Divergent recovery and policy options

In the latest edition of World Economic Outlook (WEO, April 2021), the IMF states that without the extraordinary fiscal and monetary policies, the pandemic would have resulted in an economic contraction three times larger than the current estimates. 

GDP growth

The IMF is projecting the global economy to grow at 6% in 2021, up from an estimated contraction of 3.3% in 2020, and moderate to 4.4% in 2022. These revised projections are higher than earlier estimates owing to the favorable effect of easing of lockdowns, adapting to new ways of working, substantial fiscal support in advanced economies, and an anticipated vaccine-led recovery in the second half of 2021. The IMF projects global growth to moderate to 3.3% over the medium term as the damage to supply chains scars output capacity and aging in advanced economies slows down labor force growth.

Inflation

Inflation in advanced economies is projected to rise to 1.4% in 2021, up from 0.4% in 2020, and 1.9% in 2023. In EMDEs, inflation is projected to remain stable at around 3% from 2021-2023, up from 2.8% in 2020.

The IMF expects price volatility to be short lived and that inflation will return to its long-term average as remaining slack subsides gradually and commodity-driven base effects fade away. Commodity prices, particularly oil, are expected to firm up in the months ahead. But, overall subdued inflation outlook reflects labor market conditions as well, especially subdued wage growth and weak worker bargaining power that are compounded by high unemployment, underemployment, and lower labor force participation rates. 

The IMF notes that unless output gaps become positive and very large for an extended period of time, and monetary policy does not react to rising inflation expectations, inflation is unlikely to increase much. It also does not expect monetary policy to be used primarily to keep government borrowing costs low at the expense of price stability as most economies have independent central banks. 

External sector

On external sector, the IMF projected global trade to accelerate to 8.4% due to the rebound in merchandise goods. But, cross-border services trade (travel and tourism) is expected to remain subdued. 

Divergent effects

The output losses have been divergent. The most affected are the economies that rely on tourism and commodity exports and those with limited fiscal space to respond to the crisis. Many countries entered the crisis without much fiscal space and the ability to mount an effective healthcare policy response. The WEO states that economic situation now (and eventual recovery) is influenced by factors such as the proportion of ‘teleworkable’ jobs, share of employment in small and medium enterprises, capital market deepening, size of informal sector, and quality of and access to digital infrastructure. 

The economic recovery since the second half of 2020 has been led by strong demand for products suitable for working from home and pent-up demand for durable goods such as automobiles. Industrial output is now at pre-pandemic level, but contact-intensive services activities have remained depressed. Likewise, although merchandise trade is back to the pre-pandemic levels, cross-border trade in services remains subdued.  

Unemployment and underemployment remain at elevated level. Labor force participation rate has dropped despite wage and jobs retention programs in many countries. The report notes that youth, women, less educated workers, and informally employed are hardest hit by the pandemic. Poverty (additional 95 million people) and income inequality are likely to increase. The unequal setback to schooling could further exacerbate inequality. 

Asset markets have been surging, thanks to policy stimulus and expectations of a vaccine-driven normalization. However, the IMF notes that the divergence between valuations and broader economic prospects raise financial stability risks. 

GDP loss

The IMF projects the average annual loss in per capita GDP over 2020–24, relative to pre-pandemic forecasts, to be 5.7% in low-income countries and 4.7% in emerging markets. In advanced economies the losses are expected to be 2.3%. Unlike the global financial crisis in 2008, the substantial policy support in response to the pandemic has averted a financial crisis, and medium-term losses are expected to be lower than in 2008 (about 3% lower). However, the emerging markets and low-income countries are expected to face greater scarring owing to their limited policy space. 

Fiscal authorities provided relief to households and firms in the form of transfers, wage subsidies, liquidity support, expansion of safety net such as unemployment insurance and nutrition assistance. Financial regulators facilitated credit provision by easing classification guidelines for nonperforming loans, relaxing provisioning requirements for banks, reducing risk weights on bankruptcy proceedings, and flexibility regarding bank capital requirements. 

The IMF estimates that policy actions such as automatic stabilizers, discretionary measures, and financial sector measures contributed about six percentage points to global growth in 2020. 

Economic outlook

There is considerable uncertainty over the economic outlook though. The WEO notes that it is contingent on the path of the health crisis including vaccine effectiveness against new variants, the effectiveness of policy actions to limit persistent economic damage (scarring), the evolution of financial conditions and commodity prices, and the adjustment capacity of the economy. 

Vaccine procurement and distribution are uneven with broad vaccine availability in advanced economies and some emerging market economies. Since vaccine deployment will be staggered across regions, spread of new variants forcing occasional and localized lockdowns is possible. However, the IMF notes that these may not constrain economic activities like in the initial lockdowns because they will be more targeted and that people and firms have adapted to remote work. 

The size of fiscal package will also drive the nature of recovery. The fiscal package unveiled by the US government will boost growth in the US in 2021 and provide sizable positive spillovers to its trading partners, the WEO states. The IMF expects debt service costs to remain manageable across advanced economies because their debt profile is largely dominated by long-term and sometimes negative-yielding bonds. However, it notes that EMDEs will have limited fiscal support now, but as revenue mobilization improves with pickup in economic activities and crisis-related expenditures unwind, they will have lower fiscal deficits than now. But high debt service costs are expected in EMDEs. 

The crisis could still result in substantial and persistent damage to supply potential and extend scarring due to diminishing labor force participation, bankruptcies, and disruption of production networks. It argues that the longer the recession, the more likely that the effects will be permanent, especially in EMDEs where the prevalence of relatively small firms and shallow capital markets could dampen investment and employment for an extended period of time. These may cripple productivity growth too. 

The IMF expects monetary policy to remain accommodative and tighten only gradually as recovery takes hold. It also expects oil prices to increase as OPEC+ producers curb supply. The strong rebound in PRC will put upward pressure on metal prices. Food prices are also expected to increase in 2021. 

Policy response

Against this backdrop, the IMF recommends policymakers to prioritize policies prudently including strengthening social protection with wider eligibility for unemployment to cover the self-employed and informally employed; adequate resource for healthcare, early childhood development programs, education, and vocation training; and investment in green infrastructure to accelerate the transition to lower carbon dependence. Policy support should be flexible such as shifting lifelines, reallocations, and linked to improvements in activity, but they should safeguard social spending and avoid inefficient spending outlays. Anchoring short-term support in credible medium-term frameworks is key. Economies facing high debt burden should consider creating fiscal space through increased revenue mobilization and reduced wasteful subsidies.

It recommends policy responses to be tailored to the stage of the pandemic, strength of the recovery, and structural characteristics of the economy. As the pandemic continues, policies should focus on prioritizing the healthcare spending, providing well-targeted fiscal support, and maintaining accommodative monetary policy. As recovery progresses, policymakers should limit long-term economic scarring by broadening productive capacity and increasing incentives for an efficient allocation of productive resources. 

Hardware and software of economic reforms in India

Subramanian and Felman on the inherited problems, macro-economic stability, and "hardware" and software" of economic reforms (detailed analysis here):

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The infrastructure investment boom of the early 2000s ran into major difficulties, especially after the GFC. But bankrupt firms were not allowed to exit, resulting in overcapacity that dragged down profits for the entire sector and led to burgeoning non-performing assets (NPAs) at the banks. This Twin Balance Sheet (TBS) crisis undermined growth because it meant that many firms weren’t sufficiently strong enough to expand—even if they were, banks were reluctant to lend. Real credit growth—the lubricant of any economy—consequently slid to historically low levels, and turned negative in recent years.

Summing up, the government has still not been able to overcome the problems it inherited. Now covid-19 has dealt another blow. Currently, 2020 growth estimates are being upgraded as economies are normalizing, but even revised IMF forecasts are likely to show India’s growth to be amongst the worst in the world. At the same time, macro-economic stability has been set back, as the fiscal position and inflation have deteriorated significantly. So, the RBI forecast that under the baseline scenario, the NPA ratio will almost double to 13.5% by September 2021.

[…] What then needs to be done? Consider why the government’s measures have so far failed to achieve the desired results. Transformational measures always require tweaking to ensure that they work properly. […] One possibility is that the “hardware" of reform measures has not been accompanied by sufficient “software". What is the software of economic reforms? Traversing the sequence from planning to implementation sound policies require accurate data, fair decisions, statecraft to win support, policy consistency over time, and rule of law in implementation.

[…] In the fiscal accounts, despite improvements, increasing off-budget expenditures have rendered the deficit figure less meaningful.

[…] The current government has made extensive efforts to create a level playing field, including a reliance on auctions and use of technology to automate public procurement and tax filing. But certain decisions—in retail, telecom, airports—have been perceived as demonstrating favouritism, reinforced by the reduction in Parliamentary discussion of policy initiatives. Stigmatized capitalism remains a serious problem.

[…] Once a policy is formulated, statecraft is needed to gain support of the stakeholders, especially the states, because nearly every major issue requires joint action.

[…] Once consensus is achieved and a major policy initiative launched, governments need to ensure that subsequent measures remain in line with the strategic objective. Often this does not occur. […] Widening the tax base was set back when in 2019 the income tax threshold was raised dramatically, removing about three-quarters of taxpayers from the tax net.

[…] this government, like all its predecessors, is embroiled in contract disputes with its contractors, especially on infrastructure projects. Its arrears to suppliers run high and there is anxiety about arbitrary tax enforcement.

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Accommodative monetary policy

It was published in The Kathmandu Post, 21 July 2020.

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Monetary policy: Will the measures counter the shocks?

Half-baked and misguided lending directives might further exacerbate asset-liability mismatches.

In his first annual monetary policy announcement as a governor of Nepal Rastra Bank, Maha Prasad Adhikari rolled out expansionary measures that aim to provide a healthy regulatory environment as well as immediate relief to businesses and households struggling due to the pandemic. The healthcare, economic and employment shocks have been unprecedentedly disruptive. Given the extended period of lockdowns, persistent supplies disruptions and subdued aggregate demand, economic growth in 2019-20 is projected to be much lower than the 2.3 percent estimated by the Central Bureau of Statistics before the virus took hold in Nepal. The shortage of goods and services has increased inflationary pressures, and lending interest rates have remained in the double-digits. The acute cash flow issues faced by businesses, and either layoffs or reduced working hours faced by individuals, have increased the risk of a liquidity crisis morphing into a solvency crisis.

Against this backdrop, the monetary policy for 2020-21 aims to achieve the ambitious 7 percent economic growth target set by the government, maintain adequate liquidity, limit inflation at 7 percent, encourage the merger of banks and financial institutions, enhance access to finance, and promote reliable digital transactions. The conventional monetary policy tools, as well as macroprudential policies, are much more accommodative than what we saw after the catastrophic earthquakes in 2015.

Accommodative measures

In addition to the targets mentioned above, Nepal Rastra Bank wants to ensure adequate foreign exchange reserves to cover seven months worth of imports of goods and services, adequate liquidity to facilitate economic recovery, 18 percent growth in money supply, and 20 percent credit growth to the private sector. To achieve these targets, it is planning to use a number of monetary instruments at its disposal.

Although controlling inflation is not fully within the central bank’s domain, thanks to the fixed exchange rate regime, it nevertheless has accommodated a higher inflation target than last fiscal year by rolling an expansionary monetary policy. For instance, it has reduced the policy repo rate, which is the rate of interest charged by Nepal Rastra Bank on the repurchase of government securities, by 50 basis points (bps) to 3 percent.

This essentially increases liquidity as banks can now borrow money at a lower rate from the central bank by selling the government securities they hold. Nepal Rastra Bank also uses the repo rate to maintain interest rates within the intended corridor, which is aimed at reducing interest rate volatility. Similarly, it has reduced the term deposit rate, which is the lower bound of the interest rate corridor, by 100 bps to 1 percent. This will discourage BFIs to deposit extra money at the central bank because the rate of return will be even lower. It has also committed to allowing long-term repo facility, if required, as current repo operations are limited to two weeks. In March 2020, it had already reduced the cash reserve ratio and bank rate by 100 bps to 3 percent and 5 percent respectively and lowered policy repo rate by 100 bps. These measures are aimed at increasing liquidity and lowering interest rates.

It has also provided regulatory relief by tweaking macroprudential policies, which are designed to mitigate system-wide risk and to reduce asset-liability mismatches. For instance, it suspended the 2 percent countercyclical buffer requirement, which commercial banks have been maintaining in addition to a minimum capital adequacy ratio of 10 percent. The additional buffer is imposed during normal times to lower systemic risk in case of a sudden deterioration of balance sheets. Further, the central bank has increased credit-to-core capital cum deposit (CCD) ratio to 85 percent from 80 percent till the next fiscal year.

NRB has also extended the moratorium on loan payments and allowed for restructuring as well as rescheduling of loans provided to Covid-19 affected sectors. Moreover, the central bank has also limited dividend payments and extended the deadline for issuing debentures or corporate bonds equivalent to at least 25 percent of paid-up capital. Soon it will introduce a loan classification provision whereby good loans affected by Covid-19 may not be required to be classified as bad loans. For some loans that are not repaid by the fiscal year 2020, loan loss provisions could be just 5 percent.

Always a question of implementation

The challenge now is to ensure the measures outlined in the monetary policy are fully implemented in a timely fashion so that it reaches the ultimate beneficiaries—the affected household and businesses—and that it stimulates economic activities.

The monetary policy has addressed the supply of credit by facilitating liquidity availability. However, this does not mean all of it will be taken up. The demand for loans is contingent on the overall investment climate and growth prospects. Not many businesses will take additional loans just to keep employees in the payroll and pay variable costs related to rent and operations when there are already substantial losses piled up. The uncertainty over the trajectory of recovery further complicates the matter.

Banks and financial institutions are generally risk-averse due to a lack of improvement in the investment climate and governance. They may not be willing to extend credit to new or existing borrowers without being confident about timely repayment. Consequently, the additional liquidity facilitated by Nepal Rastra Bank may end up in its own vault; banks may see it safer to park funds there even if the rate of return is much lower.

The central bank should be ready with a contingency plan regarding a possible rise in non-performing assets after the interest moratorium period is over. Subdued business activities, tepid cash flows and potential job losses might lead to unserviceable loans. Despite Nepal Rastra Bank’s commitment to reschedule and restructure troubled loans, the risk is still there. Note that concerns have been raised repeatedly by international financial institutions about the low level of non-performing assets in Nepal. This is largely due to the ever-greening and at times imprecise classification of risky assets. Higher levels of such assets in the banking sector pose systemic risk, substantially lower credit growth, and ultimately affect economic growth.

Furthermore, the large refinancing facility may not be fully utilised if banks do not see viable investment projects or creditworthy borrowers. For instance, the past refinancing pool offered to households for the reconstruction of residential houses destroyed by the 2015 earthquakes has not been utilised fully.

Finally, the aggressive push on directed lending—constituting about 40 percent of total loans, up from 25 percent last fiscal—could increase banking sector inefficiencies if proper due diligence is not followed through when extending credit to such sectors. Forcing banks and financial institutions to extend credit to particular sectors if they do not have expertise in evaluating the soundness of projects is not a good strategy. It invites political interference and fosters moral hazard behaviour. For instance, what happens if banks are forced to meet the mandatory share of lending to the energy sector if hydro projects fail to finalise a viable power purchase agreement? Similarly, what happens if farmers fail to pay their debts on time (in the past, the government waived them off with taxpayer-funded fiscal rescues). Half-baked and poorly governed lending might further exacerbate asset-liability mismatches.

Developing Asia to grow at the slowest pace since 1961

In the latest edition of ADO Supplement (June 2020), Asian Development Bank projected that developing Asia will grow by 0.1% in 2020 and then by 6.2% in 2021, thanks to a low base effect. This is a sharp downward revision from 2.2% projected in April edition of ADO 2020. 

Lockdowns and the associated decline in mobility outside home have constrained economic activities. External sector also doesn’t look that good because of a deeper contraction in the major advanced economies (the US, the Euro area, and Japan). 

The latest growth projections for developing Asia will be the lowest regional growth since 1961. Contraction is expected in all subregions except East Asia, where PRC and Taipei, China are projected to growth at a positive rate. 

However, recovery in 2021 will not be a V-shaped recovery as continued social distancing may be required amidst recurrent outbreaks. Furthermore, even if an economy succeeds in normalizing domestic activity, external demand will remain weak. ADB states that sovereign and financial crises cannot be ruled out, and social unrest is possible. US-PRC trade tension further exacerbates the situation. 

Uncertainty over the COVID-19 pandemic and the global recession will dampen economic sentiment in many economies. Some key drivers of growth such as tourism and exports (manufacturing) remain subdued.  

ADB projects growth in South Asia to contract by 3% and then recover at a rate of 4.9% in 2021. 

• The Indian economy is expected to contract by 4% in FY2021 and then growth by 5% in FY2022.  PMI index fell to the lowest level in April, reflecting not so rosy outlook for FY2021. Unemployment and exodus of migrant workers from urban areas have dampened demand (perhaps, turn out to be structural as reverse migration may not again reverse as in the pre-COVID era).
• Dip in export earnings and remittances will affect growth in Bangladesh, whose economy is expected to grow at 4.5% in FY2020 and recover to 7.5% in FY2021 (thanks to manufacturing output). 
• Tourism, manufacturing and construction activities are expected to get hit in Bhutan, resulting in growth projection of 2.4% in FY2020 and then 1.7% in FY2021 (as labor shortages hit construction sector, which gets migrant workers from India). 
• In Nepal, the government’s provisional estimate of growth for FY2020 is 2.3%, which will further decline as lockdown continue. Growth in FY2021 is projected at 3.1%.

Inflation will remain at low levels due to depressed demand and lower oil prices.

COVID-19 induced recession worst since the Great Depression

In the latest World Economic Outlook (April 2020), the IMF projected global growth to contract sharply to -3% in 2020. The cumulative loss to global GDP over 2020 and 2021 from the pandemic crisis could be around 9 trillion dollars, greater than the economies of Japan and Germany, combined. For the first time since the Great Depression both advanced economies and emerging market and developing economies are in recession. It argues that many countries face a multi-layered crisis comprising a health shock, domestic economic disruptions, plummeting external demand, capital flow reversals, and a collapse in commodity prices.

Under the assumption that the pandemic and required containment peaks in the second quarter for most countries in the world, and recedes in the second half of this year, in the April World Economic Outlook the IMF projects global growth in 2020 to fall to -3 percent. This is a downgrade of 6.3 percentage points from January 2020. This makes the Great Lockdown the worst recession since the Great Depression, and far worse than the Global Financial Crisis.

Assuming the pandemic fades in the second half of 2020 and that policy actions taken around the world are effective in preventing widespread firm bankruptcies, extended job losses, and system-wide financial strains, the IMF projects global growth in 2021 to rebound to 5.8 percent.

In an adverse scenario, the pandemic may not recede in the second half of this year, leading to longer durations of containment, worsening financial conditions, and further breakdowns of global supply chains. This could mean even greater fall in global GDP: an additional 3 percent in 2020 (below the baseline in 2002) if the pandemic is more protracted this year, while, if the pandemic continues into 2021, it may fall next year by an additional 8 percent compared to our baseline scenario.

The IMF recommends that countries continue to spend generously on their health systems, perform widespread testing, and refrain from trade restrictions on medical supplies. It also recommends continued support to households and businesses throughout the containment period: credit guarantees, liquidity facilities, loan forbearance, expanded unemployment insurance, enhanced benefits, and tax relief. During the recovery phase, policies should shift to supporting demand, incentivizing firm hiring, and repairing balance sheets in private and public sector. It recommends moratoria on debt repayments and debt restructuring to be continued during the recovery phase too. 

Substantial targeted fiscal, monetary, and financial measures to maintain the economic ties between workers and firms and lenders and borrowers is required to keep intact the economic and financial infrastructure of society. Meanwhile, broad-based stimulus and liquidity facilities to reduce systemic stress in the financial system can lift confidence and prevent an even deeper contraction in demand by limiting the amplification of the shock through the financial system and bolstering expectations for the eventual economic recovery.

INDIA: 

• The IMF has projected India’s economy to grow at 4.2% in 2019/20, 1.9% in 2020/21 and then quickly recover to 7.4% in 2021/22. 
• Inflation is projected to remain low at 3.3% in 2020/21 and 3.6% in 2021/22. 
• Current account balance is projected to narrow to -0.6% of GDP in 2020/21 and then increase to -1.4% of GDP in 2021/22.

NEPAL:

• The IMF has projected Nepal's economy to grow at 2.5% in 2019/20 and 5% in 2020/21. 
• Inflation is projected to remain at 6.7% in FY2020 and FY2021. 
• Current account balance is projected to be -6.5% in FY2020 and -6.2% in FY2021.

Policy measures for the immediate-term:

• Sizable, specific, temporary, and targeted fiscal measures to cushion the impact on the most affected households and businesses, and to preserve economic relationships (by reducing firm closures). Digital payments may improve the delivery of targeted transfers to the informally employed.
• Central banks can provide ample liquidity to banks and nonbank finance companies, and credit guarantee on loans to SMEs. It could also encourage banks to renegotiate loan terms for distressed borrowers without lowering loan classification and provisioning standards. Beyond conventional interest rate cuts, expanded asset purchase programs may be helpful. 
• Broad-based fiscal stimulus such as public infrastructure investment or across-the-board tax cuts can help to boost confidence, stimulate aggregate demand, reduce bankruptcies and avert an even-deeper downturn. 
• Flexible exchange rates should be allowed to adjust as needed. Temporary capital flow measures on outflows could be useful.

Policy measures for the recovery phase:

• Secure swift recovery as even after the containment phase, uncertainty about contagion could subdue consumer demand. Firms will hire staff and utilize capacity gradually. Hiring subsidies may be required and worker retraining programs may alleviate labor market friction. Scaling back targeted, temporary measures may be warranted. 
• Balance sheet repair and debt restructuring may be required. Banks and regulators should encourage early and proactive recognition of nonperforming loans. Steps to strengthen the insolvency and debt enforcement framework, and measures to facilitate the development of a distressed debt market could be helpful.
• Strong multilateral cooperation is a must, especially on international trade and multilateral assistance.

Financing COVID-19 related deficit in India and the impact of COVID-19 on Nepali economy

Fiscal space: Not if but how

In an op-ed published in Business Standard today (ungated version here), Devesh Kapur and Arvind Subramanian argue that the Indian government will have to find the funds/revenue to respond to the economic crisis wrought by the spread of COVID-19 pandemic. The question of fiscal space in India is not about 'if' but 'how'. They propose five ways of financing additional expenditures over the next 12 months:

• Reduction in other expenditures (Rs 1-1.5 trillion): Cut recently initiated projects and fund those near completion. Don't spend money in reviving poorly functioning public enterprises.
• Foreign borrowing, from official sources and non-resident Indians (NRIs; Rs 1-1.5 trillion): Borrow from multilateral banks (WB, ADB, etc) and also ask them to repurpose existing loans. Make a contingency plan for seeking quick disbursing funds from the IMF. Tap NRIs on special bonds.
• Public financing by issuing g-secs (including to banks and LIC) (Rs 5 trillion): Raise moeny from the public by conventional bond issuance. Allocate some of the new borrowing to PSBs and LIC.
• Monetary financing or “printing money” (Rs 1-1.5 trillion): Ask RBI to directly buy government securities and state government bonds. Make this direct purchase a one-off event given the exogenous shock (i.e, shock is not due to fiscal profligacy). This should not shoot up inflationary pressures and would also not incentivize government to monetize fiscal deficit repeatedly.
• Mobilizing additional resources via raising taxes and cutting subsidies (Rs 1-1.5 trillion)

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COVID-19 sledgehammers economic activities

Rupak D Sharma writes in The Himalayan Times: [..]If farmers do not get the input on time, agricultural output can dip by 20 to 25 per cent, according to Bhairav Raj Kaini, former director general of Department of Agriculture. A drop in agricultural yield, especially paddy, will hit Nepal’s gross domestic product in the next fiscal year as well, as it accounts for more than a fourth of the country’s total economic output.

[...]The coronavirus crisis has now threatened to eat into this steady income source, as Delhi- to Dubai-based firms are gradually sending Nepali workers, especially those employed in service sector, on unpaid leave or are laying them off. “We have heard news of layoffs and unpaid leaves. But most of the firms in the Gulf and Malaysia, where a big chunk of Nepalis are employed, have not taken such measures for humanitarian reasons. This, however, does not mean there will be no layoffs going forward,” said Kumar Prasad Dahal, director general of the Department of Foreign Employment, adding, “Massive job cuts abroad are inevitable considering the damage the coronavirus crisis has caused to economies.”

This is not a good sign for Nepal that receives around $8 billion in remittances per year, which, as a share, is around a fourth of GDP. A sharp drop in remittance inflow would not only reduce household spending and erode living standard, but also trigger a liquidity crisis.

[...]The unique aspect of the latest economic crisis is that it was not triggered by demand shock but by rapid fall in supply. Production across the globe has dropped or come to a complete halt not because of a slump in demand but because of rapid closure of production units. This has disrupted supply chains and rendered many jobless. This has subsequently forced consumers to tighten their purse strings, triggering a demand shock. This drop in demand may encourage suppliers to further cut back on production leading to more job cuts.

“This is a vicious cycle and is taking the shape of a supply-demand doom loop. This can disrupt economic activities, preventing the economy from reaching its full potential,” said economist Chandan Sapkota. “The country can come out of this precarious macroeconomic situation only if the government launches an effective rescue package that can provide relief to sectors across the board.”

How did Nepali economy perform in FY2019?

Overview

• Positive point: Three consecutive years of high GDP growth
• Concerning points: Weak budget execution, revenue growth below target, inflation inching up (natural given high GDP growth), continued tight liquidity and high interest rates, large fiscal and current account deficits, lower FDI, depleting foreign exchange reserves (although at OK level)
• Things to watch out for: Whether high growth rate is sustainable without significant improvement in public capital budget execution and higher private investment (domestic and foreign), structural and institutional reforms (procurement, land, environment, human resources and labor market, laws and regulations), and sound governance

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1. CBS estimated that the economy would grow at 6.8% (GDP at basic prices) in FY2019. At market prices, it is expected to grow at 7.1%. This marks three consecutive years of above 6% growth rate. In FY2019, bumper agricultural harvest and pickup in services sector activities contributed the most to the GDP growth. Specifically, agricultural, industrial and services sectors are projected to grow by 5.0%, 8.1% and 7.3%, respectively. Agricultural sector contributed 1.6 percentage points, industrial sector 1.3 percentage points and services sector 3.9 percentage points to the overall projected GDP growth of 6.8%. These projections are based on eight to nine months data.

2. Specifically, electricity, gas and water sub-sector is projected to grow at the fastest rate (12.4%, up from 9.8% in FY2018), followed by wholesale and retail trade (10.9%, down from 12.3% in FY2018), mining and quarrying (9.5%) and construction (8.9%). These indicate accelerated work in hydroelectricity generation and ongoing construction as well as pickup in reconstruction related activities (public as well as private housing and infrastructure). The high wholesale and retail trade activities are related to the burgeoning import growth and remittance income. Overall, robust agricultural output is underpinned by favorable monsoon and timely availability of agricultural inputs, and high services sector output is supported by wholesale & retail trading, tourism and real estate activities. Industrial sector slowed down a bit compared to FY2018.

3. On the expenditure side, GDP (at market prices) grew by 7.1%, up from 6.7% in FY2018. Consumption accelerated but public fixed investment (public GFCF) decelerated, indicating a slowdown in capital spending. A much higher increase in import and a slower increase in export meant that net export was negative.

4. On fiscal sector, capital expenditure absorption capacity continues to remain low despite the budget being unveiled one and a half month prior to start of FY2019. The government argued that it spent the first few months in designing spending procedures and directives, and laws related to investment promotion and procurement. It also said that small projects were delegated to local governments, but was not so forthright in delegation of spending and monitoring authority. This also contributed in low capital spending. Furthermore, delays in land acquisition, environment clearance, lengthy procurement processes, lack of inter-agency coordination, etc continued to bog down the extent and the effectiveness of public spending. As per the data from FCGO, actual capital spending is projected to be about 75.9% of planned capital spending. Similarly, actual recurrent spending is projected to be 84.6% of planned recurrent spending. Recurrent and capital expenditures are projected to be 20.6% and 6.9% of GDP, respectively. These were 23% and 7.9% of GDP in FY2018. FCGO used to publish monthly budgetary expenditure and revenue previously. Very strange that it is not publishing them on time these days (even quarterly public debt data are not published regularly). These are preliminary figures. Actual figures will probably show slightly higher recurrent but a bit lower capital expenditures. Also, there isn't much change in spending pattern too, with over 50% of spending bunching in the last quarter. 

5. Meanwhile, based on the latest revenue data published by the central bank in its macroeconomic situation report, revenue growth is estimated to be about 17.4%, much lower than the government’s target. Total revenue will be around 24.8% of GDP. The share of VAT is the highest (28.1%), followed by income tax (22.6%), customs (18.1%) and excise duty (14.2%) among others. Considering the expenditure under-performance and high level of revenue mobilization (although short of the target), fiscal deficit will likely be around 6% of GDP. A higher fiscal deficit is exerting pressure on current account balance too.

6. Annual CPI inflation averaged 4.6%. Here, note that usually the central bank computes annual average inflation as the average of monthly inflation, in which case it will be 4.7%. However, the central bank used the average of monthly CPI index to compute annual inflation for FY2019. Why to be inconsistent in FY2019 only (probably, to side with the lower inflation figure or just a mistake)? In any case, let us use the 4.6%, which is slightly higher than the inflation in FY2018. Both food and beverage, and non-food and services inflation increased in FY2019. In food and beverages, the highest increase in prices was that of alcoholic drinks and tobacco products (no surprise here as the government increased taxes and excise duty). In non-food and services, the highest increase in prices was that of housing and utilities, clothes and footwear, and transportation (higher fuel prices, depreciation of currency as well as strong consumer demand). 

7. M2 (broad money) expanded by 15.8%, driven by private sector credit growth. However, M2 growth in FY2019 is lower than the central bank’s target (and the one in FY2018) owing to the decline in net foreign assets. Overall credit to private sector expanded by 19.1%, lower than in FY2018.

8. Deposits at BFIs increased by 18%, lower than 19.2% in FY2018. Credit (loans & advances) grew by 20.7%, lower than 23.3% in FY2018. Deposits growth of all class A, B and C BFIs slowed down. Credit by development banks increased but that by commercial banks and finance companies decreased compared to the growth in previous year. However, credit growth of commercial banks was still higher than its deposit growth. Agriculture sector credit grew by 42.5% (primarily because processing of tea, coffee, ginger and fruits and primary processing of domestic agro products were included in agriculture  from October 2017. Prior to this, most of these were under production). Credit to construction sector grew by 22.2%. Similarly, credit to mining, transport equipment production and fitting (includes aircraft and aircraft parts); transportation, communications and public services (includes electricity), and consumable loan (includes gold & silver) grew at a faster rate than the previous year. However, credit to industrial production; metal production, machinery and electrical tools and fitting; wholesale and retail trade; finance, insurance and fixed assets (includes real estate); and service industries slowed down.  Of the outstanding credit up to mid-July 2019, the largest share (21.1%) is that of transportation, communications and public services; followed by agriculture, consumable loan, service industry, and construction, among others. 

9. The weighted average inter-bank rate has been increasing. At 4.2% in FY2019, the weighted average inter-bank rate is the highest since FY2011, when it was 8.4%. In mid-July 2018, it was 2.96%. It decreased for few months and then started to rise again, peaking  at 6.91% in mid-June 2019. In mid-July 2019, it was 4.52%. Similarly, 91-day treasury bill rate also followed similar pattern, reaching 4.97% in mid-July 2019. It indicates tight liquidity in the banking sector arising from two sources: (i) faster credit growth than deposit growth (to maintain profit margin banks had to increase loans after the sharp increase in paid-up capital); and (ii) lower than expected public capital spending. CRR and repo rates remained unchanged, but SLF rate reduced by 50 basis points in FY2019. SLF is the money BFIs borrow from NRB by keeping government bills as collateral for five days. Inter-bank rate refers to transaction among A & B, A & C, B &B, B & C and C & C class banks and financial institutions. 

10. Commercial banks have broadly adhered to the deposit and loan related regulatory requirements. Capital adequacy ratio stood at 13.51% as of mid-April 2019 against the minimum 11% (minimum CAR 10% plus 1% buffer). CCD was about 77.73%. NPL started to increase since mid-July 2018, reaching 1.67% of total loan in mid-April 2019. Interest rate corridor did not help much to lower interest rate volatility. FY2018 monetary policy changed the way to compute interest rate corridor (between 3% and 7%), with SLF rate being the upper bound and two-week term deposit rate being the lower bound. FY2020 monetary policy decreased these by 50 basis points.

11.  By mid-July 2019, 735 local levels (out of 753) have presence of commercial banks. Total number of BFIs licensed by NRB increased to 171 by FY2019 from 151 in the previous year. There are 28 commercial banks, 29 development banks, 23 finance companies, 90 microfinance financial institutions, and one infrastructure development bank. The number of class A, B and C category BFIs decreased, but the number of microfinance financial institutions increased from 65 to 90 last year. With the rapid expansion of credit and stricter enforcement of banking regulations, the number of blacklisted borrowers is also increasing—reaching 2,842 by FY2019, up from 1,335 in FY2018.

12. According to data from Department of Customs, in US dollar terms, exports increased by 10.3%, reaching US$ 862.6 million. The growth rate of export is lower than last year. Exports to India increased but exports to China and other countries decreased. Meanwhile, imports grew by 5.3%, reaching US$12.6 billion. The growth rate of import is lower than last year. Consequently, trade deficit increased much slowly than last year, reaching US$11.7 billion. India accounted for about 65% of Nepal’s exports and imports in FY2019. As a share of GDP, exports, imports, trade deficit and total trade were 2.8%, 40.9%, 38.1% and 43.8% of GDP, respectively. Export to import ratio was 6.8.

13. The largest export to India in FY2019 is a new entry—palm oil (US$91.8 million). Nepal does not produce palm oil but traders may be importing raw materials from third countries, process domestically to add at least 30% value, and then export it to India taking advantage of the preferential tariff. In fact, import of crude palm oil increased by 152.2%, reaching US$41.7 million. The second largest export item to India was polyster yarn, followed by jute goods, juice, cardamom and textiles, among others. Export of pulses, polyster yar, noodles, pashmina, handicraft goods, vegetables, jute goods, thread, and readymade garments grew by over 20%. The largest export to China are handicraft, woolen carpet, noodles and readymade garments. The largest export to other countries are woolen carpet, readymade garments, pashmina, pulses and herbs, among others. 

14. The largest import from India in FY2019 was petroleum product (almost US$2 billion), followed by vehicles & spare parts, MS billet, machinery parts, rice and medicine, among others.  Import of raw cotton, bitumen, fruits, textiles, readymade garments, molasses sugar, electrical equipment, and vegetables grew by over 30%. The largest import from China are telecommunication equipment, readymade garments, electrical goods, machinery parts, and television parts. The largest import from other countries are gold, aircraft spare parts, coal, crude soybean oil and silver, among others. 

15. The number of migrant workers continues to decline steadily after peaking in FY2014. Outbound migrant workers decreased by 32.6% because of a massive drop in outmigrants to Malaysia (9,999 in FY2019 versus 104,207 in FY2018). The government stopped issuing labor permits to potential migrant workers to Malaysia to implement the G2G deal, which ensures cost-free migration and labor rights. But, it is not implemented as expected. Moreover, outmigration for work to all major destinations except Japan, Afghanistan, UAE and Saudi Arabia decreased in FY2019. However, this has not lead to a decrease in remittance inflows probably because more migrant workers are using formal banking channel to remit income back home and that Nepalis residing or studying in developed countries are remitting more money back home. Remittance inflows reached US$7.8 billion, which is equivalent to about 26.8% of GDP.

16. A lower rate of import growth compared to export growth slowed down the deterioration of trade deficit. Remittance inflows decelerated (7.7% growth in FY2019, down from 10.5% in FY2018) but the country received higher grants than year, resulting in a marginal improvement in net transfers. With net transfers of 28.7% of GDP and net income balance of 1.2% of GDP, and trade deficit (goods and services) of 37.5% of GDP, current account deficit was 7.7% of GDP, slightly lower than 8.2% of GDP in FY2018. Balance of payments recorded a deficit of US$598.7 million, the first in the last nine years. Meanwhile, net FDI decreased by 31%, reaching US$116 million (0.4% of GDP). Gross foreign exchange reserves reached US$10.6 billion, which is enough to cover 9.4 months of import of goods and services. Nepali rupee depreciated by 0.02% against the US dollar in mid-July 2019 compared to the same period last year. 

Overall, here is a snapshot: 

• The economy grew at over 6% for three consecutive years, thanks to bumper agricultural harvest, post-earthquake related reconstruction, stable supply of electricity and pickup in services sector activities. So, consumption accelerated but public investment slowed down. 
• Public capital spending decreased but higher recurrent spending will lead to a fiscal deficit of around 5% to 6% of GDP. 
• Inflation inched higher on account of higher food and non-food prices of goods and services. 
• Broad money growth (M2) was below the central bank’s target. Credit expansion outstripped deposit expansion with construction and agricultural sectors receiving more loans than before. 
• Retail deposit and loan interest rates as well as inter-bank rate increased, indicating tight liquidity situation in the banking sector. 
• The number of migrant workers is decreasing but remittance inflows are increasing, suggesting more use of formal banking channel and higher remittance from non-traditional employment destination. 
• There is not much change in composition of exports and imports. 
• A lower rate of import growth compared to export growth slowed down the deterioration of trade deficit. This along with improved net transfers resulted in lower current account deficit than last year. 
• Balance of payments slipped into the negative territory for the first time in nine years. 
• Forex reserves are down but are enough to cover 0.4 months of import of goods and services. FDI inflows decreased.
• Here is an earlier posts on FY2020 budget and FY2020 monetary policy

सरकारले गरेका काम कसरी मूल्यांकन गर्ने?

सेतोपाटीमा असोज १४, २०७५ मा प्रकाशित लेख। 

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सरकारले गरेका काम कसरी मूल्यांकन गर्ने?

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।