The World Bank (WB) is likely to give a surprise gift – most probably by exempting loan – for the low income country including Nepal.
The World Bank and International Monetary Fund (IMF) is going to give a ‘surprise’ at the end of the ongoing spring meeting, according to World Bank country manager Faris Hadad-Zervos.
The government has requested the development partners – including World Bank, Asian Development Bank (ADB), International Monetary Fund (IMF), Asian Infrastructure Investment Bank (AIIB) – to either waive or differ the interest and loan payment schedule. The development partners have neither denied nor accepted Nepal’s proposal. However, the IMF-WB spring meeting is expected to take some decision on the matter.
Speaking to the journalists today, through a video conference, organised by the Society of Economic Journalists Nepal (Sejon), Faris said that the impact of coronavirus pandemic in the global economy is going to be unfortunate for the next few years.
“The World, South Asia and Nepal are going to see significant drop in GDP growth in the ongoing and upcoming few years as per him,” he said, adding that the GDP in South Asia – before the pandemic – was expected to grow at 6.3 per cent. “But as the result of the Covid-19, the region is likely to see GDP growth between 1.8 per cent and 2.8 percent in the current fiscal year, which the worst growth rate in last 40 years.”
The GDP growth in South Asia is expected to remain moderate in 2021 fiscal year at 3.7 per cent to 4.2 per cent, according to the World Bank. Though Nepal is located between two big neighbours and neighbours themselves have witnessed reduction in growth, this will also leave an impact on Nepal and its growth, he said, adding that the recession that we are going through this coronavirus pandemic is different than other. “It is not just recession but a different type of recession.”
Usually recessions impact investment and demand for goods. Normally, recessions are demand-driven while the current recession due to coronavirus is supply-driven. “We are currently facing supply-short rather than demand short, Faris said, adding that understanding this recession differently will help economies use different new and unique tools to revive economy and growth. “Understanding this panic differently will also help countries to bring out necessary stimulus package in unlocking supply side constraints.”
According to the World Bank's projection, the GDP in Nepal is expected to grow between 1.5 per cent and 2.8 per cent in the current fiscal year, while the growth would be roughly 3 per cent in the next fiscal year 2021-22.
Remittance hit will directly affect foreign exchange, Faris said, adding that employment and migration, trade and tourism sector will be directly hit in Nepal. “We expect that Nepal's inflation will go above six per cent in the current fiscal year due to the supply shock while both fiscal deficit and the current account deficit are expected to be widened.”
He also informed that the World Bank is working with the government to support Nepal tackle the pandemic and recover the economy. “World Bank believes that a lot has to be done next year on priority basis,” he said, adding that the first priority should be the immediate health response and the government is already doing it. “The second is immediate social assistance and jobs as many overseas Nepalis will be returning home which demands huge number of jobs. The Prime Minister Employment Programme (PMEP) and other such programmes should be focused.”
As it is a supply shock, thirdly we need to focus on the real sector by making sure that production of goods are continued, boosted and small and medium scale industries are focused, he added. “Similarly, supply chain should be made intact, and the fourth priority should be macroeconomic stability as the spending is going to be huge, there needs to be prioritisation of spending.”
To help Nepal prioritise the on the focus sectors, the Work Bank is moving 18 per cent of its portfolio from our existing portfolio projects towards Covid-19 response, he added.
The World Bank and International Monetary Fund (IMF) is going to give a ‘surprise’ at the end of the ongoing spring meeting, according to World Bank country manager Faris Hadad-Zervos.
The government has requested the development partners – including World Bank, Asian Development Bank (ADB), International Monetary Fund (IMF), Asian Infrastructure Investment Bank (AIIB) – to either waive or differ the interest and loan payment schedule. The development partners have neither denied nor accepted Nepal’s proposal. However, the IMF-WB spring meeting is expected to take some decision on the matter.
Speaking to the journalists today, through a video conference, organised by the Society of Economic Journalists Nepal (Sejon), Faris said that the impact of coronavirus pandemic in the global economy is going to be unfortunate for the next few years.
“The World, South Asia and Nepal are going to see significant drop in GDP growth in the ongoing and upcoming few years as per him,” he said, adding that the GDP in South Asia – before the pandemic – was expected to grow at 6.3 per cent. “But as the result of the Covid-19, the region is likely to see GDP growth between 1.8 per cent and 2.8 percent in the current fiscal year, which the worst growth rate in last 40 years.”
The GDP growth in South Asia is expected to remain moderate in 2021 fiscal year at 3.7 per cent to 4.2 per cent, according to the World Bank. Though Nepal is located between two big neighbours and neighbours themselves have witnessed reduction in growth, this will also leave an impact on Nepal and its growth, he said, adding that the recession that we are going through this coronavirus pandemic is different than other. “It is not just recession but a different type of recession.”
Usually recessions impact investment and demand for goods. Normally, recessions are demand-driven while the current recession due to coronavirus is supply-driven. “We are currently facing supply-short rather than demand short, Faris said, adding that understanding this recession differently will help economies use different new and unique tools to revive economy and growth. “Understanding this panic differently will also help countries to bring out necessary stimulus package in unlocking supply side constraints.”
According to the World Bank's projection, the GDP in Nepal is expected to grow between 1.5 per cent and 2.8 per cent in the current fiscal year, while the growth would be roughly 3 per cent in the next fiscal year 2021-22.
Remittance hit will directly affect foreign exchange, Faris said, adding that employment and migration, trade and tourism sector will be directly hit in Nepal. “We expect that Nepal's inflation will go above six per cent in the current fiscal year due to the supply shock while both fiscal deficit and the current account deficit are expected to be widened.”
He also informed that the World Bank is working with the government to support Nepal tackle the pandemic and recover the economy. “World Bank believes that a lot has to be done next year on priority basis,” he said, adding that the first priority should be the immediate health response and the government is already doing it. “The second is immediate social assistance and jobs as many overseas Nepalis will be returning home which demands huge number of jobs. The Prime Minister Employment Programme (PMEP) and other such programmes should be focused.”
As it is a supply shock, thirdly we need to focus on the real sector by making sure that production of goods are continued, boosted and small and medium scale industries are focused, he added. “Similarly, supply chain should be made intact, and the fourth priority should be macroeconomic stability as the spending is going to be huge, there needs to be prioritisation of spending.”
To help Nepal prioritise the on the focus sectors, the Work Bank is moving 18 per cent of its portfolio from our existing portfolio projects towards Covid-19 response, he added.
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