Sunday, December 9, 2018

Nepal India power trade, subnational government's budget execution and more

From The Kathmandu Post: India opened the door wider to power exporters by removing a discriminatory provision in the Guidelines on Cross Border Trade of Electricity under which Nepali-based hydropower projects which are owned by the Indian government or have a majority Indian share are only allowed to export power to India. This condition essentially bars plants built with Nepali or third country funding from exporting electricity to India, and its removal has been hailed as a major boost for Nepal’s energy sector.

According to the Energy Ministry and the Indian Embassy, the Indian Power Ministry has prepared a new draft of the guidelines minus the provision allowing only Nepali-based companies wholly owned by the Indian government or the public sector or private companies with a 51 percent or more Indian stake to sell power to India. Moreover, companies owned or controlled by the Nepal government will be able to export power to India after getting a one-time approval from Indian authorities, as per the guidelines.

According to the guidelines issued by the Indian Power Ministry in December 2016, other companies wishing to sell power to India have to obtain the approval of the designated authority on a case-by-case basis. The provision was discouraging to foreign investors and private Nepali power developers planning to build export-oriented hydropower projects with an eye on the Indian market.

From The Kathmandu Post: Even as pressure builds on the government to resume movement of Nepalis to work in Malaysia without further delay, officials say it will take more time as both the countries are working for implementation of a bilateral deal. Nepal and Malaysia signed a much-awaited labour agreement on October 29. This was expected to resume departures of Nepali workers for Malaysia, which has been halted since mid-May. However, there has been no significant progress towards that end.

Minister for Labour, Employment and Social Security Gokarna Bista told the Post that the government was working to complete the process so that Nepalis can work in Malaysia again. “The labour deal with Malaysia was signed after years. We need to work for putting the agreement into practice. There is still some work to be done before we allow workers to migrate to Malaysia,” said Minister Bista.

According to him, joint working committees are thrashing out issues. The delay in resuming worker departures for Malaysia five weeks after signing the labour pact has irked recruiting agencies as well as political leaders from the opposition Nepali Congress.

From The Kathmandu Post: The federal government’s delay in handing over the key institutions and deputing the required number of civil servants has hit the provincial governments’ ability to spend. In the first five months of the current fiscal year, the provincial governments have spent only two percent of their budget on an average. 

The combined budget of all the seven provinces for the current fiscal year is Rs113.43 billion whereas their combined spending stood at Rs2.36 billion as of December 5. This shows that budget utilisation of the provinces is much below the federal government’s. Singha Durbar spent 20.91 percent of its total budget in the same period, according to the federal finance ministry.

The dismal spending by provincial governments comes at a time when the federal government itself is criticised for its poor spending. Provincial governments, however, blame Kathmandu for the poor implementation of the budget.“The failure of the federal government to depute necessary staff to the provinces and the frequent transfers of officials at the provinces, particularly the secretaries, are the main reasons behind the poor spending,” said Province-2 Finance Minister Bijaya Kumar Yadav. “How can budget be implemented without the bureaucracy?”

According to the Ministry of Federal Affairs and General Administration, only around 12,900 civil servants have been mobilised at the provinces against the need for 21,000.

Govt takes over projects meant for provinces

From The Himalayan Times: The federal government has taken over some development projects supposed to be under the jurisdiction of provinces. The federal government had stated in the budget that some key development projects would be under the jurisdiction of provinces but now it has taken control of them.

The projects the federal government has taken over include:  The 10  Mid-Mountain Highway Cities, 15 linkage roads of the postal highway in Tarai-Madhes, Jhamak Kumari Ghimire foundation, nine risky settlements including in Bajura and the four municipalities of Province 7 funded by the Asian Development Bank. The  budget had stated that these projects would be under the provincial government’s jurisdiction. According to the Ministry of Urban Development, the provinces have expressed dissatisfaction with the federal government’s decision.

Spokesperson of the Ministry of Urban Development Krishna Prasad Dawadi told THT the Cabinet had decided to this effect on November 19 after consulting the federal finance ministry. “The federal government decided to take over these projects because provincial governments lacked skilled manpower and had failed to open offices to execute the projects,” he added.  He said the other reason was involvement of foreign donors in the projects and the risk of high variation order on account of delay. “The donors had also expressed concerns regarding some projects,” Dawadi added. Dawadi said the federal government would gradually hand over these projects to the provincial governments.

Thursday, December 6, 2018

Latest trade policy review of Nepal

The WTO has released the latest trade policy review of Nepal (prepared by WTO here and by Nepal here). The last review was done in 2012. Nepal has updated its trade policy and export strategies and investment as well as labor legislation since then. However, there is not much to show in terms of its effect on industrial output and exports growth, which suffers from supply-side constraints and inadequate trade facilitation measures. 

Nepal became a member of the WTO on 23 April 2004 when it became the first LDC to join the WTO through the full working party negotiation process. It is also a member of two overlapping regional free trade agreements: South Asia Free Trade Area (SAFTA), and Framework Agreement on the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). Nepal has bilateral trade agreement with 17 countries. The transit and trade treaty, railways services agreement and an agreement on cooperation to control unauthorized trade with India are the most consequential ones. The transit treaty with India allows Nepal to trade with other countries through Kolkata/Haldia ports and Vishakapatnam port (since 2016).

Here are some of the highlights from the TPR:

1. Exports have declined since the last review, but imports have more than doubled. Almost two-thirds of export and imports occur with India. As a share of total imports, agricultural (19%), iron & steel (9.7%), non-electrical machinery (8.5%), and transport equipment (8.9%) imports increased. Manufacturing import's (i.e. total minus agricultural and mining imports) share increased from 54.3% to 59.2% over the review period. 

2. Nepal updated its trade policy in 2015 and Nepal Trade Integration Strategy in 2016. MoICS is responsible for implementing trade policy, but MOF has the final say in setting tariffs. Trade related legislation covers customs, export and import licensing, TBTs, SPSs, competition policies, investment regimes, competition policies, government procurement, and intellectual property rights.

3. NTIS 2016 provides the foundation for the implementation of trade policy 2015. It identifies 12 strategic area goods and services: large cardamom, ginger, tea, medicinal and aromatic plants, fabrics textiles yarns and ropes, leather, footwear, chyangra pashmina, knotted carpets, skilled and semi-skilled professionals, IT services and BPO, and tourism. Seven cross costing areas are trade capacity (including trade negotiations), trade and investment environment, trade and transport facilitation, standards and technical regulations, sanitary and phytosanitary standards, intellectual property rights, and trade in services. NTIS 2016 identified 190 actions to be implemented by 2020. 

4.  The bilateral trade and transit treaty with India allows each other unconditional MFN treatment and exemption from customs duties and quantitative restrictions on a reciprocal basis on a mutually agreed list of primary products. Nepal gets non-reciprocal access (no customs duties and quantitative restrictions) of its industrial products to the Indian market except for vegetable fats, acrylic yarn, zinc oxide and copper products under HS headings 74 and 8544. These four products face tariff quotas. The EU provides duty-free and quota-free access to Nepalese exports under its Everything But Arms (EBA) initiative. Nepal is beneficiary under the GSP schemes of Australia, Canada, the European Union, the Eurasian Economic Union, Iceland, Japan, Kazakhstan, New Zealand, Norway, Switzerland, Turkey and the United States. The US is providing duty-free treatment for 779 products to help the country expand its trade and economic development following the devastating earthquakes in 2015. This unilateral preferential agreement started on 30 December 2016 and will last until 21 December 2025. China and Nepal also signed a bilateral agreement on transit transport in March 2016.
5.  FITTA 1992 and IEA 2016 provide the legal basis for regulating, administering and facilitating FDI. There many other laws related to banking, environment, and labor among others that also affect investment. The Company Act, 2006 (as amended in 2017) simplifies and makes the process of establishing, managing and administering companies more convenient and transparent. The Industrial Enterprises Act (amended in 2016) is simplifies and clarifies the procedures for the entry, operation and exit of industrial enterprises. The SEZ Authority Act 2016 provides incentives for investors establishing firms within a SEZ: full tax exemption for first five years, income tax rebates, dividend tax exemption, VAT facility, and custom duty exemptions among others. Investment Board of Nepal and Department of Industry facilitate and approve investment proposals depending on the amount of investment or as specified in respective laws.

6.  There are eight MFN tariff bands: duty-free, 1%, 5%, 10%, 15%, 20%, 30% and 80%. As of 2018/19, there are 5,572 tariff lines at the eight-digit level based on HS2017 nomenclature. The simple average applied MFN tariff (excluding ad valorem equivalents for specified duties) decreased from 12.2% in 2011/12 to 12% in 2018/19. Including ad valorem equivalents, the simple average applied MFN tariff in 2018/19 is 12.4%. The highest ad valorem rate of 80% applies to two tariff lines related to tobacco, along with motor vehicles, and arms and ammunition products.  

7. Tariffs have been increasing, with an average tariff of 9.3% on raw materials (first stage of processing), 11.4% on intermediate goods, and 13.8% on finished goods.  
8. Nepal bound 54 tariff lines at HS eight-digit level, with overall average bound tariff of 26.6%. The average bound tariff for agricultural products is 42.9% and for non-agricultural products 23.9%. However, applied tariffs (average 12.4%) are much lower than the average bound rate except for 38 tariff lines. These are mainly chemical products and some machinery including motor vehicles. 

9. The simple average tariff rate for SAARC members is 9.5% (for non-SAARC members its 12.4%). For agricultural products the average preference margin is 2.2 percentage points compared to the applied MFN tariffs, and for non-agricultural products its 2.9 percentage points. 

10. Other duties and charges imposed by Nepal include an agricultural reform fee of 5% (or 8% on some products) on selected agricultural products imported from India and Tibet Autonomous Region of China; and a road maintenance and reform fee of NRs4 per liter for import of petrol and NRs2 per liter for diesel. A customs service fee of NRs565 per declaration is charged o import consignments worth over NRs5,000. VAT and excise duties are also levied at customs points.

Tuesday, December 4, 2018

Waiting for the pay-off: Contribution-based social security scheme in Nepal

It was published in The Kathmandu Post, 03 December 2018. Related blog post here.

Prime Minister KP Sharma Oli launched a new contribution-based social security scheme for private sector employees amidst much fanfare and self-congratulation. The opposition bloc cautiously welcomed the initiative, asserting their share of contribution too but censuring the government’s flamboyance.

The new social security scheme, a product of groundwork that began almost a decade ago, is a landmark initiative. It is a win-win for private sector employees and employers (at least on paper) as it offers financial and income certainty for the former and a possibility of investor-friendly workplace environment for the latter. However, the success of the scheme now depends on how effectively and efficiently the government implements it by prioritising institutional set up, and operational and management independence of the fund.

Setting new precedents

The new scheme is in line with contribution-based social security regulation, which reflects the contribution-based social security law passed by the parliament last year. All formal sector firms are required to join the scheme and deposit 31 percent of an employee’s basic monthly salary in the Social Security Fund (SSF), of which 11 percent needs to come directly from worker’s basic salary and the remaining 20 percent must be contributed by the employer. Workers will get a unique social security number that will not change even if their jobs do. 

The SSF offers a number of schemes for workers. First, the health and maternity policy is restricted to medical coverage up to Rs. 100,000  and maternity allowance is equivalent to one month’s salary. If workers need to be absent from work beyond the 12 days of annual leave, then the SSF will provide them 60 percent of minimum salary. Pregnant workers who need to take leave in excess of 60 days (at the maternity level) will also be offered similar facilities. Second, workers will receive financial support in the case of workplace and non-workplace accidents and injuries. Third, workers who have contributed to the fund for at least 15 years are eligible for a monthly pension. Those working less than 15 years can withdraw the contributed money after termination of their employment. Fourth, in cases of deaths of workers, their family members can receive monthly pension equivalent to 60 percent of the worker’s basic salary in the last job. Similarly, children will receive 40 percent of parent’s monthly salary to cover educational expenses up to the age of 18 years.

Compared to existing schemes for workers’ welfare and financial security, these are generous offers. Employees have an incentive to be more disciplined, punctual and productive at workplace- something the private sector wanted since trade unions became unruly, leading to a deterioration of the investment climate - given the promises of not only their own financial and health securities, but also of their dependents. Employers are hoping for an end to labor strikes, often instigated by politically affiliated trade unions, over workers’ welfare and financial allowance. It should help to raise labour productivity (per worker output) if disruptive union politics and dishonest employers do not game the system in their favor. There will also be pressure on informal sector firms to enroll their employees into the program, leading to the formalisation of businesses (and potentially more tax revenue for the government).

The trade unions, which act as sister organisation of political parties, are happy because it is easier for them to make a deal with the government than the private sector (remember that the contribution rates could be changed). The private sector is also happy because now, issues such as planned and ad hoc welfare are now the government’s headache.

Key lies in implementation

The success of the new scheme depends on how effectively and efficiently it is implemented. First, the fund should be operated by an independent agency free from political and trade union pressure. An independent and transparent mechanism to manage fund is quintessential to its operational success and for it to earn higher return on investments. The law allows the government to direct the SSF on issues it thinks are pertinent and of national interest. This provision should not be used by the government to indirectly advance its agenda, especially on matters related to personnel management, daily operation of SSF, and investment decisions. Moreover, the SSF should desist from funding the government’s fiscal deficit—especially if it is due to drastic increase in recurrent expenditure—by purchasing treasury bills and bonds if the returns are not higher than in alternative scenarios.

Previously, the Ministry of Finance indirectly instructed Employees Provident Fund (EPF) and Citizen Investment Trust (CIT) to extend loans to projects it deemed were important and necessary to support the government’s agenda. A recent example includes the loans extended by these semi-autonomous pension funds to Nepal Airlines to purchase aircrafts, whose full operation is uncertain as the company is mired in a controversy over foul play in their procurement processes. This kind of investment, even with sovereign guarantee, increases the odds of incurring losses, which would mean lower than expected payment for employees enrolled in the scheme. Remember that final payment is based on the contribution of employees and the returns earned by the SSF on investments.

Second, a professionally run SSF without political and union interference is paramount to its success. If all formal and informal sector employees enroll, it could easily have over one billion dollars in deposit each year. Acquiring the human resources, and operational and management expertise required to manage such a large fund is quite a behemoth challenge. Furthermore, the failure to invest deposited funds will have an impact on banking sector liquidity unless the SSF adopts the pension fund’s strategy to park deposits in banks offering the highest interest rate.

Third, the government’s liabilities are going to increase drastically because it guarantees payment to workers even if money contributed by the SSF is insufficient. Some of the SSF’s policies, including issues pertaining to workplace accidents and the eligible age for pension schemes, are open ended and therefore, could significantly increase liabilities vis-à-vis its accumulated assets.

Furthermore, if SSF’s investment goes sour, then the liabilities will be even higher. The government is already alarmed by the ballooning retirement payment to public sector employees. Contingent and unfunded liabilities are ever increasing. This calls for a unified social protection scheme that covers public and private sector employees, old age allowance, medical insurance, and unemployment allowance, among others.

Fourth, workers, with their own and familial financial and health securities guaranteed, need to be more disciplined and productive at workplace. This, along with improvements to the investment climate, could result in higher production and investment. Currently, labor productivity of Nepali workers is one of the lowest in South Asia. 

Tuesday, November 27, 2018

Contribution-based social security scheme in Nepal

Prime Minister KP Sharama Oli formally launched a new contribution-based social security scheme today. It provides health, accident and maternity coverage to workers employed in the private sector. Workers will also get a lifetime pension after retirement. The scheme is in line with Contribution-based Social Security Regulation.

To enroll into the scheme, a sum equivalent to 31% of a worker’s basic monthly salary needs to be deposited in Social Security Fund (SSF). 11% will come directly from the worker’s basic salary and 20% will be contributed by the employer. This is a significant step in terms of financial and social security of workers and will be a win-win scheme for both workers and their employers. It is step toward workers security as well as creating an investor-friendly workplace environment. 

Here are some of the features:
  • Enrolled workers will get a unique social security number, which remains unchanged even if they change their job.  
  • The fund has four types of social security policy: health and maternity security, dependent family security, accident and disability security, and old age pension security. 
  • They must contribute to the fund for at least six months to avail medical insurance, which covers doctor’s fee, hospital charges, medical test fees, and travel expenses among others. 
  • They must contribute to the fund regularly for at least 12 months (in the last 18 months) to receive health and maternity coverage. Health coverage is limited to NRs100,000 annually. Maternity coverage is limited to one month of extra salary.
    • Workers are getting 12 days of annual leave. If they have to take leave more than that, then SSF will give them 60% of minimum salary 
    • Pregnant worker can get 60 days leave. SSF will give 60% of minimum salary if she has to take leave more than that (but not in excess of NRs25,000).
  • They will get financial support in the case of workplace accidents and disabilities.
    • They must contribute to the fund for at least two years to ensure that all expenses related to occupational diseases are covered. 
    • For non-workplace accidents, a maximum coverage of up to NRs700,000 can be availed.
    • For those who cannot return back to work after accident, the SSF will provide 60% of minimum salary until they report back to work.
  • They are eligible for pension 15 years after they start regular contribution to the fund (and after 60 years of age).
    • Workers who have worked less than 15 years can withdraw the deposited money after termination of employment
    • Workers who have worked at least 15 years will get monthly pension, which is equivalent to the sum of worker's deposit and profit earned by SSF from its investment divided by 180. If workers retire after 20 years of employment and contribution to the fund, then they will divide it is by 240.
  • If a worker dies, then the family members can receive monthly pension equivalent to 60% of the worker’s basic salary in the last job. The worker’s children will receive 40% of parent’s monthly salary to cover educational expenses up to the age of 18. If the worker doesn’t have spouse or children, then his or her parents will get 60% of monthly salary as pension. 
The government is planning to make it mandatory for formal sector firms to enroll in the scheme. It then wants to expand the coverage to informal sector too. Formal sector enterprises need to register by February 22 and submit employees' details by May 21. The exiting social security funds deposited in Citizen Investment Trust and Employees Provident Fund need to be transferred to SSF.

As per the plan as of now, of the total SSF, 3.22% will be allocated for medical treatment, health and maternity security; 4.52% for accident and disability coverage; 0.87% for dependent's family; and 91.39% for old age security. Currently, SSF has NRs20 billion deposited by levying one percent social security tax on basic salary of all private sector employees.  There are an estimated 3.5 million workers currently. The minimum wage as of FY2018 is NRs13,450, of which NRs8455 is basic salary and NRs.4995 is allowance. 

It is a good social security scheme whose groundwork started almost a decade ago. The big question now is how enrollment and fund will be managed and operated transparently. A committee headed by the secretary of Ministry of Labour, Employment and Social Security along with representatives from NRB (deputy governor), finance ministry, law and justice ministry, and cooperatives and poverty alleviation ministry will manage the fund. The executive committee will have three representatives each from trade unions and employers. There will be an executive director at the SSF. If politics is not kept away from SSF, then there is scope for mismanagement of funds (like pressure from MOF to invest in certain projects it deems necessary to support the government's plan). 

Independent and transparent management of fund is quintessential to its operational success and for it to earn profits from the investments. Higher the profits from investments, higher will be the payments to workers enrolled in the scheme. If not, then this is likely to increase fiscal burden of the federal government. 

Another question is how is the SSF going to encourage informal sector firms to enroll in the program (which in a way will force them to operate formally). There are about 0.5 million workers in the formal sector. Monthly contribution from them will be about NRs2.5 billion. 

Tuesday, November 20, 2018

China's manufacturing transformation

China's trajectory of manufacturing is quite interesting. Here is an abstract from an article in NYT:

Economic textbooks lay out a common trajectory for developing nations. First they make shoes, then steel. Next they move into cars, computers and cellphones. Eventually the most advanced economies tackle semiconductors and automation. As they climb up the manufacturing ladder, they abandon some cheaper goods along the way.
[...]Look at the evolution of what China sells to the rest of the world. As it ramped up its manufacturing engine in 2000, China was pretty good at making basic products like toys and umbrellas. By 2016, China had moved into more expensive goods like cellphones and computers, while making even more of the cheaper stuff.

The next phase, which includes the most valuable products in the world, will be harder. China can’t make chips as small and fast as the United States can. Its cars are mostly sold at home. Its manufacturing prowess is built on the back of engineering and expertise from the West.
Both the Apple iPhone and Huawei Mate 10 are assembled in Chinese factories. Both rely on pieces from outside China. The most intricate and expensive technology in the Huawei phone, the motherboard, has a Chinese processor, but it is primarily composed of chips from American, South Korean and Japanese companies. The 2.8-inch board accounts for 52 percent of the cost of the phone, according to data from TechInsights.

Sunday, November 18, 2018

Nepal Airlines seeks bailout, federal government to address tax overlaps and latest private sector diagnostics

From The Kathmandu Post: Less than four months after making the largest jet purchase in the history of Nepali aviation, Nepal Airlines Corporation, which was on a mission to reclaim its long-lost glory, said it is running out of cash and teetering on the edge of bankruptcy.

A statement made public on Thursday by the national flag carrier through a “white paper” shows that the corporation’s monthly cash deficit has reached Rs317.79 million since inducting the first of two long-range Airbus A330s into its fleet. Before that, Nepal Airlines had a monthly revenue surplus of Rs12.54 million. Since summer, Nepal Airlines’ debt-to-equity ratio, which measures the financial health of a company, has swelled to 39.82 percent from 14.40 percent. A higher ratio indicates the company is receiving most of its financing from borrowing, threatening bankruptcy if business continues to decline.

According to the white paper data, revenue earnings from the two wide-body jets from August 1 to September 15 stood at Rs264.8 million, while the expenses nearly tripled to Rs756.6 million, in addition to a staggering deficit of Rs491.8 million. At the moment, the two A330 jets are being utilised for less than seven hours daily, less than half of the required flight time to generate a decent profit. The revelation about the dire state of Nepal Airlines’ finances comes on top of the corporation’s massive loans to various institutions—its long- and short-term loans stand at Rs41.73 billion and it owes more than Rs3.66 billion in interest annually.

The national flag carrier, instead of scoping pilots for the new aircraft, followed its traditional practice—to get the planes first and find the pilots to fly them later. It still has at least three planes sitting on the tarmac at the Tribhuvan International Airport while it frantically looks for capable pilots. It was indeed a gargantuan project to equip the airlines with the youngest fleet in the country—inducting two Airbus A320 aircraft in 2015 and two additional wide-body A330 in 2018. The induction of four jets had been described as a game-changer for the corporation—and the country, allowing the airlines to compete with other international players on long-haul routes to Europe, Japan and the Middle East. However, some airlines officials say the corporation did not plan its operations efficiently.

From The Kathmandu Post: The Finance Ministry presented the proposal to the Cabinet for implementing the report that calls for scrapping several taxes levied by the local and provincial governments while broadening the tax base of the sub-national administrations.

The report recommends that the arbitrary taxes should be scrapped and a composite federal revenue law introduced to provide legal clarity. Finance Ministry officials confirmed that the government will instruct the provincial and local governments to follow the recommendations. The Thapaliya-led committee was formed after an uproar over hefty increments in taxes imposed arbitrarily by the provincial and local governments.

The committee concluded that only the federal government has the authority to levy tourism fees, which has to be shared between the provincial and local governments. It also recommends an end to the practice of non-state actors such as various committees and projects collecting tourism-related taxes contrary to the spirit of the constitution. The high-level committee also suggests that local governments cannot impose business taxes—on industries, trade, profession or occupation within a particular local federal unit—on transactions. Such taxes can be imposed only during the registration and renewal of business ventures. The report deems the Patake Sawari Kar (vehicle tax) and the District Export Tax as unconstitutional as they go against Article 236 of the constitution.

While the erstwhile District Development Committees imposed ‘District Export Tax’ on the sale of such goods to another district, the new constitution banned it. However, Clause 11 of the Local Government Operation Act allows the local government to collect sales and export fees on such items. After the Financial Act introduced by the federal government amended the provision of the Local Government Operation Act-2017, local governments complained that the changes breached their right to collect wealth tax. The report suggested implementation of the Act’s provision. The report also stresses the need for a law on taxing the extraction of stones, gravel and sand as there is no legal clarity over their use.

Private sector diagnostics 

The IFC recently released country private sector diagnostics, which identifies sectors that have potential to support Nepal's growth. In addition to hydropower, the other identified five sectors that have potential to have major impacts on Nepal's growth trajectory are tourism, agribuisness, education, health, and IT. 

The private sector is constrained by institutions/governance and infrastructure. With key sectors such as tourism and agribusiness being highly reliant on connectivity, strengthening infrastructure is the other critical challenge for private sector development. A gap in technical skills and managerial capabilities is constraining growth-oriented firms from scaling up and rising up the value chain. Access to finance and inefficient land markets are also key constraints. Excessive barriers to foreign investment and foreign-exchange transactions also constrain the private sector. Policies on land acquisition and the use of land as collateral, in particular, deter foreign investors and lenders, restricting private sector access to long-term finance.

Tuesday, November 13, 2018

Nepal Investment Summit: Rhetoric vs Reality

It was published in The Kathmandu Post, 12 November 2018, p.8

Tangible outcomes must be met before holding the next Nepal Investment Summit

The government is planning to organise an investment summit around March 2019 despite having nothing much to show since Nepal Investment Summit in March 2017. The Investment Board of Nepal (IBN), which is spearheading the idea of organising the summit, wants to boast about the government’s ‘stable politics’ and investment policies, especially after the elections. However, this rhetoric means nothing to investors if the government cannot show them tangible outcomes that would facilitate investments in ways that are different from previous years.

Organising a grand summit for fleeting fanfare does not constitute promotion of the country as an investment destination. Investors will be more interested in concrete accomplishments since the last summit, the government’s promises vis-à-vis its pro-activeness in amending and implementing legislations, and the resulting number of successful commercial deals and projects signed. Or else, it will simply be yet another summit that leaves us with little more than photo-ops, self-glorification, and never-ending commitments.

Little progress

Investors from seven countries signed letters of intent to invest US$13.5 billion-in sectors including hydropower, airlines, tourism, agriculture, railways, and infrastructure-during the investment summit in 2017. About 61 percent of it came from Chinese investors.

The summit in 2017-organised to promote Nepal as an investment destination for the next decade-targeted diplomatic missions in the country, current and potential foreign investors, media, nonresident Nepalis, experts, and private actors. The hype before the event and the rousing fanfare immediately after the investment commitments were made tapered off in no time. The investment promotion agencies have not been successful in transitioning from intent to commitment to investment. Although the summit had broad political support, the IBN has failed to do the required follow-up work with the seriousness it deserves. All we are getting is bureaucratic lip service. 

Let’s look at the outputs thus far. First, foreign direct investment (FDI) commitments increased from 0.6 percent of gross domestic product (GDP), or about Rs.150 billion, in 2016/17 to about 1.9 percent of GDP (Rs556 billion) in 2017/18. However, none of the investment commitments in new projects can be traced back to the investment summit in 2017. Meanwhile, actual FDI investment increased from 0.5 percent GDP to 0.6 percent of GDP over the same period. Again, none of these are even remotely related to the investment summit.

Second, one of the main points trumpeted by the IBN to justify the new summit is that the time is different now. Yes, the two big communist parties forged an alliance, forming Nepal Communist Party, and formed a majority government not only at federal level, but also provincial and local levels. However, this alone is not a harbinger of political and policy stability. The previous summit had support from the same political parties and politicians. The co-chair of the ruling party was the prime minister during the investment summit last year.

Third, a cosmetic change in government leadership but not in governance style that produces promised outputs does not mean much to investors. They are interested in whether the government is keeping its promises in a timely manner, and how easier it is for them to invest, earn and repatriate income. There is hardly anything to show on this front. The previous summit was tagged as an effort to promote Nepal for the next ten years. However, after just two years, devoid of any commendable result, the IBN is proposing for a new investment summit. It does not send a good signal of consistent leadership with concrete vision and viable work plan. Furthermore, inconsistencies, especially policy reversals to benefit a particular group of investors, unnerve genuine investors. For instance, the controversy over re-awarding Budhi Gandaki project by the cabinet to a foreign firm with a questionable record in Nepal is a case in point.

Fourth, latest global reports that track the progress of our economy relative to itself and to other economies are not encouraging either. Nepal ranked 109 out of 140 economies in the Global Competitiveness Report 2018, which evaluates an economy on a range of factors such as institutional quality, state of infrastructure, business dynamism and innovation capability. Nepal’s rank was 108 in 2017 but it slipped by one position to be the least competitive economy in South Asia. In terms of enabling environment such as institutions, infrastructure, ICT adoption, and macroeconomic stability, Nepal’s relative standing is not encouraging.

Similarly, Doing Business Report 2019 indicates an economy that did not make any progress in making business operations smooth and hassle-free last year. Nepal scored 59.63 (rank 110 out of 190 economies), lower than 59.95 last year, indicating that doing business, in fact, was made burdensome. Nepal fares notably low in enforcing contracts, resolving insolvency, getting credit and paying taxes.

Simplify process

The overall outcomes since the last investment summit are not encouraging at all. The economy is not agile and future-ready enough to entice investors. It doesn’t even have basic infrastructure and proactively supportive institutions to create a foundation for enhancing productivity. Instead of wasting time and resources on another investment summit, the IBN should do the necessary to follow-up on the investment commitments made during last year’s summit. Meantime, the government should be doing the needful to develop a conducive legal and regulatory framework to attract more FDI, starting with approval of foreign investment and public-private partnership legislation.

The next five years should be marked by notable progress in reducing barriers to doing business in Nepal: aiming for the best investment destination by ensuring speedy clearance of investment proposals, requiring the lowest number of documents to enter, operate and exit the market, and making bureaucracy and government leadership the most efficient in South Asia region. Boasting about these tangible milestones is more meaningful than just claiming political stability under the communist leadership, which is already vulnerable to a resurgence of factionalism within the party. 

Wednesday, October 17, 2018

Nepal ranked 109 out 140 economies on economic competitiveness

The World Economic Forum has published an updated version of its global competitiveness rankings by including potential of and opportunities from rapid technological change (dubbed as the Fourth Industrial Revolution [4IR]), which is also one of the critical factors for higher productivity and an important determinant of long-term growth and income.

The new report is named Global Competitiveness Report 2018 (GCI 4.0 2018) and includes a number of new, critically important factors such as entrepreneurial culture, companies embracing disruptive ideas, multistakeholder collaboration, critical thinking, meritocracy, social trust. These factors complement traditional components such as ICT and physical infrastructure, macroeconomic stability, property rights, and years of schooling. They together enhance human capital, innovation, resilience and agility. This year’s report also introduces a new benchmark that scores an economy from 1 to 100 (the largest figure being called the frontier that each country should aspire to reach).

The index includes 98 indicators grouped into 12 pillars of competitiveness: Institutions; Infrastructure; ICT adoption; Macroeconomic stability; Health; Skills; Product market; Labour market; Financial system; Market size; Business dynamism; and Innovation capability. Some of the pillars of competitiveness are the same as in the previous reports, but some are different or regrouped (especially those to do with ICT and innovation).

The 2018 ranking is not compatible with rankings in the past. However, they include backcasting estimation for 2017 that can be compared with 2018 edition. The logic behind the change in competitiveness scoring is that the pathway to prosperity through progressive industrialization by leveraging low-skilled labor is now diluted by the advent of the 4IR. The cost of technology and capital is lower than ever (but would still require a number of other factors for adoption). It calls for a holistic approach to competitiveness, as a good performance in one pillar doesn’t make up for a poor performance in another (investing in technology without investing in digital skills will not yield meaningful productivity gains). All pillars are weighted equally rather than according to a country’s current stage of development.

With a score of 85.6, the United States is the closest economy to the frontier, the ideal state (100), where a country would obtain the perfect score on every component of the index. The other in top 10 are: Singapore, Germany, Switzerland, Japan, Netherlands, Hong Kong SAR, the United Kingdom, Sweden and Denmark.

In South Asia, all economies need to enhance innovation capacity, technological readiness and address the usual development constraints related to institutions, infrastructure and skills. In ICT adoption and innovation capability, the region lags behind from the rest of the world (although India is an outlier with 31st rank).

India leads the region in all areas of competitiveness except for health, education and skills, where Sri Lanka boasts the highest life expectancy (67.8 years) and the workforce with the highest amount of schooling (9.8 years). The report notes that India has invested more heavily on transport infrastructure and services, while Sri Lanka has the most modern utility infrastructure. The quality of Indian research institutions stands out in the region.

In South Asia, India ranks 58th (up five places compared to 2017 backcast edition), followed by Sri Lanak (rank 85), Bangladesh (rank 103), Pakistan (rank 107), and Nepal (rank 109). All countries in the region, except India, saw their rank deteriorate compared to the 2017 backcast estimate. 

Nepal is the least competitive country in South Asia. It ranks 109 out of 140 economies included in the report. In none of the four broad components it ranked below 100. Its overall comparable rank in 2017 was 108.

In enabling environment component, it ranks 108 out of 140 economies. Within this component, the ranking on institutions is 98, infrastructure 117, ICT adoption 101, and macroeconomic stability 96.
  • Within institutions pillar, the worst ranking is on quality of land administration (133) and intellectual property protection (122). The ranking on organized crime is also pretty bad. The beast ranking is on shareholder governance.
  • Within infrastructure pillar, the ranking is the worst: above 100 in all of the subcomponents (except for airport connectivity, on which it ranks 75).
  • Within ICT adoption pillar, the best ranking is on mobile cellular telephone subscriptions per 100 people (57) but fares worst in internet subscriptions and users.
  • Within macroeconomic stability pillar, it ranks 116 in inflation and 82 in debt dynamics (this one was one of the best in previous reports but looks like the fast accumulation of debt is a factor here)
In human capital component, it ranks 103 out of 140 economies. Within this component, the ranking on health is 102 and skills 106.

In markets component, it ranks 105 out of 140 economies. Within this component, the ranking on product market is 130, labor market 125, financial system 58, and market size 84.

In innovation ecosystem component, it ranks 105 out of 140 economies. With this component, the ranking on business dynamism is 98 and innovation capacity 110.

Despite the importance of 4IR now, for many of the low-income countries (also least competitive ones), the main causes of slow growth and low level of prosperity continues to be ‘old’ development issues such as institutions (security, property rights, social capital, checks and balances, transparency and ethics, public-sector performance and corporate governance), infrastructure (road, rail, air, electricity, water connectivity) and skills (education, critical thinking). They cannot ignore these issues and hope to achieve technology-based leapfrogging.

For non-least competitive economies, the policy approach should incorporate 4IR. For instance, investment in broader measures of competitiveness today to sustain growth and income in the future; enhancing the fundamentals of competitiveness today to improve resilience to shocks; supporting those who lose out to globalization; enhancing agility and future-readiness; ensuing effecting institutions to promote competitiveness; strengthening financial system; and proactive, far-sighted leadership.

Sunday, October 14, 2018

Nepal's fares better than most South Asian countries on the state of human capital

This year’s World Development Report focuses on the changing nature of work and the importance of productive human capital. The report argues that there is no need to become overly fearful of robots taking over jobs that have traditionally been done by humans. 

Technological progress (innovation) reshapes work, and firms adopt new ways to produce goods and services and to expand markets. Governments too can make use of technology to delivery effective public services. Differences in human capital now will have profound implication on productivity of the next generation of workers. 

Key highlights:

Technology changes the nature of labor demand, especially it reduces demand for low skilled workers but raises premium on high-order cognitive skills. This is especially true in the case of manufacturing jobs in some advanced economies and middle-income countries. But then technology has provided new opportunities to create new jobs, increased productivity and helped to deliver effective public services. 

Digital technologies allows firms to scale up or down production quickly; and platform marketplaces allows faster diffusion of technology to benefit general public.   

Three types of skills are particularly important: advanced cognitive skills (complex problem solving), socio-behavioral skills (teamwork), and skill combinations predictive of adaptability (reasoning and self-efficacy). 

Investing on human capital, especially education and health, must be a priority for governments. Policy measures include investing in people through nutrition, healthcare, quality education, jobs and skills. Accumulation of knowledge, skills and health helps citizens realize their potential and make them productive. Investment in physical and human capital complements each other. Creating formal jobs, better access to internet, investment in roads and municipal infrastructure, and social protection are vital to enhance human capital. Focusing on early childhood, tertiary education, and adult learning outside jobs could help in adapting to skills readjustment. 

The changing pattern of jobs and skills landscape necessitates social protection as well. Eight in 10 people in developing countries receive no social assistance, and 6 in 10 work informally without insurance. The report recommends expanding social protection coverage to cover the neediest people (and eventually universal coverage), exploring the feasibility of universal basic income, and placing community health workers on the government’s payroll. 

To create fiscal space, developing countries need to increase tax base (such as property taxes in urban municipalities and excise duty on sugar or tobacco), enhance efficiency of public administration (indirect taxes, reforming subsidies, closing global tax loopholes) and reduce the size of informal sector. Addressing informality in the absence of social protection for workers is a challenging policy issue.

Human Capital Index

The WDR 2019 also includes Human Capital Index (HCI), which measures “the amount of human capital that a child born in 2018 can expect to attain by age 18, given the risks of poor health and education that may exist in the country where she lives”. HCI ranges between 0 and 1, with a higher score indicating that a child born today achieves full health (defined as no stunting and survival up to at least age 60) and completes her education potential (defined as 14 year of high-quality school by age 18). 

Specifically, it is a composite score of five indicators: (i) the probability of survival to age five; (ii) a child’s expected years of schooling by her 18th birthday; (iii) harmonized test scores as a measure of quality of learning; (iv) adult survival rate (fraction of 15 year olds that will survive to age 50); and (v) the proportion of children who are not stunted. Indicators (ii) and (iii) is a measure of expected years of quality-adjusted schooling, which combines quantity and quality of education. Indicators (iv) and (v) are related to health dimension. 

For instance, Nepal has a HCI score of 0.49, meaning that a child born today in Nepal will only be half as productive as she could have been relative to the benchmark of complete education and full health. You could also think this of as the possibility of doubling GDP in the future if Nepal reaches the benchmark of complete education and full health. Nepal’s HCI is higher than the average for South Asia region.

On Nepal and South Asia:

Nepal ranked 102 out of 157 countries covered in the report. India ranked 115 (and has rejected the findings). Sri Lanka ranked 74.

Human Capital Index: A child born in Nepal today will be 49 percent as productive when she grows up as she could be if she enjoyed complete education and full health. In 2017, the HCI for Nepal is higher than what would be predicted for its income level. 
  • In South Asia, Sri Lanka had the highest HCI score (0.58) followed by Nepal (0.49), Bangladesh (0.48), India (0.44), Afghanistan (0.39), and Pakistan (0.39).
Probability of Survival to Age 5: 97 out of 100 children born in Nepal survive to age 5. 
  • In South Asia, probability of survival to age 5 is the highest in Sri Lanka (99 out of 100 children), followed by Bangladesh and Nepal, India, Afghanistan and Pakistan. 
Expected Years of School: In Nepal, a child who starts school at age 4 can expect to complete 11.7 years of school by her 18th birthday. 
  • In South Asia, expected years of school is highest in Sri Lanka (13), followed by Nepal, Bangladesh, India, Pakistan and Afghanistan. 
Harmonized Test Scores: Students in Nepal score 369 on a scale where 625 represents advanced attainment and 300 represents minimum attainment.
  • In South Asia, students’ harmonized test scores is the highest in Sri Lanka (400) followed by Nepal, Bangladesh, India, Afghanistan and Pakistan. 
Learning-adjusted Years of School: Factoring in what children actually learn, expected years of school is only 6.9 years. Children in Nepal can expect to complete 11.7 years of pre-primary, primary and secondary school by age 18. However, when years of schooling are adjusted for quality of learning, this is only equivalent to 6.9 years: a learning gap of 4.8 years.
  • In South Asia, learning-adjusted years of school is the highest in Sri Lanka (8.3 years), followed by Nepal, Bangladesh, India, Afghanistan and Pakistan.
Adult Survival Rate: Across Nepal, 85 percent of 15-year olds will survive until age 60. This statistic is a proxy for the range of fatal and non-fatal health outcomes that a child born today would experience as an adult under current conditions.
  • In South Asia, adult survival rate is the highest in Bangladesh and Sri Lanka (0.87), followed by Nepal, Pakistan, India and Afghanistan. 
Healthy Growth (Not Stunted Rate): 64 out of 100 children are not stunted. 36 out of 100 children are stunted, and so at risk of cognitive and physical limitations that can last a lifetime.
  • In South Asia, Sri Lanka has the highest fraction of kids under 5 NOT stunted (0.83), followed by Nepal, Bangladesh, India, Afghanistan and Pakistan. 
UNDP’s HDI and WB’s HCI are complementary. HDI is a composite index of life expectancy, education and per capita income. HCI is also a similar index but it links the five indicators to (future) productivity and income levels. In other words, it shows how improvements in the current education and health outcomes shape the productivity of the next generation of workers. HCI touches upon SDGs 3 and 4. 

Meanwhile, India 

Friday, October 5, 2018

सरकारले गरेका काम कसरी मूल्यांकन गर्ने?

सेतोपाटीमा असोज १४, २०७५ मा प्रकाशित लेख। 

प्रधानमन्त्री केपी शर्मा ओलीले मन्त्री र सरकारी कर्मचारीलाई भन्दै आएका छन्, 'जनताले देख्न र महशुस गर्न सक्ने गरी परिणाममुखी विकास निर्माणका काम गरेर देखाउनुहोस्।'

उता, अर्थमन्त्री युवराज खतिवडा समग्र आर्थिक प्रगति मूल्यांकनमा आर्थिक वर्ष २०७५/७६ लाई आधार वर्ष मान्नुपर्ने धारणा राख्छन्।

यसको तात्पर्य, यो सरकारको बजेट कार्यान्वयनबाट मात्र आधार वर्ष निर्माण हुनेछ। त्यसपछि बल्ल सुन्तलालाई सुन्तलासँग तुलना गरेजस्तो उपयुक्त हुनेछ।

उसो भए यो सरकारले २०७५/७६ मा गरेका काम कसरी मूल्यांकन गर्ने त?

यो सरकारले २०७४ फागुन ३ देखि काम सुरु गरेको हो। आर्थिक वर्ष २०७४/७५ को झन्डै आधा समयदेखि यही सरकारले काम गरिराखेको छ। त्यसैले, बजेट कार्यान्वयनका केही पक्ष छाडेर समग्र अर्थतन्त्रको अवस्था र प्रगति मूल्यांकन गर्दा अघिल्लो वर्षदेखि नै गर्नुपर्ने हुन्छ।

सामाजिक, कूटनीतिक, राजनीतिक, शान्ति र सुशासनजस्ता महत्वपूर्ण पक्षमा भएका प्रगति सम्बन्धित विज्ञले गर्लान्। यो लेखले २०७४/७५ मा भएका बृहत अर्थशास्त्रका विभिन्न पाटाको समीक्षा गर्नेछ। यो आर्थिक वर्षमा सरकारले गरेका काम कसरी मूल्याकंन गर्ने भन्नेमा लेख केन्द्रित छ।

विशेषगरी बृहत अर्थशास्त्रका चार मुख्य क्षेत्रमा हामी यहाँ चर्चा गर्नेछौं।

सबभन्दा पहिला, वास्तविक क्षेत्रको कुरा गरौं।

यसमा आर्थिक वृद्धिदर, प्रतिव्यक्ति आय, रोजगार सिर्जना, लगानी लगायत क्षेत्र समेटिने छन्। अघिल्लो आर्थिक वर्ष कुल गार्हस्थ्य उत्पादन (जिडिपी) ५.९ प्रतिशत वृद्धि भएको थियो। यो वर्षको बजेट र मौद्रिक नीतिको लक्ष्य ८ प्रतिशत छ। अहिलेसम्मको स्थिति हेर्दा वास्तविक उपलब्धि यो लक्ष्यभन्दा कम हुनेछ।

हामीले ध्यान दिनुपर्ने गैरकृषि क्षेत्रको वृद्धिदर हो। कृषि क्षेत्र सरकारको कामभन्दा मनसुनमा भर पर्छ। गैरकृषि भन्नाले उद्योग र सेवा क्षेत्रलाई चिनिन्छ। जिडिपीमा उद्योग क्षेत्रको हिस्सा झन्डै १५ प्रतिशत छ भने सेवा क्षेत्रको ५३ प्रतिशत छ।

गत वर्ष प्रतिकूल मौसमका कारण कृषि उत्पादन २.८ प्रतिशत मात्र वृद्धि भयो। उद्योग क्षेत्र ८.८ प्रतिशत वृद्धि भयो। बिजुली आपूर्ति र व्यवस्थापन सुधारले माथिल्लो तामाकोशी र मेलम्चीजस्ता ठूला पूर्वाधार आयोजनामा राम्रो काम भएको थियो।

भुइँचालोपछि पुनर्निर्माणले पनि गति लिएको थियो। त्यस्तै, बढ्दो पर्यटक आगमन, सहज बिजुली आपूर्ति र चुनाव बेला भएको खर्चका कारण सेवा क्षेत्र ६.६ प्रतिशत वृद्धि भएको थियो।

विगत सरकारले भन्दा भिन्न तरिकाले काम नगर्ने हो भने उद्योग र सेवा क्षेत्र वृद्धिदर अघिल्लो वर्षभन्दा बढ्न मुश्किल छ। राष्ट्रिय गौरवका आयोजनाको प्रगति, मासिक सरकारी खर्चको सम्भावित गति र ढाँचा, उच्च व्याज दर र निजी क्षेत्रको हालसम्मको शिथिलता हेर्दा आर्थिक वृद्धि लक्ष्य चुनौतीपूर्ण देखिन्छ।

यो सरकारको चुनौती उद्योग र सेवा क्षेत्रको वृद्धिदर अघिल्लो वर्षभन्दा बढाउनु हो। गत वर्ष चुनावताका जस्तो अर्थतन्त्रलाई बढावा दिने खालका अल्पकालीक खर्च पनि अहिले छैन। त्यसैले, यो सरकारले समयमै बजेट कार्यान्वयन, निजी क्षेत्रको लगानी वृद्धि, पुनर्निर्माण, उच्च पर्यटक आगमन र सुशासनजस्ता महत्त्वपूर्ण पाटामा ध्यान दिन जरुरी छ।

अघिल्लो वर्षभन्दा धेरै आर्थिक वृद्धि भयो भने त्यसको सकारात्मक प्रभाव लगानी, रोजगार, पर्यटक आगमन, प्रतिव्यक्ति आयजस्ता महत्त्वपूर्ण आर्थिक सूचकमा देखिन्छ।

सरकारको मूल्यांकन गर्दा आर्थिक वृद्धिदरका साथै यस्ता सूचकमा भएको परिवर्तन पनि हेर्न जरुरी छ।

गत वर्ष प्रत्यक्ष विदेशी लगानी जिडिपीको ०.६ प्रतिशत थियो। पर्यटक आगमन झन्डै १० लाख थियो। प्रतिव्यक्ति आय अमेरिकी डलर १००३.६ थियो। कृषि, निर्माण, ऊर्जा, उद्योग, खनिज, सेवा र पर्यटन क्षेत्रमा लगानी प्रतिबद्धता जिडिपीको ११.७ प्रतिशत थियो।

त्यस्तै, प्रत्यक्ष विदेशी लगानी प्रतिबद्धता जिडिपीको १.९ प्रतिशत थियो। सरकारी कुल स्थिर पुँजी निर्माण ७.८ प्रतिशत थियो भने निजी कुल स्थिर पुँजी निर्माण २६.३ प्रतिशत थियो।

दोश्रो, सरकारको कामसँग प्रत्यक्ष सरोकार राख्ने वित्तीय क्षेत्र हेरौं।

अर्थमन्त्री खतिवडाले केही हदसम्म वित्तीय अनुशासन कायम गरेर २०७५/७६ मा १३ खर्ब १५ अर्ब रुपैयाँको बजेट ल्याए। आर्थिक वृद्धिदर ८ प्रतिशत र मुद्रास्फिति दर ६.५ प्रतिशतको लक्ष्य छ।

हालका केही वर्षमा चालू खर्च यसरी बढिरहेको छ, कर राजस्वले पनि धान्न गाह्रो छ। एकातिर खर्च धान्न हम्मे छ, अर्कातिर विनियोजित बजेट खर्च हुन सकेको छैन।

पछिल्लो पाँच वर्षमा विनियोजित बजेटको पुँजीगत खर्च जम्मा ७२ प्रतिशत थियो। झन् पुँजीगत खर्चको मासिक ढाँचा हेर्ने हो भने त लगभग ४० प्रतिशत खर्च आर्थिक वर्षको अन्तिम महिनामा हुने गरेको छ।

यसले कम खर्चका साथै कम गुणस्तरका आधारभूत संरचना बनाइएको संकेत गर्छ। आयोजना तयारी तथा कार्यान्वयनको संरचनात्मक कमजोरी, आयोजना व्यवस्थापन तथा ठेकेदारको कमजोर क्षमता, प्रान्तीय तथा स्थानीय तहमा आयोजना कार्यान्वयन गर्न सक्ने जिम्मेदार व्यक्तिको अभाव र योजना तथा सञ्चालन तहमा राजनीतिक हस्तक्षेप लगायत कारणले वास्तविक पुँजीगत खर्च विनियोजित बजेटभन्दा कम भएको हो।

यी समस्या अर्थमन्त्री खतिवडाले खासै सम्बोधन गरेका छैनन् भनेर आलोचना हुँदा अर्थ मन्त्रालयले बजेट कार्यान्वयन बेला सम्बोधन गर्ने बताएको थियो।

सरकारको यो वर्षको काम मूल्यांकन गर्दा विनियोजित बजेटको तुलनामा वास्तविक पुँजीगत खर्च अघिल्ला वर्षभन्दा धेरै भयो कि भएन भनेर हेर्नुपर्छ। अर्थ मन्त्रालय र सरकारको काम मूल्यांकन गर्दा लक्ष्यभन्दा बढी राजस्व असुलीलाई मात्र प्राथमिकता दिएको पाइन्छ। तर, प्रान्तीय तथा स्थानीय सरकारको बजेट कार्यान्वयन गर्नसक्ने क्षमता वृद्धि गर्न केन्द्रीय सरकारले (विशेषगरी अर्थ मन्त्रालय र राष्ट्रिय योजना आयोग) तदारुकतासाथ काम गरेको अहिलेसम्म देखिएको छैन। भुइँचालोले ध्वस्त घर र आधारभूत संरचना पुनर्निर्माणमा पनि खासै उल्लेखनीय उपलब्धि भएका छैनन्।

यो सरकारले बढ्दो वित्तीय घाटा कम गर्न कस्ता कदम चाल्छ भन्ने पनि हेर्नुपर्छ। जस्तै, अनावश्यक र अनुपयुक्त चालू खर्च घटाएर उत्पादक क्षमता बढाउन कत्तिको सफलता पाएको छ भन्ने महत्त्वपूर्ण हुन्छ। वित्तीय घाटा जिडिपीको १० प्रतिशत हुने अनुमान छ। यस्तो ठूलो वित्तीय घाटाले मुद्रास्फिति र आयात बढाउनुका साथै बैंकिङ तरलतालाई असर गर्छ। सर्वसाधारण जनता र व्यापारीले बैंकबाट लिने ऋणको व्याज उच्च तथा अस्थिर हुन जान्छ।

त्यस्तै, सञ्चालनमा रहेका ३७ सार्वजनिक संस्थानमध्ये कतिले घाटाबाट नाफा कमाउन थाले भन्ने पनि हेर्नुपर्छ। कमजोर वित्तीय अवस्थाका बाबजुद उत्पादकत्व वृद्धि गर्ने खालका पुँजीगत खर्चलाई निरन्तरता दिनुपर्ने बाध्यता भएका बेला घाटामा चलेका सार्वजनिक संस्थानलाई जनताबाट उठाएको राजस्व खन्याएर अनुदान दिनु अनुचित आर्थिक नीति हो।

तेस्रो, मौद्रिक क्षेत्रमा मुद्रास्फिति दर ६.५ प्रतिशतभन्दा कम, बैंकिङ तरलताको सहजता, बैंकबाट लिने ऋणको व्याज अहिलेभन्दा कम र स्थिर, वित्तीय पहुँचमा वृद्धि, अनुत्पादक पुँजीमा कमी र उत्पादक क्षेत्रमा बढ्दो ऋणजस्ता सूचकलाई तुलनात्मक रूपले हेर्नुपर्ने हुन्छ।

वास्तवमा मुद्रास्फिति दर अघिल्लो वर्षभन्दा थोरै (४.२ प्रतिशत) भयो भने यो सरकारले जस लिने हो। मुद्रास्फिति दरलाई सरकारको नीतिका अलावा बाह्य कारकले पनि असर गर्छ। त्यसैले, सरकारको बजेट लक्ष्यसँग तुलना गर्दा बढी सान्दर्भिक हुन्छ।

भारतमा बढ्दो मुद्रास्फिति दर, अक्सर बढिरहेको तेल र खान पकाउने ग्यासको मूल्य, कमजोर विनिमय दर र आपूर्ति पक्षसँग सम्बन्धित बाधाले नेपालमा वस्तु तथा सेवाका मूल्यमा असर गर्छ। यो सरकारले आपूर्ति पक्षसँग सम्बन्धित समस्या समाधान गरेर वस्तु तथा सेवामा बढ्दो मूल्यको चाप कतिसम्म कम गर्ने पहल गरेको छ भन्ने महत्त्वपूर्ण हुन्छ।

आकासिँदै गएको ऋणको व्याज घटाएर साधारण जनता र व्यवसायीलाई कत्तिको राहत महशुस हुन्छ भन्ने पनि ख्याल गर्नुपर्छ।

हामीले याद गर्नुपर्ने के पनि हो भने, सरकारले धेरै आन्तरिक ऋण उठायो भने निजी क्षेत्रले लिने ऋणको व्याज बढ्न जान्छ। सरकारले आन्तरिक ऋण उठाउँदा बजारमा भएको तरलतालाई कत्तिको ध्यान दिएर उठाएको छ भन्ने अहम् हुन्छ।

बैंकिङ सेवा नपुगेका स्थानीय तहमा यो वर्ष कति हदसम्म सेवा विस्तार हुन्छ भन्ने पनि महत्त्वपूर्ण छ। कुल बैंकिङ ऋण वृद्धिमा उद्योग तथा उत्पादनमूलक क्षेत्रले बढी ऋण पाउँछन् कि थोक र खुद्रा व्यापारले पाउँछ भन्ने पनि नियाल्नुपर्छ।

अहिले कुल बैंकिङ ऋणको २० प्रतिशत थोक र खुद्रा व्यापारले पाउँदै आएको छ। उद्योगले जम्मा ११ प्रतिशत जति पाएको छ। बैंकिङ क्षेत्रमा अहिले ॠणको वृद्धिदर निक्षेपभन्दा धेरै छ। उच्च लाभ कमाउने होडमा खराब कर्जा पनि बढ्ने जोखिम हुन्छ।

केही अघिसम्म धेरैजस्तो बैंक तोकिएको पुँजी पर्याप्तता अनुपातको सेरोफेरोमा बसेर करोबार गर्दा माग भएजति कर्जा स्वीकृति गर्न सकिराखेका थिएनन्। यो समस्याको दीर्घकालीन सुधार गर्न सरकार र राष्ट्र बैंकले कस्तो रणनीति अवलम्बन गर्छन् भनेर पनि हेर्नुपर्छ।

चौथो, अहिले सबभन्दा बिग्रेको स्थिति बाह्य क्षेत्रको छ।

चालु खातामा घाटा बढेर जिडिपीको ८.२ प्रतिशत भएको छ। जुन आर्थिक वर्ष २०५२/५३ यताकै सबभन्दा धेरै हो।

केहीअघिसम्म बचतमा रहेको चालु खाता २०७४/७५ को बढ्दो व्यापार घाटा र घट्दो विप्रेषण आयले ठूलो घाटामा छ। यो वर्ष चालू खातामा घाटा बढेर गत ५० वर्षमा भन्दा धेरै हुने हो कि गत वर्षभन्दा थोरै हुने हो, हेर्न बाँकी नै छ। साह्रै कम निर्यात, अत्यधिक आयात र सामान्य विप्रेषण आयले चालू खातामा घाटा झन् बढ्ने देखिन्छ।

यो सरकारले निर्यात प्रवर्द्धन गर्न र आयात प्रतिस्थापन गर्दै स्वदेशी उत्पादन बढाउन चालेका परिणामउन्मुख कामहरू मूल्यांकन गर्नुपर्छ।

चालू खातामा घाटा बढ्दै गयो भने बाह्य क्षेत्रको जोखिम पनि बढेर समग्र अर्थतन्त्रलाई हानी पुर्याउँछ। यसले विदेशी मुद्रा भण्डार घटाउँछ। विदेशी मुद्रा भण्डारअनुसार देशले कति महिनाको आयात धान्न सक्छ निर्धारण गरिन्छ। यसले सम्भावित प्रत्यक्ष विदेशी लगानीलाई असर गर्छ। समग्र भुक्तानीको सन्तुलन बिगार्छ।

यो वर्ष भुक्तानीको सन्तुलन घाटामा जान सक्ने सम्भावना छ। चालू खातामा भएको ठूलो घाटाले कम घरेलु बचतलाई संकेत गर्छ, जुन सरकारको लापरवाह वित्तीय नीति र अनुत्पादक तथा अनावश्यक क्षेत्रमा बढी कर्जा प्रवाह भएर हुन्छ। सरकारले बढ्दो 'दोहोरो घाटा' (वित्तीय र चालू खातामा घाटा) कम गर्दै आर्थिक वृद्धिदर र मुद्रास्फिति दरको लक्ष्य प्राप्त गर्नुपर्ने चुनौती आएको छ।

झन्डै दुईतिहाइ बहुमत भएको सरकारले यसो-उसो नभनी समयमै परिणाममुखी आर्थिक र विकास निर्माणका काम गरेर देखाउनुपर्ने अवस्था आएको छ। सरकारले गर्ने कामको प्रभाव प्रत्यक्ष वा अप्रत्यक्ष रूपमा माथि उल्लिखित वास्तविक, वित्तीय, मौद्रिक र बाह्य क्षेत्रहरूसँग सम्बन्धित प्रमुख समष्टिगत आर्थिक परिसूचकहरूमा प्रतिबिम्बित हुन्छ।

यो 'आधार वर्ष' मा भएका आर्थिक उपलब्धि तिनै सूचक तथा बजेटमा गरेका प्रतिबद्धताका आधारमा मूल्यांकन गर्नुपर्छ। हामीले अरू देशको प्रगतिसँग पनि तुलना गर्नुपर्ने हुन्छ। जस्तै- डुइङ बिजनेस रिपोर्ट, विश्व प्रतिस्पर्धात्मक परिसूचक लगायतमा नेपालले तुलनात्मक रूपले अघिल्लो वर्षको आफ्नै र अहिलेको अरू देशको अवस्थामा सुधार गरेको छ कि छैन हेर्नपर्छ।