$650 billion is necessary for immediate relief. The UN Conference on Trade and Development has advocated an alternative way to facilitate fair and orderly debt crisis resolutions. It would involve a multilateral legal framework for restructuring sovereign debt using both public and private creditors.

Interest rate increases in advanced countries will always impact low-income countries. But that does not negate the need to pursue structural reform in low-income countries. Structural reform is the only way to find short and long-term solutions to debt management.

– SANTOSH SHARMA Poudel

The column originally appeared in The Diplomat on 9 August 2022. Please read the original article here.

On August 3, the U.N. aviation watchdog, the International Civil Aviation Organization (ICAO), formally asked the Nepali government to split the Civil Aviation Authority of Nepal (CAAN) into two separate entities — a service provider and a regulator. Nepal needed the restructuring to ensure a “clear separation of authority between service providers, operators and the regulatory authority” in order to improve air safety, ICAO said.

Back in 2009, during a safety audit by ICAO, Nepal had committed to work on legislation to split CAAN. However, 13 years later the proposed legislation remains in limbo.

Nepal has a poor aviation safety record. According to the Aviation Safety database, there have been 27 plane crashes in Nepal over the past three decades, 20 of them over the last 10 years. In May 2022, a Tara Air plane crashed in the mountainous Mustang district of Nepal, killing all 22 passengers and crew members, including six foreigners.

The European Commission (EC) imposed a blanket ban on Nepali airlines entering European airspace in 2013 after eight British nationals were killed in a Sita Air plane crash in 2012.

The rugged mountain terrain, a lack of investment in new planes, and poor infrastructure have contributed to dangerous air travel in Nepal. However, Nepal’s aviation governing structure shares some blame too.

CAAN is both the service provider and regulator in Nepal. That has engendered a conflict of interest, especially when it comes to safety regulations.

This prompted the EC to insist on CAAN splitting into two separate bodies before it considers lifting the ban on Nepali airlines. EU Ambassador Nona Deprez unequivocally stated that passing the bills to split CAAN is a “prerequisite” for Nepali airlines to be removed from the “air safety list.”

Nepali policymakers recognize the need to split CAAN. Since 2007, successive governments have put forward plans to end the dual functioning of the aviation regulator. Each government has expressed a commitment in bilateral (with the EU) and multilateral forums to split CAAN and urged the EC to revoke the ban. A subcommittee of the parliamentary International Relations Committee led by former Prime Minister Madhav Kumar Nepal even directed the government to split CAAN, saying it was mandatory.

Besides improving safety, restructuring CAAN has other tangible benefits for Nepal and Nepali aviation.

First, it will likely lead to the EC removing Nepal from its “air safety list,” opening European skies to Nepali airlines. It would boost revenue for Nepal’s struggling national carrier, Nepal Airlines. Nepal Airlines could not carry out chartered flights to the EU during COVID-19 rescue missions. As a result, the airline lost a big chunk of potential revenue, besides affecting the government’s ability to rescue Nepalis stranded in European countries during the pandemic.

Second, a restructuring would provide a shot in the arm to Nepal’s tourism industry. Around 15-20 percent of tourist arrivals to Nepal are from EU member countries. In 2019, almost a quarter of a million tourists from the EU visited Nepal. Nepal has announced a “Visit Nepal decade, 2023-2033” to revive the tourism sector. Without safe air services, the primary mode of transport for inbound tourists, the tourism decade cannot be successful. Nepal’s poor air safety record and the EU’s ban dissuaded many potential tourists from visiting Nepal. That would change if Nepal sets in motion the necessary changes to make flights safe.

Finally, the issue provides a litmus test of Nepali leaders’ commitment and delivery. Every government since 2007 has committed to and “prioritized” CAAN’s restructuring, but none have delivered.

On March 1 this year, the parliament secretariat included two aviation bills, the Civil Aviation Authority of Nepal Bill and the Air Service Authority of Nepal Bill, on the agenda for the meeting of the House of Representatives scheduled for the following day. However, then-Minister for Civil Aviation Prem Bahadur Ale did a volte-face and requested the parliament secretariat to hold back the bills. Some employees of the aviation regulator were opposed to the planned restructuring, he claimed.

The bills have not made any headway in the House of Representatives since, although the National Assembly, Nepal’s upper house, passed the bills unanimously.

On July 31, Jeevan Ram Shrestha, who succeeded Ale as aviation minister, said that Nepal would not immediately accept the EC’s condition and that CAAN would be restructured “according to need and at the appropriate time.”

Analysts attribute the lack of progress in passing the bills to the vested interest of some office holders and foreign airline operators. The existing system allows CAAN’s director-general to issue tenders and oversee compliance while issuing regulations governing the issues of licenses to airlines and crews. These officials would not want to give up this power.

Meanwhile, other international airlines have gained market share and revenue at the expense of Nepali airlines. Ale and Shrestha’s dilly-dallying shows the deep reach of such vested interests.

Going forward, the path for the government could not have been more straightforward. Yet vested interests have reigned over the common sense measure for 15 years. Shrestha’s statement provides little hope of a change to the status quo.

Domestic Updates

The Maldives is at a high risk of dollar reserve depletion by 2023. The primary causes are Covid-19’s impact on the tourism industry, soaring global fuel prices, and rising borrowing costs. Maldives has USD 829 million in reserve. However, the national debt, at USD 5.9 billion in 2021, has ballooned to USD 6.4 billion in the first quarter of 2022.

Minister of Finance, Ibrahim Ameer, assured that the Maldivian finance is in better shape now than in the last three years. The economy is growing with the arrival of tourists. The Maldives is expected to grow at 13-18 percent in 2022.

Regional Engagement

Maldives and India conducted the second joint hydrographic survey of Maldives, covering 6500 nautical miles. The survey is critical for the Maldives to update the Navigational Charts/Electronic Navigational Charts for ship safety in several areas of Maldives and enhance Blue Economy. The first phase of the survey started in 2021. Some of those areas were not surveyed since 1853.

The joint survey resulted from India’s policy of supporting the Maldives to set up Hydrographic facilities. India provided the Maldives with hydrographic survey equipment in 2021 and 2022. The joint survey will enable economic development, defence, security, coastal zone management, environmental protection, and scientific research.

Global Engagement

President Ibrahim Mohamed Solih sought approval from the parliament to join the International Islamic Trade Finance Corporation (ITFC). Maldives is not a member of ITFC. Yet, ITFC has provided financial assistance to the Maldives since 2005. ITFC aims to advance trade among members of the Organization of Islamic Cooperation (OIC). The Russian invasion of Ukraine has adversely impacted Maldivian tourism. The two countries jointly accounted for 14 percent of tourist arrivals between January to March of the current year. Despite this, Maldives condemned the Russian invasion of Ukraine at the United Nations General Assembly (UNGA) vote. Furthermore, the Maldives has reiterated its firm belief in principles of respect for sovereign states and sovereign equality. Yet, Maldives has taken a cautious approach to enforcing the sanctions imposed by the West in the aftermath of Russian aggression in Ukraine.