New government promises economic austerity, effective service delivery

The newly formed government led by Prime Minister Puspa Kamal Dahal 'Prachanda' has promised economic austerity and effective service delivery.

The first cabinet meeting of Prime Minister Dahal decided not to take the increased salary for the current fiscal year. The budget for the current fiscal year 2022-23 has increased the salary of the government officials, including the ministers. Due to economic crisis, the erstwhile government failed to mobilise the revenue not only falling short of the target but also failing to meet the recurrent expenditure.

Dahal, in the cabinet, also instructed to prioritise good governance, better service delivery and end the hassles faced by people while obtaining passports and licenses. The eight-member cabinet also decided to make arrangements to ensure that citizens can obtain essential documents like passports and driving licences without waiting long in queue. Passport and driving licence-obtaining processes in Nepal are complicated and mismanaged, which has forced service seekers to stand in queue for hours from early morning. Likewise, there is a lot of complaints of bribery and forgery.

The new government has decided to make efforts to reform the service delivery of government offices to make the public feel change.

Talking to journalists after the first cabinet meeting today evening, Dahal said the cabinet has been formed as per the people's mandate. "Challenges galore ahead," he said, adding that the first meeting of his cabinet decided to take stock of the economic crisis and identify solutions.

Earlier in the afternoon, Dahal also instructed not to buy extravagant goods at Baluwatar, the official residence of the Prime Minister, where he will be shifting day after.

According to Prime Minister Dahal's personal secretary Ramesh Malla, the Prime Minister has instructed not to buy any luxury goods for his use. Dahal courted controversy, during his first tenure as Prime Minister, as he was blamed for buying a bed worth Rs 1 million for him.

Dahal was sworn-in as the 44th Prime Minister of Nepal at the President Office at Sheetal Niwas today and formed an eight-member cabinet immediately.

ADB to help develop agriculture, improve food safety

The Asian Development Bank (ADB) has approved a $50 million policy-based loan to help support the Government of Nepal’s reforms to improve food safety measures, enhance agricultural trade standards, and promote agricultural commercialisation in the country.
“Agriculture has a big potential to contribute significantly to Nepal’s growth and development, but the sector remains rooted on subsistence farming and food safety measures are impeding the prospect of trade with other countries,” said ADB senior public management economist Navendu Karan. “ADB’s assistance will help address these issues by making sure that Nepal’s agricultural products and processes are up to international standards.”
Agriculture plays a key role in Nepal’s economy, contributing 27 per cent of gross domestic product (GDP) in 2019, with 55 per cent of the country’s working age population (above 15 years) engaged in subsistence agriculture, 61 per cent of whom are women. However, the sector’s productivity remains the lowest in South Asia, given the dominance of subsistence farming, poor adoption of suitable on-farm and post-harvest technology, lack of timely supply of quality inputs including fertilizer and seeds, and limited financial services and infrastructure.
Agricultural commercialisation, meanwhile, is constrained by the limited capacity of farmers to prepare bankable business proposals to seek formal financing. The country’s food safety measures are also not aligned with international standards, making it difficult to move agricultural commodities between Nepal and its trade partners, with exporters facing significant delays and higher transaction costs due to multiple food safety tests on both sides of the border.
The Food Safety and Agriculture Commercialisation Programme, comprised of a two-tranche, standalone policy-based loan, will improve food safety and quality monitoring systems in Nepal, particularly in enhancing the regulatory and institutional capacity for sanitary and phytosanitary monitoring. This will include alignment with accepted standards for pesticide residue levels for fruits and vegetables, among others.
The programme will promote agricultural commercialization by supporting the preparation of bankable business plans for selected commodities to widen farmers’ access to finance and business knowledge, while building their capacity in good agricultural practices. Institutional capacity of relevant government authorities will be enhanced to ensure sustainability of progress in the agriculture sector.
ADB has been Nepal’s key partner in the agriculture sector since the bank’s first sector engagement in 1971. Apart from the policy-based loan, ADB will also provide a $500,000 technical assistance grant to assist implementing agencies to comply with the policy conditions of the programme’s second tranche.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. In 2018, it made commitments of new loans and grants amounting to $21.6 billion. Established in 1966, it is owned by 68 members, 49 from the region.

New WTO indicator finds services trade weakening

World trade in commercial services lost momentum through the second quarter of 2019 according to the WTO’s new Services Trade Barometer, launched today. The index’s reading of 98.4 is below the baseline value of 100, suggesting that services trade continued to face strong headwinds leading into the second half of the year.
The barometer is part of the WTO's efforts to develop new insights into services trade. Its June reading indicates a further weakening after services trade growth slowed during the first quarter of 2019. For comparison, during a recent peak in July 2018, the barometer registered 103.1.
Declines in most of the Services Trade Barometer's component indices drove the second quarter softening, as they signalled a broad loss of momentum across various services sectors. The passenger air travel index (95.6), construction index (97), and global services Purchasing Managers' Index (97.2) all fell further below trend in June. The financial services index (99.7) also dipped, finishing slightly below trend. The index for information and communication technology services (100.3), meanwhile, fell from well above trend in mid-2018 to on-trend in June. In contrast, the container shipping index (100.8) was slightly above trend and rising in June, following a multi-month slowdown.
Despite the overall loss of momentum since the start of 2019, services trade has generally held up better than goods trade since the latter is more directly affected by recent trade tensions. The importance of services trade to the global economy will be explored in greater depth in the forthcoming World Trade Report, slated for release on October 9.
The Services Trade Barometer – which will be released two times per year – highlights turning points and changing patterns in world services trade. Unlike its counterpart for goods, the fluctuations registered by the services indicator coincide with movements in actual trade flows, rather than anticipating them. Readings of 100 indicate growth in line with medium-term trends. Readings greater than 100 suggest above-trend growth while those below 100 indicate the opposite.