Budget planningThe government must buck its own trend of non-performance to ensure employment to Nepalis.
In another ludicrous and distracting political drama, it seems that Prime Minister KP Oli has found a way to appease rival factions in the Nepal Communist Party and keep his hold on power, and his seat. That the bargaining and haggling came during a long lockdown, in the midst of a deadly pandemic, seems not to have bothered the ruling party leaders—the plight of the country’s poor and vulnerable be damned. While leaders globally come up with solutions to mitigate the effects of social distancing, closures and lockdowns—the only proven and effective way to arrest viral transmission currently—Nepal’s prime minister and his cronies and rivals continue to embarrass themselves with petty self-interests.
Amidst all this, it is heartening to learn that at least some sections of government are indeed focused on finding a solution to the impacts of Covid-19. Even as uncertainty looms on when the budget session of Parliament will actually begin, it is encouraging to learn that the National Planning Commission, the Finance Ministry and the Ministry of Industry, Commerce and Supply are working to plan for the next fiscal year, including finishing the budget. The budget for the fiscal year 2019-20 was announced on May 29, 2019. If all goes as planned, the budget announcement this year shouldn’t be later than May end. Importantly, according to sources, budget planning seems to be moving forward in a realistic attempt to mitigate the economic impacts of Covid-19.
Without a vaccine or a proven treatment course yet, the only way to mitigate the effects Covid-19 has been to stop the spread of SARS-CoV-2 itself. However, the lockdowns, closures and distancing measures have created a triple threat to the global economy. Supply is constrained due to the inability to work as usual. Demand has been hit for two reasons—the inability to purchase services and goods as before, along with an uncertainty of income meaning people plan to spend less. Moreover, there are signs of a potential liquidity crunch. The slowdown caused by Covid-19 is sure to disrupt the global economy for at least another year. This will hit Nepal especially hard.
Nepal has for years been a net importer of goods, even essential ones like food and pharmaceutical products. The one thing that kept its foreign currency reserves to a healthy level had been the remittances sent home by Nepal global migrant workforce—by far the country’s largest and most valuable export. Another major source had been income from tourism. As economies everywhere receive significant shocks, Nepal is set to be affected heavily. Already, international tourism has ground to a halt. Moreover, many migrant workers have lost their jobs to the global downturn; some have returned home voluntarily amidst the uncertainty. Further, while foreign aid constituted 24 percent of last year’s budget, it is expected to drop severely this year, given the current scenario.
The biggest challenge for Nepal in the coming fiscal year will be to ensure that its citizens have a steady source of income. Although increasing the number of infrastructure projects may have added jobs, Nepal simply would not be able to afford them, given the circumstances. It seems that, in its planning, the government has decided to wisely forgo large new projects; instead, focusing on employment generation from other sources.
However, it remains to be seen whether the prudent plans will end up in the final version of the budget, and whether they will be implemented effectively. As it stands, the Prime Minister’s Employment Fund stands to be a crucial programme to find returning migrants and the local unemployed some form of livelihood in the coming year. However, this grand programme has so far failed spectacularly to fulfil its objectives. To truly ensure that Nepal doesn’t go through a damaging recession, the government must make sure that its prudent plans are implemented well. Hope remains that this government will put behind petty politics to ensure this.
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