Views of a Nepali Economist

In Republica, Chandan Sapkota writes:

In trading across borders, which is one of the indicators of Doing Business ranking, Nepal is ranked 164 out of 183 countries. Moreover, Nepali exporters have to produce at least 9 documents and takes 41 days to process them before they are cleared for export. These numbers are one of the highest in the region. Furthermore, Nepal has one of the worst logistics related to exports and ranks 147 out of 155 countries in the latest Logistics Performance Index ranking. Nepal’s logistics ranking is worse than that of Afghanistan.

Chandan's main argument is about the cash assistance that Nepalese government hands out to the exporters. Chandan  believes that cash assistance to exporters won't do much good. He writes

Cash incentives to a few sectors and businessmen will do nothing to alleviate these problems. Instead the government should be looking into investing the allocated sum to reduce these hurdles for exporters. It will eventually make our exports competitive and might increase both exports volume and revenue.

 ......Another reason why cash incentives will not increase exports earnings (share of GDP) is that it will not address the underlying cause for eroding export competitiveness at the first place: Supply side constraints such as poor infrastructure network, lack of reliable and adequate power supply, excessive labor unionism and militancy, lack of raw materials needed for our firms, and very few opportunities and avenues, on top of bureaucratic red tapes, for new entrepreneurs to enter the market.

 In the same newspaper, the editorial mentions

.....the economy expanded by a meager 3.5 percent-- the lowest rate in the last three years.

.....The non-agricultural sector grew by only 3.1 percent, far below last year’s rate of 5.4 percent. The economic survey once again shows the persistent weakness of the manufacturing sector. It grew by 1.5 percent, an insignificant increase from last year’s 1.2 percent.

.....Our list of exportable commodities is shrinking and our imports are rising fast, leaving a bloated trade deficit. This year alone, the ratio of trade deficit to gross domestic product (GDP) doubled to 23.6 percent. As this is clearly an unsustainable trend, the country must take measures immediately to reverse the trade deficit.

...The number of health institutions did not grow at all during the entire fiscal year but stayed put at 4,393. The only achievement in the sector was the upgrading of 500 sub-health posts to health posts. And 100 hospital beds were added during the entire fiscal year.

...170,000 more children were enrolled in primary schools, raising the enrolment rate to 95.5 percent from 94 percent. But a lack of trained teachers in schools in the rural areas and regular strikes across the sector raise serious questions about the quality of education in our public schools.

 Nepalnews writes that the Nepal Oil Corporation has decided to increase the price of petrol and diesel.

The Nepal Oil Corporation (NOC) has again increased the price of diesel and kerosene by Rs. 5 each per litre effective from Sunday.....The price of diesel and kerosene has now reached Rs. 73.50 per litre from Rs. 68.50....Following the hike in its price, the monthly loss of the NOC is expected to drop to Rs. 740 million....NOC had increased the price of the petrol to Rs. 102 per litre from Rs. 97 last month.

The same online newspaper reports that:

Experts have urged the government to introduce new monetary policy to help the country find a way out of the present economic crisis.

...economist Tulraj Basyal said that as the bank and financial institution (BFIs) are suffering from weak internal management, the government should bring in policy that could terminate these problems. .....Basyal also urged the government to prepare the policy on the basis of other cooperatives and development banks' statistic as well, as previous monetary policies are only based on central bank statistics.

...former governor Dipendra Bahadur Chettri also said that the new monetary policy should discourage the informal transaction of Indian Currency in the terai regions to achieve the goal aimed by the central bank.

Labels: central bank of nepal, nepal, Nepalese Economy