Monday, June 10, 2013

Seven per cent growth per annum needed to graduate from LDCs group

The country needs economic growth of seven per cent for some years continuously to graduate to the developing countries category from the current Least Developed Countries (LDCs) status by the end of 2022, according to the target of the draft of third Three Year Interim Plan, said finance minister Shankar Koirala, addressing the journalists here at the Finance Ministry, today.
However, the government has been planning to target a modest growth rate of six per cent — though more than the last fiscal year's projection of 5.5 per cent — as the budget for the next fiscal year would be more focused unlike the earlier distributive budgets, he said, adding that the politically-motivated programmes will be phased out and resources will be concentrated to key priorities like energy; infrastructure including roads, railways, north-south and east west highways, and irrigation projects; commercialisation of agriculture; tourism and import substitution and export promotion.
The budget will take development oriented goals that will help alleviate poverty, generate employment, develop private sector, create an investment-friendly environment, maintain financial discipline and attract foreign investment, the minister added. “The monetary policy and revenue policy will also be aligned with the fiscal policy that will be non-political document," he added.
Claiming that macro-economic indicators are satisfactory, finance secretary Shanta Raj Subedi, said that the government has, however, challenge to contain inflation — that is hovering over two digits — increase capital expenditure, diversify and promote of exports, increase agriculture production, manage mushrooming cooperatives that could hit financial stability, and stabilise Nepali rupees against strong US dollar. “Finance Ministry is planning seriously to plug revenue leakages, reform customs, and promote financial discipline also for the financial sector stability," he added.
As the government has been successful in revenue mobilisation in the current fiscal year due to high imports, the donors have also changed their strategy and asked Nepal to increase loans and decrease grants, Subedi said.

New Foreign Aid Policy has ceiling for foreign grant, loan
KATHMANDU: Barring non-budgetary foreign aid, a draft Foreign Aid Policy has proposed a minimum ceiling of $5 million for grant and $20 million for loan. "The government should not accept less than the fixed ceiling and out of budget assistance," according to the draft Foreign Aid Policy that has also proposed to accept foreign aid in priority sectors only for its maximum utilisation that could help propel economic growth. The loan should be accepted in large infrastructure projects only, whereas grants should be in the priority sectors only. It has been circulated to the development partners for their feedback. “The draft Foreign Aid Policy will be finalised after the feedback from the development partners," said finance secretary Shanta Raj Subedi. "The number of projects should be reduced but the aid should be increased," the draft stated, adding that the stream lining of foreign aid is key to aid transparency and accountability, according to international commitments.

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