Lockdown to continue, essential industries to open from Friday

The government has extended the lockdown period – as recommended by the High-Level Coordination Committee for the Prevention and Control of Covid-19 yesterday – keeping the suspension on international flights and sealing border till May end, but some essential industries will be allowed to start their operation from Friday.
A meeting of the Council of Ministers today decided to extend the term of nationwide coronavirus-lockdown till May 18, confirmed finance minister, who is also information and communication technology minster, Dr Yuba Raj Khatiwada. “But some 42 industries of essential nature will be allowed to operate from Friday with adequate health precautions,” he said, adding that they have to maintain social distance, employees must use mask and sanitiser. “These industries can make one-third of their employees work at a time.”
The industries related to food and food processing, water, biscuits, tea, sugar, LP Gas, ginger, bread, confectionery, paintings, press, electricity fittings to construction related industries will be allowed to operate from Friday, Khatiwada said, adding that the party palaces, malls that do not sell food and food products, gym, temples, mosque, church, and training programmes are however not allowed to operate.
A meeting of the High-Level Coordination Committee for the Prevention and Control of Covid-19 yesterday – in the presence of Prime Minister KP Sharma Oli – had reviewed measures taken to prevent the spread of the pandemic and the impact of the ongoing lockdown. It has concluded that the lockdown has been effective in controlling coronavirus from spreading. But the economy has been bleeding as the industries have been closed since March 24. When the government first announced the lockdown, Nepal had reported just two Covid-19 cases. But this week alone, 23 new cases have been reported, with the national tally reaching 99, though there have been no deaths so far.
With the sixth extension of lockdown from day after, Nepal will be under lockdown for almost two months until a different modality of rules and restrictions is decided upon. The country has lost around Rs 300 billion due to a lockdown in the last a-month-and-half which has halted economic activities in the country.
The committee has decided to recommend the government to further extend the lockdown, but allow some economic activities to start as the government coffer is drying due to loss of revenue, reduction of remittance inflow and plummeting export, apart from tourism that seems to take minimum half year to revive.
The length of the lockdown imposed on March 24, which saw the most recent extension on April 27, is maturing tomorrow, the committee had suggested to categorise areas as green, orange and red, but the Prime Minister was not convinced saying that it is not the right time to relax lockdown on the basis of categorisation, as Covid- 19 cases continued to rise in India and in certain districts of Nepal bordering India, and also in Nepal.
Critics say the government failed to utilise the lockdown over the last six weeks to step up measures to trace and treat and find ways to gradually lift lockdown.
The cabinet meeting also decided to tighten entry points to Kathmandu and keep records of those who need to travel for emergency situations like for health checkups, Khatiwada added.

Central bank deputy governor suspended

The central bank deputy governor Sheeba Raj Shrestha has been suspended.
After the central bank board meeting this morning formed an inquiry committee to probe into allegations against Shrestha, he has been suspended from his post, according to the Nepal Rastra Bank (NRB) Act-2002.
The central bank has formed a three-member committee led by its board director Sri Ram Poudyal, and Dr Subodh Kumar Karna and Ramjee Regmi as the members. The probe committee has been tasked to investigate within a month and submit the report. Based on the probe report, the government will either remove him or give clean chit. If the probe committee finds him guilty, the government will seek clarification and remove him, if his clarification unsatisfactory. “Or he will be given a clean chit and he will continue as the deputy governor,” according to the central bank.
Following a written request of the Finance Ministry last week based on a cabinet decision of October 17, the central bank has started investigation into Shrestha over a dozen allegations on his ‘misconducts that threaten the financial stability of the country’. The central bank had called for a board meeting today to form a probe committee to investigate the allegations against Shrestha.
Shrestha has been alleged of his involvement in compromising financial stability, acting dishonestly or with mala fide intention for personal gains to protect financial wrongdoers, promoting money laundering and taking facilities unlawfully during his foreign trips, according to a board member of the central bank.
According to the NRB Act-2002, the government shall remove deputy governor from the office on the basis of recommendation made by an inquiry committee.
In its letter, the Finance Ministry stated that the cabinet decided to initiate investigation over those allegations also due to a written request from the Department of Money Laundering Investigation (DMLI) for support over its investigation on a money laundering offense.
Shrestha said that all his decisions are based on law, and as per consultations with the central bank management and board members. “Thus, if I was wrong in taking any decision, it also means that the entire central bank management and the board was wrong,” he said, pledging to fully support the probe. He also urged for fair investigation on charges levelled at him.
Though, a central bank board member also disagrees a probe committee on him as the board is also involved in the decision making process, the central bank has formed a committee – according to the NRB Act-2002 – under one of the board member with other two board members. “If Shrestha is found guilty, the entire board members, who are investigating him are also to be blamed as they are also involved in the decision making process,” according to former governor of the central bank Deependra Bahadur Kchhetry.
Shrestha refuting allegations against him said that the allegations are aimed at tarnishing his credibility amid the race for the post of the governor. “The probe is a ploy to remove me from the race of becoming central bank governor,” said Shrestha, whose five-year term as deputy governor is expiring in 16 months. A deputy governor is also considered a contender for the governor.
The incumbent governor Dr Chiranjibi Nepal is retiring in next five months.

PM urged to crack the whip over development projects

Apart from improving the current governance system and restructuring the administration, the political leadership must regularly prod the bureaucracy to expedite development projects, according to experts.
Until policy reforms, depoliticisation of the bureaucracy, enhancing of institutional capacity and restructuring of the administration can be achieved, the government has to work under a Plan-B, with a commitment towards national development, they said. The government – especially Prime Minister Puspa Kamal Dahal 'Prachanda' – should take a lead role in expediting development projects under the personal initiative of the prime minister, they suggested.
Although obsolete policy and the lethargic  bureaucratic structure need to be reformed as soon as possible, until then the prime minister Dahal – under Plan-B – has to himself monitor  development projects regularly, every fortnight if possible, to expedite development work, suggested senior economist Prof Dr Bishwhambher Pyakuryal.
Either Nepal has to address development projects on a war footing now or remain poor, under developed and paralysised, he said, suggesting the government also adjust the three-year plan, the annual fiscal plan and the long-term plans, as these do not dove-tail.
The delay in development projects is also due to negligence in monitoring and evaluation, and this has to be looked into seriously, he said.
"Though there are various mechanisms under the National Planning Commission (NPC), the Prime Minister's Office and also the ministries concerned with monitoring and reviewing development, the progress at almost all development projects including the national pride projects is pathetic," according to former vice chairman of the NPC Dr Govind Raj Pokharel.
Commitment from both the bureaucracy and the political leadership is key, he said suggesting enhancement of institutional capacity and logistics to help expedite development projects.
Currently, the Prime Minister's Office looks after mega projects whereas the Finance Ministry looks after projects with outlays of above Rs 150 million. The ministries concerned are also responsible for monitoring development projects apart from the planning commission. Likewise, the parliamentary committees – especially the development committee – also takes stock of development projects, though it has been blamed for obstructing the development rather than facilitating.
Almost all the development projects are either running behind schedule, thereby escalating costs, or have shown little progress. "Political instability is no excuse although it is a reality hampering the progress of the development projects," according to another former NPC vice chair Deependra Bahadur Kshetry.
However, he opined that every authority – including the Project Monitoring Division under the planning commission – must be held responsible and they must function on a routine basis even in the absence of ministers. "Otherwise they also should be penalised," he added.
The NPC meets every three months to take stock of development projects and review their status but these  meetings, which are chaired by the Prime Minister, have become a mere formality, he added.
Delayed development projects have not only been holding the the country back but also adding to economic costs for the people. The weakness of the planning commission and also the various ministries in effectively monitoring development is going to cost not only the economy but also social progress, as scarce and precious resources are misused in the last months every year thereby encouraging financial indiscipline and recklessness.

Government officials find tax offices lucrative

The government officials’ priority for transfer has changed, as unlike earlier, majority of them want to get transferred to the tax offices like Inland Revenue Department and Department of Revenue Investigation (DRI), according to a survey.
Some 70 per cent of the government officials surveyed said that they want to get transferred to tax offices.
Earlier, customs used to be their first priority. "But the survey revealed that customs has become the second priority at present," said senior training officer at the Revenue Administration Training Centre Basu Sharma.
Earlier, customs used to be lucrative but the current trend showed the officials started preferring tax offices as they found it even more lucrative in recent years, may be due to some ‘unseen’ benefits,” according to a Finance Ministry official.
“Finance Ministry comes to the third priority and nobody wants to get transferred to research and academic departments," Sharma said, adding that the results could be an eye-opener for the Finance Ministry.
The officials also said that there is massive political interference and unpredictable environment in the government job. “Government employees’ image has taken a plunge," they said, adding that the frequent transfer on the basis of ideology has forced the officials to believe that system does not work.
The unions in the government machinery are so powerful that they have no more them on their ability. The bureaucracy needs a complete revamp as it’s not professional, they said.
They are not satisfied with the current organisational structures too. “The current government organisational structure offers nothing for growth and development, neither personal nor organizational, they said.
The Revenue Administration Training Centre had conducted a 45-day long training for over 60 government officials from senior to junior level including that from Revenue Department and Finance Ministry.
The frequent changes in the government coupled with the bureaucracy have been making it harder for the government employees to maintain their professionalism and discouraging them from believing on the system.

Budget allocates less fund for infrastructure

The government has earmarked very less budget for the infrastructure in the current budget.
"The current budget has separated Rs 20.81 billion for the public infrastructure," said Bodh Raj Niraoula, chief of the Budget Department at the Finance Ministry.
Though, finance minister Surendra Pandey has separated Rs 129.54 billion for the capital expenditure, the development activities, the real amount for the public infrastructure comes to Rs 20.81 billion, which is only 6.7 per cent of the total budget of Rs 337.90 billion.
Similarly, the government has allocated Rs 2.40 for the compensation of the land, the government will take for the infrastructure development, he said, adding that the delay in budget could make it difficult for the total amount to be compensated as the people are more demanding.
According to the budget, the major infrastructure includes 10 new modern cities for business and residential purpose in the vicinity of Mid-hills Highway (Lok Marga) and North-South corridors.
The old bridges of Godawari of Dhangadhi, Bheri of Surkhet, Dharke and Mugling, and bridges across Pathalaiya to Koshi that have been put under government's priority list and construction of six lane wide roads linking international trade routes namely Birgunj-Pathlaiya, Belahiya-Butwal, Rani-Itahari and Surya Binayak-Dhulikhel.
Of the total budget for infrastructure, the government will spend Rs 65 billion from its own purse, whereas Rs 36 billion will be spent from the foreign loan and Rs 23 billion from the foreign grants, Niraoula added.
However, the experts doubt the government's capacity to spend the whole budget due to four-month delay -- from the regular schedule -- in budget and the new rule that has fixed the ceiling for the expenditure for each quarter of the fiscal year.
"Unlike previous years, we have tried to discourage the spending habbit at the end of the fiscal year," he said, adding that the budget has clearly spellt out the percentage of expenditure that could be done on the fixed quarter of the fiscal year."By mid-May, the government has to spend 60 per cent of the budget," according to the new rule that has barred to spend more than 15 per cent in the last month of the fiscal year.
The finance ministry also holds a regular review meeting every alternative month for the effective monitoring of the spending. "We held review meeting with the secretaries of different ministries last month to monitor the spending," Niraoula said, adding that the next meeting is scheduled for next month.Realising the difficulty in budget implementation, the Budget Department has also prepared Result Based Budget (RBB) syatem and change in the coding system to GFS 2001 from the next fiscal year's budget.
"The budge for the next fiscal year would be more effective," the department chief added.

Budget to come on Friday

The caretaker government is bringing full-fledged budget on Friday for the current fiscal year-- four months late than the schedule -- focusing on donor-fuded programmes.
"After the opposition from UCPN-Maoists, finance minister Surendra Pandey backed form his populist programmes," said a source at the ministry.
After a long tug-of-war among the political parties, they have agreed to bring the full-fledged budget with the condition that no new policies would be announced. The donor funded projects and running health, education and infrastructure projects will get continuity as the donors have committed around Rs 100 billion aid in the last fiscal year 2009-10.
The foreign aid contributes to almost half of the development expenses and around 30 per cent to the total budget. "Foreign aid is key to our development expenses as the revenue alone is not even enough for regular expenses," a former finance minister said, adding that the trend, though is not good for the country, there is no alternative.
The government is, apart from revising some tax rates, is planning to bring some relief package for the exporters as the exports have plunged by over six times to imports widening the trade gap.
Subsidy for fertilizer and shallow tube wells for farmers to promote agriculture and some incentives for the exporters are in the finance minister's kitty, according to the source. Agriculture alone contributes to around 32 per cent to the gross domestic product but that largly depends on rain due to lack of proper irrigation facilities.
The full-fledged budget -- that has to be presented by mid-July -- have been stalled by the political deadlock after the surprise resignation of the Prime Minister Madhav Kumar Nepal on June 30 -- just two weeks ago the budget presentation date.
Since then, parliamentarians have voted 16 times to elect a new Prime Minister without being successful as no one has been able to gain a clear majority.
"The 17th vote that is scheduled for Friday could also be deferred till UCPN-Maoists' Plenum ends," said the source.
Meanwhile, Nepali Congress and CPN-UML today issued whips to their lawmakers for compulsory attendance in parliament on Friday during the amendment of the special Provision under Article 96 (A) in the Interim Constitution that will pave the way for full-fledged budget presentation.
The three major political parties -- UCPN-Maoists, Nepali Congress and CPN-UML -- along with other small parties have earlier agreed to present the annual budget in parliament through the caretaker government on November 19 as the UCPN-Maoists will be busy with its Plenum that starts from November 21.
Earlier Pandey has brought special budget of Rs 110.21 billion -- under the special provision for the regular expenses -- that will now be adjusted in the full-fledged budget. The budget will be around Rs 336 billion to Rs 339 billion as the final touches will continue till last hour.

Budget likely on November 19

The caretaker government is likely to present the budget on November 19.
Prime minister Madhav Kumar Nepal of the caretaker government has directed the Finance Ministry this morning to make preparation of the budget to table on November 19.
"The government has to either bring budget before or after the UCPN-Maoists plenum that is being scheduled from November 21," said an official, who attended the meeting. "The premier chose to bring it before."
The Finance Ministry is waiting for the budget announcement date to be fixed to finalise the last minute details.
Prime Minister has consulted with Finance minister Surendra Pandey, legal experts and Finance Ministry officials at his official residence, Baluwatar today morning.
During the consultation meeting, the premier also asked the legal experts for their advise on what should the government do if the UCPN-Maoists obstruct the government from presenting the budget in the parliament.
"The legal experts suggested to bring the budget through ordinance under Article 88, if the UCPN-Maoists continue to obstruct," said advocate Tika Ram Bhattarai, who was one of the experts the premier consulted with.
The UCPN-Maoists have been challenging the constitutional right of the caretaker government claiming that it can not bring the full-fledged budget.
Due to surprise resignation of Prime Minister Nepal in June -- 15 days before the budget presentation date -- finance minister Surendra Pandey brought a Special Budget of Rs 110.21 billion for the regular expenses under Special provision.
In absence of budget hospitals, senior citizens and government staffers will be hit hard as the government -- from November end -- cannot buy essential medicines and pay allowance to the senior citizens and salaries to its staffers that comes from the regular expenses.
The government has spent almost all the budget under its regular expenses head. "Due to legal provisions, the budget separated under the development expenses could not be transfered under the regular expenses," finance secretary said Rameshwor Prasad Khanal, who thinks that budget is urgent need of economy.
"The nation is above politics and the opposition will be ready to cooperate in bringing the budget," he said, hoping that everyone including the UCPN-Maoists knows the necessity of the budget for the country's development.
In absence of the full-fledged budget, the state coffer has also been hurt, as the government can not hike the revenue, though it can continue collection according to last fiscal year's policy.
The government can also not borrow from the internal market. "Had the budget come on time, the government could have borrowed from the market that has enough liquidity currently," Khanal said, adding that it could have expidited the development activities.

Conclave on budget
KATHMANDU: The umbrella organisation of Nepali private sector is organising a conclave on Sunday to pressurise the government to bring budget as soon as possible. "At a time, when all the economic indicators are negative, absence of budget is bleeding the country blue," Federation of Nepalese Chambers of Commerce and Industry (FNCCI) said, adding that the delay will also raise question mark over the efficiency of the politicos. The private sector will announce its united stance on budget after the meeting.

Finance Ministry clears Mutual Fund Regulation

Finance Ministry has given a green signal for the Mutual Fund Regulation that is expected to lure small investors and stabilise the secondary market.

"The ministry passed the Mutual Fund Regulation as the separate Mutual Fund Act may take long time to take shape," said Keshav Acharya, advisor of the Finance Minister Surendra Pandey.

"The Act needs to be passed by the parliament that may take long time," he said, adding that the capital market is in urgent need of Mutual Fund for its sustainable development. "Thus the ministry has decided to pass the Regulation under the existing Securities Act to give a alternative way to start the Mutual Fund.

However, the ministry has increased the paid up capital to Rs 1 billion from poposed Rs 100 million in the draft regulation.

Securities Board of Nepal (Sebon) had forwarded draft regulation of Mutual Funds -- after suggestions from to Nepal Rastra Bank (NRB) and Bankers Association (NBA) -- to Finance Ministry to get its final nod.

After the ministry's clearance, Securities Board of Nepal (Sebon) will prepare some guideline and start the process of providing licence any time soon.

Mutual Fund — with a face value of Rs 10 per unit — is the most suitable investment for a common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

Mutual Funds are expected to fuel capital market as many commercial banks have shown keen interest in it. It will create institutional investors also — something that the capital market lacks at present.

In an absence of the regulation also, NIDC Capital Markets Ltd and Citizen Investment Trust (CIT) had issued NCM Mutual Fund and CIT unit trust. But, the first one had a bitter experience in the absence of transparency and regulation.

The Regulation envisions an Assest Management Company (AMC) that will manage the fund, a Trustee that works like a watchdog, a Custodian and a Depository; all of whom has to get separate licence from the regulatory authority of the capital market.

What is Mutual Fund

KATHMANDU: A Mutual Fund is a trust that pools the savings of many who share a common financial goal. The money thus collected is then invested in capital market instrumentssuch as shares, debentures and other securities. The income earned through these investments and the capital appreciation realised are shared by its unit holders in proportion to the number of units owned by them. It can be traded at the Nepse as well. These funds are convertible and has liquidity also.

Action against Coops

KATHMANDU: Finance Ministry has suggested Department of Cooperatives (DoC) to cancel the registration of cooperatives operating illegally. The ministry was forced to direct the department after 25 big cooperatives operating in Kathmandu Valley, Kavre and Pokhara found operating against the cooperatives law.

Investors threaten to take to street

Share investors have threatened to take to street due to government apathy.
"We are ready to stage protests in the streets if our demands are not fulfilled," said General Investors' Association (GIA) president Deepak Karki addressing a press meet here today.
The investors' organisations -- General Investors' Association (GIA), Nepal Investors' Forum (NIF) and Nepal Securities Investors' Association (NSIA) -- are staging protests since February 18, after the government seemed reluctant to fulfil their 22-point demands. Partially addressing their demands, Nepal Rastra Bank (NRB) on Monday relaxed margin lending by five percent. However, that did not appease the investors.

Nepal Stock Exchange (Nepse), the secondary market of shares and debentures, is dysfunctional since the last three days due to their protest. There has been no trading on the Nepse floor as stockbrokers are supporting the agitation. "We want the demands of investors fulfilled and operation resumed at Nepse," said Nepal Stock Brokers' Association president Nanda Kishore Mundada.
Former Finance Minister Dr Ram Sharan Mahat has urged the government to take strong measures to revive the capital market. "The government should make the capital market stable," he said. He also urged the government to encourage banks and financial institutions to work as market makers to make the capital market progressive. If the government does not act today the capital market will crash, he added.
Nepse is in a bearish mode since last September and the benchmark index stood at 485.14 points last Thursday. Trading has halted due to investors' protest since then. The index had touched the highest point of 1,175.38 points on August 31, 2008.
Finance Minister Surendra Pandey's advisor Keshav Acharya assured investors that the Ministry of Finance (MoF) will take necessary action to revitalize the capital market. "The ministry will talk to investors to sort out the problems soon," he said. He, however, warned investors not to expect much in the current problematic scenario. "The whole economy -- monetory, exchange, capital market and real sector -- is in trouble at present," he said adding that none should expect rapid progress.
Securities Board of Nepal (Sebon) former chairman Dr Chiranjivi Nepal asked the government to exempt investors from capital gain tax (CGT) for a short time. "It could be from three to six months," he said. "If this is done, the market may flourish."
Japan and South Korea had applied the formula during the East Asian recession in 1997. Dr Nepal also called for belaying the decision to float 19 per cent of promoters' shares till Nepse gains momentum.
Prof Dr Bishombher Pyakurel elaborated the situation as bad governance. "All the problems are associated with bad governance," he said, "The government is not people friendly."
Meanwhile, Confederation of Nepalese Industries (CNI) has showed serious concern over the investors' agitation and urged the government to take the mater seriously.

World Bank pumps in millions for energy, agriculture sectors

The government of Nepal and the World Bank signed two agreements here today, amounting to $109.2 million to boost the nation’s development, especially in energy and agriculture sectors.
Finance Secretary Rameshore Khanal and World Bank Country Director for Nepal Susan Goldmark inked the agreement, which will provide $89.2 million in addition to aid package for the Power Development Project that will help implement the Energy Crisis Management Action Plan. Another, $20 million has been allocated for the implementation of the Project for Agriculture Commercialisation and Trade (PACT).
Nepal is in the midst of an unprecedented energy crisis that has had a cascading impact on all aspects of the economy. The nation has declared a “national energy crisis” in light of last winter’s acute shortfall of power.
"It is clear that chronic power shortages will continue to be a defining feature of life in Nepal for several years to come. The World Bank is stepping up its assistance to help Nepal minimise economic impacts and hardships in the short-term as well as to implement medium to long-term development plans," said Goldmark. "In the absence of a concerted scale-up of both grid-supplied and off-grid power, Nepal will continue to be burdened by a heavy reliance on costly, and often polluting, alternative means for meeting the demand for electricity,” she explained.
The additional financing will include investments in rehabilitation of the Kali Gandaki 'A' Hydro Electric Plant (HEP) — the biggest in the country — as well as two existing thermal plants in Duhabi and Hetauda. It will also finance construction of the 220KV Bharatpur-Bardaghat transmission line, strengthen the old and severely overloaded distribution network in the Kathmandu Valley and expand the government's off-grid micro-hydro rural electrification programme. These investments are intended to strengthen the nation’s power system by increasing energy production through reduction of down-time at the Kali Gandaki 'A' HEP and make available an estimated 22 MW in the existing thermal plants
The PACT aims to improve the competitiveness of small-hold farmers and agri-businesses in 25 districts. Agriculture, which is predominantly subsistence, contributes 38 per cent to Nepal's gross domestic product (GDP). In a globalised world, agriculture faces several challenges like market orientation, trade promotion and increased investment in the agricultural sector to shore up rural income.
"To harness opportunities in the global market, farmers and other stakeholders must produce and deliver the right commodities at the right time, while maintaining consistently high quality standards. To satisfy the requirements of trade partners and to ensure the competitiveness of Nepali products, food safety and animal health regulations and standards must be actively promoted," said Goldmark.
The PACT aims to help farmer groups and cooperatives engage in profitable market-oriented production and improve access to markets through technology and information services, critical public infrastructure and linkages to agri-business. It intends to create and strengthen industry-wide partnerships along the value chain, forging linkages between producers, traders, processors, and other stakeholders. At present, the World Bank is financing 16 projects in Nepal, whose cumulative worth is around $916 million.

Budget should focus onsocial spending

Bharat Mohan Adhikari, a senior leader of ruling CPN-UML, was the finance minister for nine months when CPN-UML was in power in 1995-96. He was the first finance minister of the CPN-UML. Adhikari has some words of advice for Surendra Pandey — his fellow party leader, who is heading the finance ministry and preparing budget for the fiscal year 2009-10. The budget has to be presented before the fiscal year ends, but Pandey is likely to present the budget a little later than usual due to the deadlock in the parliament.
Adhikari talks to Kuvera Chalise on what the budget’s priorities, size and focus should be.

What should be the top priority of the budget?
The guiding principle of the budget should be state, private sector and cooperatives. There should be consensus on these three pillars that can drive Nepali economy. Apart from that, the budget should focus on creating conducive environment to speed up the economic development that could bring inclusive growth. Only growth with social justice can bring peace in this country. Social network in the rural areas has to be created and strengthened.

Every government brings its own programmes making the people more confused. Should the budget bring more new programmes or give continuity to the programmes of the past governments?
It’s not necessary to impose new programmes every time. If the programmes of the past governments have given positive results, why not continue them. When I presented the budget almost one-and-a-half decades ago, I brought ‘nau-sa’ programmes to accelerate the economic activities in the rural areas. It cost government little but generated economic activities that increased rural growth. Such programmes should be continued as Nepal has more villages, where we need to generate economic activities that can fuel economic development. The tested and widely beneficial programmes should be continued.

Which programmes of the past governments you think are worth continuing?
The programmes that Dr Baburam Bhattarai brought in his budget like the opening of cooperative shops in every village should be continued. Such programmes will encourage the cooperatives, provide villagers with goods at reasonable price and curb price hike. But Dr Bhattarai’s Literacy Programme needs to be improved upon. It should be launched as a national campaign for at least three to five years, not for a short period. The Youth Self-Employment Programme could also be continued with certain changes. The Afno Gau Afai Banau programme generated lots of activities in the rural areas and has to be continued. The cooperatives have to be strengthened by amending the Acts. They should be actively involved in production and distribution. Budget should ensure social spending. Free health care for women and children will help boost social security. The budget must encourage education in the rural areas by providing free snacks and uniforms for the children from Dalit, backward and marginalised groups. Similarly, primary health care should be guaranteed.

What should be the size of the budget?
It should be around Rs 300 billion. Roughly, the capital expenditure — expenses for development activities — will be around Rs 125 billion, current expenditure will come to around Rs 150 billion, as the salaries of the employees will go up.

Economists say Rs 260-billion budget will be ideal. Revenue generation target cannot be more than last year’s and the Maoist-led government failed to spend on development, though it succeeded in meeting the ambitious-revenue target of Rs 141 billion. Can the finance minister dare to bring Rs 300-billion budget?
The government has to follow Dr Bhattarai on revenue target. Dr Bhattarai did a remarkable job on that front and proved that revenue can be generated, though he failed on development front and the government has a surplus of Rs 22 billion. He met the target of Rs 141 billion. New budget should set a target of at least Rs 183 billion. An ambitious target will encourage the bureaucracy to work more efficiently. Had I been the finance minister, I would have set up a separate mechanism to spend on development activities and sent the budget to the villages for whom it was meant.

Dr Bhattarai blamed other political parties for not being able to spend the development budget due to absence of representatives in the local bodies. What kind of mechanism can take the place of local bodies?
There should be a high level committee headed by the Prime Minister to look into the development activities. The committee should review its task every three months and submit the report to the parliament and to the people. People have every right to know what their representatives are doing for their development.

If all the committees are headed by the Prime Minister how can he do justice to them?
He has to prioritise. For example, there is no need for the PM to head the Investment Board as its focus is to lobby and bring investment in the country for mega projects. Such committees should be headed by a political figure who has a good international reputation, who can convince foreigners to invest in the country.

Talking of investment, Nepal has barely seen any investment in the recent past. How should the private sector be ecouraged to invest more?
The reason for Nepal’s poverty is low production and little investment. Policies should be framed to encourage the private sector to bring more investment and generate employment. It should be encouraged to invest in fast track roads and Tarai and Lhasa-Kathmandu railway. The budget must announce a clear policy on domestic raw material-based industries like cement and hydropower. The special economic zones, like in Panchkhal, have to be speeded up.

Despite Nepal being rich in water resources, the country is reeling under long hours of power outages? How can industries operate?
The budget should spell a clear policy on hydropower generation. It has to form a policy to attract foreign investment in mega hydel projects that need FDI. Other micro, small and medium-scale hydro projects that are under review have to be immediately finalised and Nepal Electricity Authority should enter into Power Purchase Agreement without wasting any time. There have been continuous disruption of the hydro power projects by the locals, as they feel they are being denied the ownership of their natural resources. The problem can be solved by ensuring the locals’ participation as shareholders and sharing the benefits with them by constructing schools, hospitals and roads and providing them with employment. Tehri Dam project of India is the best example how the project can benefit the locals also.

Nepal is an agricultural country and most of the Nepalis are dependent on agriculture for their livelihood but the productivity is decreasing every year and there is food scarcity. How can budget ensure food sovereignty and modernise agriculture?
The budget should give priority to land reforms, land tilling, accessibility of loan to the farmers, subsidy on fertilizers and improved seeds, apart from the irrigation facilities. The modernisation and commercialisation of agriculture is yet another aspect the budget should address in all seriousness.

FM vows capital market development

Finance Minister Surendra Pandey assured investors of including their suggestions in the coming budget for the development of capital market.
"The government is committed to create an investment-friendly environment and develop capital market," he said while inaugurating a workshop on 'Stock Market Development in Nepal: Issues and Challenges for Reform', organised by Nepal Investors' Forum here today.
During the last one-and-half decade, the sector has grown significantly in Nepal. And, with the development and reforms in financial sector the stock market also grew, said Prof Dr Bijaya KC presenting his paper on the occasion. "Stock market size, liquidity, concentration and volatility are indicators for measuring the rate of stock market development," he said adding that the relationship between various attributes of the stock market and economic growth of nations has developed a set of indicators under these categories to conceptualise the nature of such relationship.
Commenting on Prof KC's paper, Dr Chiranjivi Nepal, former chairman of Securities Board of Nepal (Sebon), said international research has shown that economic growth is directly related to the stock market. "The paper missed three major indicators like asset price effect, regulatory and international development and conglomerate index," Dr Nepal commented.
According to one study, Nepal's stock market falls in the under-developed category among a 41-nation study which has termed the Japanese, US and UK stock markets the most developed and Nigerian, Colombian and Zimbabwian stock markets least developed.
Though the number of investors, shares and listed companies has increased in recent years, Nepal's stock market is grossly inflated. It has no direct relationship with real economic growth. "The share prices go up if there is economic growth," he said adding that in Nepal the share prices are going up but the factor is not supported by economic growth as the gross domestic product (GDP) is going down.
Rewat Bahadur Karki, former general manager of Nepal Stock EXchange (Nepse), and Deepak Kafle, former chairman of Sebon, also commented on the paper that concluded that the Nepali stock market is underdeveloped and has failed to have a significant impact on the overall economy.Earlier, welcoming the participants, Rana Keshav Pradhan, general secretary of Nepal Investors' Forum complained of government apathy towards the stock market.

Government spends less on development works

Nearly half the fiscal year has lapsed without any major development works in the country.
According to data from the finance minsitry, in the first five months - till December 15 - of this fiscal year 2008-09, the government spent very little on development works while administrative expenses multiplied by eight times as against development expenses during the period.
The government spent Rs 4.87 billion under capital expenditure - that is development works during the period, said the finance ministry. In contrast, the government spent Rs 32.33 billion under recurrent expenditure which is routine expenses and mainly administrative expenses that include expenses of foreign trips by ministers and their salaries.
The increase in administrative costs directly pushes consumer prices up. "Theoretically, the increase in administrative expenses means increase in consumer prices," said Dr Shanker Sharma, former vice-chairman of National Planning Commission (NPC), the government think-tank.
"Ideally, prices will go up but it also depends on last year's development works' expenses during the same period," he said adding that development spending for this fiscal year's five months was unsatisfactory.
The government has made tall promises of infrastructure development but till the half of the fiscal year, there has been no 'visible' development work by the Maoist-led government.
To top that, consumer price index is skyrocketing, as according to Nepal Rastra Bank (NRB) the year-on-year inflation was at 14.5 per cent in the first four months against 6.3 per cent in the same period the last fiscal. There seems no end in sight to the price hike as transporters have not yet reduced transportation charges though fuel price in the domestic market went down thrice since October.
Including the principal amount of Rs 6.32 billion as loan paid, the total government expenditure stands at Rs 43.53 billion - three per cent less than in the first five months of last fiscal year.
The government has released Rs 54.1 billion - Rs 40.7 billion for administrative expenses, Rs 6.77 billion for development works and Rs 7.16 billion for foreign loan repayment - during the period. The amount is 1.2 per cent less than allotted to the ministries for the same period last fiscal year, said the finance ministry.
The government is yet to spent around Rs 11 billion of the total released amount. "The government has not spent the total released amount of Rs 54.1 billion," said Shankar Prasad Adhikari, spokesperson at the finance ministry.