The country’s Gross Domestic Growth is expected to remain NPR 3.464 trillion. This year’s growth rate is comparatively higher than the previous year’s growth rate of 6.3 percent.

Nepal’s economic growth rate took a hit in FY 2072-73 when the Gorkha earthquake struck the country and stalled its livelihood.

The per capita income for FY 2075-76 is estimated to reach USD 1, 034 compared to last year’s USD 998. Likewise, the total number of people living below poverty line has also reduced. A total of 18.7 percent people are currently under poverty line.

According to the white paper presented by Finance Minister Yubaraj Khatiwada one and half year ago, 21.6 percent of the people were living below poverty line.

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Khatiwada said this at the ‘Nepal-India Franchise Investment Expo and Conclave’ held in Kathmandu on May 15, 2019.

Commending Nepal as a suitable investment destination, the Minister told Indian industrialists that the Oli Government has created a conducive and secure environment for higher profitability through necessary policy reforms.

“Nepal is at present on the course toward economic prosperity by welcoming foreign technology and investment. We have made sweeping reforms in the legal framework. The one-stop service center has also been brought into operation. The law related to foreign investment and technology transfer too has been implemented,” Finance Minister said in a statement.

He said the government is also welcoming foreign investment and technology to drive the Nepali economy further.

Khatiwada added that the country’s ‘Visit Nepal Year 2020’ campaign, to drive 2 million tourists, provides a better opportunity for expanding investment in service industries.

Stating that Nepal tourism already has good private sector investment, he urged private investors to invest more into the sector considering the rise in tourist arrivals, every year.

The Minister also informed that the Nepal Government is currently preparing to introduce a new Intellectual Property Rights law, which is expected to be registered in Parliament by the end of the current session.

“The government is serious regarding the protection of the intellectual property and the patent rights as well,” read Khatiwada’s statement.

Meanwhile, the Federation of Nepal Chamber of Commerce and Industry (FNCCI) President Bhawani Rana said the investment expo will help the business community of both the nations to pursue investment opportunities in potential sectors.

She highlighted tourism, hospital, hotel, industry and allied sectors as the potential sectors for investment.

“The only slogan of the government is economic prosperity and the Prime Minister has been emphasizing on this. The government has also expressed its commitment to take the private sector along with it in every sector,” said the FNCCI President.

Indian Ambassador to Nepal Manjeev Singh Puri highlighted on the need to focus on franchise investment that attracts youth and stressed on the need for enhanced trade cooperation.

Mr. Manjeev Singh Puri – Ambassador of India to Nepal

A total of 47 special stalls have been organized at this event, being held from May 15-17, 2019.

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The country’s only infrastructure bank has resumed its operations on March 06, 2019 with an aim to generate finances for the local infrastructure projects.

The Minister for Finance Yuba Raj Khatiwada inaugurated the bank that has been developed under the public-private partnership model.

The bank has resumed its operations with the largest paid-up capital of NPR 20 billion and the authorized capital of NPR 40 billion.

With headquarters in Kathmandu, the bank will expand to all local regions with branch offices in every province.

The infrastructure bank will play a key role in addressing financial needs and fund crunch being faced by Nepali infrastructure sector.

It is noteworthy that many local banks and financial institutions have expressed their reluctance to offer fund funds for long-term infrastructure projects. Now, the infrastructure bank is expected to fill that gap!

Addressing the inauguration event, Khatiwada, who served as the governor of the central bank in the past, called on need for utilization of banking services.

NIB came into operational much before the expected date. Earlier in February 2019, the tentative date for resuming NIB operations was set as June 2019.

NRB issued an operating license to NIB in a decision on February 11, 2019.

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PM Oli inaugurated the milestone program at a special function held in City Hall, Kathmandu. The scheme will create a minimum of 100,000 jobs, annually!

About the Prime Minister Employment Program (PMEP)

The employment campaign seeks to create job opportunities within Nepal and end Nepal youth dependency on jobs abroad, said Oli.

“This is a new beginning, a new campaign. Among many problems of the country, unemployment is the major one, which is directly linked with poverty. This program aims to resolve both,” the Prime Minister added.

Unemployed persons between 18-51 years will be covered under this scheme, which will assign them jobs as per their qualification and interest areas. Additionally, they will also receive vocational and skill-oriented training.

With the implementation of the new program, an unemployed Nepali citizen will get employment for a minimum of 100 days in a fiscal year along with subsistence allowance worth 50 days of work.

As per the employment program, the selected youth will be categorized under community infrastructure development, information and communication technology, industry and health, large and national pride projects and reconstruction among other services.

Program Implementation

The program implementation will begin after the government gets a count of the number of unemployed persons in Nepal.

According to the Labor, Employment and Social Security Ministry, the government will provision employment coordinators at all 753 local levels to facilitate the program.

2,259 candidates have been shortlisted to run the Employment Service Centers (ESCs) at all local units.

ESCs will now look for government projects that require people for project execution and completion.

Finance Minister Yuba Raj Khatiwada says that for the process to commence, certain amendments need to be made in line with the Public Procurement Act. He also added that both the local and the provincial governments should work together for implementation.

The employment coordinators will have to submit the names of unemployed to the government by June 25, 2019.

“Every month, the working age population increases by 35,000 people and Nepal must create 286,900 jobs a year to maintain its employment rate”, says a World Bank report.

Nepali Sansar applauds the government for this remarkable step towards addressing Nepal’s unemployment scenario.

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The investors have been on a hunger strike in front of the Nepal Stock Exchange (NSE) demanding the resignation of the Finance Minister Yuba Raj Khatiwada and Nepal Rastra Bank (NRB) Director Chiranjeebi Nepal.

Chairman of the Securities Board of Nepal Rewat Bahadur Karki, NSE Chair Laxman Neupane and Insurance Board Chairman Chiranjeebi Chapagain were among other officials targeted by the investors.

“The promises which the government authorities have been making for the improvement and upliftment of investors for last three-four years have not been fulfilled. We demanded swift implementation of measures to protect the interests of investors, but the government did not pay any attention. As a result, we have started the hunger strike to pressurize the government,” says Koirala, a senior economic journalist.

Koirala alleged that the Finance Ministry failed to bring in reforms in the national stock market situation.

“Finance Minister Yubaraj Khatiwada and the head of other regulatory bodies do not want to expand and improve the financial market because of which, we are now facing forced to go on a hunger strike demanding their resignations,” Koirala adds.

“The veteran economist is himself the Finance Minister. He is well aware of the issues but is acting indifferently. He has been ignoring 1.7 million share investors,” says Sushma Dhungana, one of the investors in the national stock market.

The investors published their 14-point demands calling reformation in the capital market, protection of investors and creating an investment-friendly environment in the country.

The group stands committed to continuing their protests until their demands are accepted.

What does the government have to respond on this? Let’s see!

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In an encouraging move, the government honored the country’s highest taxpayers including top companies in 15 different categories, at a program held by the Inland Revenue Department.

Officials feel that the move will promote tax-paying culture in Nepal.

Nepal-based MNC Surya Nepal emerged as the highest taxpayer even this time, leaving its mark for the third time in tax-paying to the Nepal Government.

Siddhartha Shumsher grabbed the recognition in the ‘individual category’ as the top taxpayer, continuing journey as the ‘top taxpayer’ for the sixth consecutive year.

Dabur Nepal, Himal Power Ltd, Agriculture and Livestock Probiotic Industry, the Chhimek Cooperatives, Nabil Bank, Nepal Punarbeema (Re-Insurance) Company, Nobel Medical College, F1 Soft Information and Taragaon Regency Hotel are among others in the list.

Non-payment Tax Hindrance to Growth

Addressing the event, Finance Minister Yuba Raj Khatiwada urged every Nepali citizen to be liable for voluntary tax-payment depending on their level of income and ensure timely payments.

Stating that every lowest taxpayer is also a respectable tax-payer, the Minister said that the non-payment of taxes will hinder the country’s growth progress. In this regard, he also informed that the government is working towards manage taxation system alongside focusing on increasing the scope of taxation rather than tax rates.

Meanwhile, Finance Secretary Rajan Khanal also informed that the government’s efforts on tax reforms have received some benefits over the benefits.

The government has also recently set-up a tax consultation department to address public concerns about taxation.

What Industry Said?

Speaking on the occasion, industry bodies urged the government to ensure a business-friendly environment in the country.

Federation of Nepalese Chambers of Commerce and Industry (FNCCI) President Bhawani Rana, Confederation of Nepalese Industries (CNI) chair Hari Bhakta Sharma and President of Nepal Chambers of Commerce Rajesh Kaji Shrestha were among key delegates present at the event.

They urged the government to ensure a conducive investment-friendly environment in the industrial sector and also facilitate the industry-friendly taxation system.

In this regard, the Nepali business community expressed their willingness to work with the government with regard to taxation and related payments.

Director General of the Inland Revenue Department Bishnu Prasad Nepal informed that the Department is working with government on economic and revenue mobilization policies.

We are also working on ways to raise awareness among tax-payers besides and have been providing needed concessions that encourage tax-payers.

Hope the constructive and collaborative efforts of the public-industry-government would drive the budget promises, driving the Nepali economy towards a structured growth.

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The Minister said this at a program event titled ‘Nepal’s Agriculture Structure: Constructive Change for Prosperity’ held by Nepal Sociological Association in Kathmandu on November 21, 2018.

Khatiwada said that the country’s agriculture sector needs to be modernized with optimum usage of technology.

In this regard, he pitched on the need to bring conclusions drawn from relevant studies and researches by various sectors to farmers’ purview.

“The technology is confined in the laboratory. The studies carried out by NARC, NAST, universities are there amongst us, but have not reached the farmer’s doorstep. Now is the time to pay attention to this aspect,” said Khatiwada.

The Minister stressed on technology implementation while expressing concern over lack of sector’s growth and decrease of arable land despite incentives and special facilities.

Speaking about government’s expectations of five percent agriculture production this year, Khatiwada said that achieving this target would suffice the country’s food grains requirement.

In this regard, he urged for price adjustment to reduce production cost in Nepali agricultural sector owing to its production performance compared to other sectors.

“The problem is that two-thirds of the laborers are engaged in agriculture whose production is merely one-third. This ratio should be brought down to at least one-third in the next 10 years and the bulk of the labor force should be engaged in other enterprises,” he said.

Stating that the rate of women ownership of land has increased from 8 percent to 30 percent currently, Khatiwada pitched for a change in society’s thinking perspective towards women-related taboos.

Meanwhile, Nepal Agriculture Scientist Dr. Kailash Nath Pyakurel said the program has been organized with an aim to give a sociological analysis of Nepal’s land reforms and agriculture policy and programs.

As part of the program, Dr. Purna Subedi, Dr. Bishnu Uprety, Dr. Yubaraj Luitel, and Yamuna Ghale presented a working paper on land and agriculture, gender concept in the agriculture sector and food security.

Various discussions and debates held as part of the program will further be submitted to the government for further review.

Sociologist Bidya Bhattarai, Representative of the Agriculture and Forestry University Ramhari Timilsina and Action Aid Director Sujita Mathema were among the key speakers of the program.

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Finance Secretary Rajan Khanal and World Bank Director for Bangladesh, Bhutan and Nepal Qimiao Fan signed the agreements in the presence of Nepal Finance Minister and World Bank Vice-President for South Asia Schafer among others senior government officials.

“With these two projects, the Government of Nepal and the World Bank will come together to ensure better livelihoods, access, trade and life opportunities for thousands of Nepalese people,” said Dr Yuba Raj Khatiwada, Nepal Finance Minister.

The amount will be utilized for:

• Construction and maintenance of safe, resilient and cost-effective bridges across Nepal
• Improving food security of concerned households and communities

Investment for Strategic Roads Network
The first credit worth USD 133 million will be dedicated to the Nepal’s Strategic Roads Network spread across 12, 142 km including national highways, feeder roads and other important national roads.

This amount will also fund:

• Nepal’s Second Bridges Improvement and Maintenance Program which aims at fixing around 477 bridges.
• Maintenance support for 90 bridges
• Upgrading road safety measures on approximately 180 existing bridges to reduce road mishaps.

“We are deepening our collaboration with the Government of Nepal through the development and sustainability of key strategic bridges, and through enhancement of food security and nutrition. These contribute greatly to Nepal’s development story-line by addressing the need for connectivity, human capital development and shared prosperity,” said Hartwig Schafer, Vice President, World Bank- South Asia Region.

Investment for Food Security
The second project will be a grant of USD 22.7 million which will add to Nepal Government’s capacity for agriculture services enhancement at decentralized levels and create diverse income opportunities for the rural poor.

The USD 22.7 million Global Agriculture and Food Security Program (GAFSP) will support the Food and Nutrition Enhancement Project aiming at improving 65,000 direct beneficiaries, out of which 65 percent are for women.

The projects aims to improve nutritional behavior and connecting it with agriculture-related and income-enhancing activity by working with smallholders and marginal farmers.

As part of the program, farmers from adjacent communities will also indirectly benefit through knowledge sharing and engagement with project-supported farmers.

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The move is mainly coming as a solution to the issue of tax collection from beyond jurisdictions, by local level governments.

Speaking at a press meet in Kathmandu, Chandannath Municipality Mayor Kantika Sejuwal informed that she is visiting the capital to invite important governing bodies including federal ministers, high-ranking officials, industrialists, business chambers’ leaders and development partners to the summit.

The event is scheduled to be held in Karnali Technical School in Jumla’s Chandannath Municipality on September 14, 2018.

Sejuwal has invited Nepal Finance Minister Yubaraj Khatiwada as ‘chief guest’. According to Sejuwal, Khatiwada will deliver the keynote speech for the summit.

Following this, there will be a thematic presentation on far-west Nepal’s agriculture, non-timber forests products and tourism investment potential.

Jumla’s Untapped Potential:
Chandannath Municipality has identified some priority projects that have investment potential which include apple orchards, farming, herbs and herbal processing units, poultry, cold storage facilities, hotel & hospitality business and technical education institutes.

Sejuwal has expressed commitment to address the tax crisis by providing tax incentive according to the jurisdiction of the municipality and adequate protection for the investment.

Additionally, the Municipality Development Masterplan has been created to attract investment and provide adequate protection to them.

Speaking about Jumla’s huge potential Sejuwal says that the district has potential for high-value organic agro products, herbs and other non-timber forests products that have provide market advantage for Nepal exports.

“Jumla district has a lot of unexplored potential and investors have not been attracted so far due to its geological remoteness, however, there are plans to open the checkpost from Yari of Humla district to connect this region with China,” she said.

“We are looking forward to investors carrying out baseline surveys to invest in Jumla during the investment summit,” said Sejuwal, adding further.

Conclusion:
Other then Khatiwada, Karnali’s ministers and lawmakers are also called to address the summit. Among the many invited dignitaries, National Planning Commission Vice Chairman Prof. Pushpa Raj Kandel and member Min Bahadur Shahi, various business chambers and industries representatives, bankers, diplomats and development partners representatives have confirmed their attendance to the event.

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Nepal’s capex saw a five-year high at Rs 267.25 billion in the FY 2017-18 that ended mid-July 2018, with the last month of the fiscal alone witnessing Rs 108 billion spending.

The government drew wide criticism for its rush spending in the last month!

Responding to remarks over the spending rush, the Finance Minister Yubaraj Khatiwada recently made new statements citing ‘dependence on revenue collection’ as the key reason behind the last-hour spending.

Government’s expenses, mainly capital expenses rise in the last quarter of the fiscal because the payments are issued based on revenue collection. Revenue collection surges only after the first half, says Khatiwada.

He further informed that the budgets for developmental projects were released in the third and last quarters of the fiscal after reviewing the performance of the completed tasks and that doesn’t mean the projects were taken up in the last month.

“Contractors who completed works in the third quarter might have received payments in the last quarter,” he added, while also admitting delays on contractors’ side in executing tasks.

Key Structural Concerns Haunting!
Ending the criticism, Khatiwada noted that the government will soon take necessary measures to address the structural concerns pertaining to budget execution.

In this regard, he highlighted key concerns that are acting as hurdles for the government.

Tax Revenues: According to the minister, timely collection of tax revenues in line with the taxation rules is one major concern delaying the early release of payments from the government’s treasury.

The taxation rules mandate individuals to present 40 percent of the annual income tax estimation by the end of the first half of the fiscal, which decides the surge in governmental revenue for further spending.

Project Preparedness: Another key concern is the lack of preparedness in case of some projects put forth for inclusion in the budget.

Ministries select projects without any preparation. They should know that just announcing projects is not sufficient to implement them. They should at least understand the basics of project implementation, says the Finance Minister.

Need of the Hour
Khatiwada pitches for early addressal of the aforementioned problems to ensure planned budgetary execution.

The minister calls for trimming down the projects that lack early preparedness.

The concept of a project bank must be established, and only matured projects should be included in the budget, says the Ministry of Finance.

He further pitched on the need for development of necessary measures that support project implementation driving planned execution through feasibility studies, environmental impact assessment, legal clearances, among others.

Highlighting lack of inter-agency coordination as another key concern, the minister said budget execution is a collective responsibility of all the related stakeholders followed by strict quality monitoring.

Related Articles:

• Nepal’s Capex at 5-yr-high in FY’18, Delays Continue
• Nepal Federal Budget FY 2019-20: Highlights & Announcements

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