The government has revised economic growth target down by 1.49 percentage points to 7.01 per cent from its ambitious target of 8.5 per cent for the current fiscal year, according to a report published by the Finance Ministry.
Though the government has set 8.5 per cent growth target for the current fiscal year through the budget for fiscal year 2019-20, the slowdown in the economy has forced the Finance Ministry to revisit the growth target to downwards.
The World Bank (WB) – in its report ‘South Asia Economic Focus’ published last month – projected the economy to grow by 6.5 per cent, whereas Asian Development Bank (ADB) has projected the growth rate at 6.3 per cent. The International Monetary Fund (IMF) has also projected the economic growth rate to be around 6.5 per cent in the current fiscal year.
Thus, the revised growth rate, however, is still higher than the estimations made by international development partners including WB, ADB and IMF.
The public spending – which is not better than last fiscal year – not so promising agriculture production – that contributed to around one third to the economy – deceasing remittance inflow coupled with government’s inability to mobilise revenue are some of the reasons that economy is slowing down. “On top of the economic slowdown, the private sector is fast losing the confidence on the stable and two-third majority government in the history of Nepal,” according to an investor, who said that despite increased investment in infrastructure, capital expenditure is far below the level needed to achieve the ambitious growth target.
According to Financial Comptroller General Office (FCGO), the government has been able to spend only Rs 18.36 billion – in the first three months of the fiscal year – which is just 4.41 per cent of Rs 408 billion allocated for the capital expenditure, for the current fiscal year.
In the last fiscal year 2018-19, economy was expanded by 7 per cent due to better agriculture output, especially better paddy production. “Agriculture production contributes to 27 per cent to the country's GDP,” according to Economic Survey 2018-19, when the economy posted a growth of 6.81 per cent.
“Likewise, the economy grew by 6.3 per cent in the fiscal year 2017-18,” according to the Central Bureau of Statistics (CBS) that revealed that economy grew by 7.74 per cent in the fiscal year 2016-17, largely due to good harvest based on better moonsoon and reconstruction drive after the devastating earthquake that has pulled the economy down to around 1 per cent.
Though the government has set 8.5 per cent growth target for the current fiscal year through the budget for fiscal year 2019-20, the slowdown in the economy has forced the Finance Ministry to revisit the growth target to downwards.
The World Bank (WB) – in its report ‘South Asia Economic Focus’ published last month – projected the economy to grow by 6.5 per cent, whereas Asian Development Bank (ADB) has projected the growth rate at 6.3 per cent. The International Monetary Fund (IMF) has also projected the economic growth rate to be around 6.5 per cent in the current fiscal year.
Thus, the revised growth rate, however, is still higher than the estimations made by international development partners including WB, ADB and IMF.
The public spending – which is not better than last fiscal year – not so promising agriculture production – that contributed to around one third to the economy – deceasing remittance inflow coupled with government’s inability to mobilise revenue are some of the reasons that economy is slowing down. “On top of the economic slowdown, the private sector is fast losing the confidence on the stable and two-third majority government in the history of Nepal,” according to an investor, who said that despite increased investment in infrastructure, capital expenditure is far below the level needed to achieve the ambitious growth target.
According to Financial Comptroller General Office (FCGO), the government has been able to spend only Rs 18.36 billion – in the first three months of the fiscal year – which is just 4.41 per cent of Rs 408 billion allocated for the capital expenditure, for the current fiscal year.
In the last fiscal year 2018-19, economy was expanded by 7 per cent due to better agriculture output, especially better paddy production. “Agriculture production contributes to 27 per cent to the country's GDP,” according to Economic Survey 2018-19, when the economy posted a growth of 6.81 per cent.
“Likewise, the economy grew by 6.3 per cent in the fiscal year 2017-18,” according to the Central Bureau of Statistics (CBS) that revealed that economy grew by 7.74 per cent in the fiscal year 2016-17, largely due to good harvest based on better moonsoon and reconstruction drive after the devastating earthquake that has pulled the economy down to around 1 per cent.
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