By PR Pradhan
The country’s balance of payment scenario has become negative and the negative situation is further increasing. This is the indication that our economy is heading towards a negative path. Also, this is an indication that the foreign currency reserve ratio is declining as we are spending very much, compared to what we receive from abroad. In a healthy economy, the major source of receiving foreign currency is from exports of goods in the foreign markets. As we are exporting less (very nominal) goods compared to our imports, we are spending foreign currency to import goods from the international markets. Besides, tourism is the major source of receiving foreign currency. On this also, the country has not been able to show drastic achievement.
Accordingly, foreign loans and grants, foreign direct investment, etc are known as the visible sources for generating foreign currency.
So far, the country’s major source of earning foreign currency has become remittance sent by our youths doing labour works abroad. It is expected that more than 5 million youths are in foreign countries for “dirty and difficult works” in such countries. The nation’s economy has been saved due to the remittance sent by them.
On the foreign trade side, the trade deficit ratio is very much alarming. The deficit ratio is 93:7 i.e. our imports stand at 93 percent whereas exports stand at 7 percent only. The government is unable to reduce the size of imports due to different reasons. Immediately, we have not been able to increase our exports but we are compelled to increase the size of imports even to meet the revenue target. If imports of different items such as vehicles, petro-products, and even luxury items including television sets are restricted, the government cannot meet the revenue target, which will limit the government expenditure. The government expenditure, that too in non-productive sectors such as salary and allowances for the elected people’s representatives has increased by many folds as we have introduced seven provinces and 753 local bodies. The nation’s internal revenue cannot meet the expenditure of these organs, therefore, the country should receive foreign grant just to feed the local representatives. The investment side or say development sector has also been badly affected as the government’s administrative expenditure or say non-productive expenditure has increased and the government is compelled to reduce the size of the amount allotted for the development projects.
The government could reduce imports of luxury items including vehicles, television sets, but if such a decision is taken, the government will lose revenue from imports of such items. Furthermore, the government cannot avoid imports of construction materials and also imports of petro-products. As the price of the petro-products is increasing in the international market, the size of amount for imports of petro-product is going to further increase. Also, due to devaluation of the Nepali rupee against the US dollar, it will also contribute to increase the size of amount on our imports.
While viewing the above scenario, it can be assumed that the nation is not only going to fall into the “debt-trap” but it is heading towards a “deathtrap”.
Besides from the compulsory expenditures, the government could reduce unnecessary expenditures, but in the meantime, the government is intends to provide more facilities to the leaders in power. The government has released 180 million rupees to purchase vehicles for the President. Likewise, the government has decided to acquire the land owned by the Nepal Police Training Academy for the use of the President and also the land belonging to the Social Welfare Council for the use of the Vice President.
In European countries, even the Presidents and prime ministers are found spending a simple life just like a general public. In Pakistan, the newly elected prime minister Imran Khan decided to stay in his own private house by handing over the official residence for the prime minister to an University. Khan has given directives to the government authorities to cut down unnecessary expenditures including expenditure on government parties. In Nepal, the government has decided to provide more land to a ceremonial President. Also, the government is purchasing new vehicles by dumping running vehicles as there is hefty amount of commission that the government officials receive while purchasing new vehicles. There are many areas from where the government could cut down the unnecessary expenditures, but the government doesn’t want to make such a move.
The level of corruption and commission is too high and the government is unable to curb such corruption as our ministers and prime ministers are encircled by the mafias. Such activities of the government leadership indicate that we are not heading towards prosperity but towards poverty.
Economy under deathtrap
By PR Pradhan