Nepal will miss GDP growth target, says FinMin MahatFinance Minister Ram Sharan Mahat has said the country is unlikely to achieve the economic growth target for this fiscal year due to the ongoing political turmoil.
Finance Minister Ram Sharan Mahat has said the country is unlikely to achieve the economic growth target for this fiscal year due to the ongoing political turmoil.
The government has targeted 6 percent growth for this fiscal year on the backing of massive reconstruction activities after the earthquake, better monsoon and constitution promulgation. However, industrial and economic activities have come to a grinding halt due to the two-month Tarai banda and subsequent unofficial trade embargo imposed by India.
“Industrial production has decreased, consumption of goods too have decreased. Tourism sector has been badly hit. We will not be able to achieve the economic growth rate,” Mahat said, speaking at a meeting of the Public Accounts Committee of the Parliament on Saturday.
The April 25 earthquake caused loss of Rs52 billion, according to the Central Bureau of Statistics. But the private sector has said the losses caused by the ongoing Tarai banda have already crossed Rs100 billion and it is uncertain when the strikes will end.
International institutions like the World Bank, Asian Development Bank (ADB) and the International Monetary Fund (IMF) have downgraded the growth prospects of Nepal for this fiscal year.
The World Bank projected the growth rate at 3.7 percent, while ADB estimates the rate between 4.5 percent and 5.5 percent based on political and economic situation. The IMF has projected Nepal’s growth rate at 4.4 percent for this fiscal year.
Nepal Rastra Bank has also said low rainfall, lack of the chemical fertilisers due Tarai banda and its impact on the non-agriculture sector,
including manufacturing, construction, trade, hotel and tourism, could have adverse impact on Nepal’s economic performance.
According to Department of Hydrology and Meteorology, the average rainfall between Jun 10 and August 15 remained 74.2 percent of 30 years’ average. “This is likely to dampen the agricultural output,” states the NRB.
Furthermore, delay in reconstruction works as well as in restarting stalled projects related to road, irrigation and hydropower after the earthquake could have a negative impact on the economy.
There has also been a significant slump in revenue collection. Mahat said major customs points which used to collect Rs500-600 million a day are collecting just around Rs100 million.
“Out of 2,500 trucks lined up to enter Nepal only 357 trucks succeeded in crossing the border. The situation is alarming,” Mahat said, adding there is a need for reinstating stability.