Editorial
Noted Nepali economic experts are saying that the economic situation of the country is not that worst like in Sri Lanka but viewing all the negative economic indicators they have predicted that it is at an alarming stage. If we will not try to improve our economy, ultimately, we may face the fate of Sri Lanka. They are predicting that in the past few years, Nepal’s foreign and domestic debt burden has increased surprisingly. The government is found taking foreign debt even to meet general sector expenditure, which is very serious. Besides, Nepal has become a consumer country as we don’t have experts. If the agricultural product’s contribution declines to 15 percent of the gross domestic product, the country would face a serious accident. We are exporting palm oil by importing raw materials from foreign countries, which is not a genuine expert. The main source of revenue earning for Nepal is customs duty on imports, which has encouraged imports and serious weakness in the economy.
The problem in Sri Lanka is a scarcity of foreign currency and heavy foreign debt taken for ambitious infrastructural projects and also spending foreign debt in the non-productive sector without a cost-benefit analysis. Sri Lanka would not have faced a scarcity of foreign currency if a terrorist attack would not take place there and if the Covid-19 pandemic would not hit its tourism industry. The decline in its export has also resulted in a scarcity of foreign currency reserves. The main reason, according to the economic experts, is expenses made by the party leadership for political gains and a heavy exemption on income taxes and VAT.
In the Nepali context, every year, our general sector expenditure is inclining. As we have introduced federalism with seven provinces, the expenditure to function the system has also inclined significantly. The nation’s domestic revenue cannot meet the administrative expenditure, therefore, the government is compelled to seek foreign debt to strengthen federalism. The country has no funds to invest in the infrastructural development sector. All the sectors, including the political leadership, have understood this reality but they are unable to speak against the political system as they will be categorized as the “regressive element”. Nevertheless, they are indicating that the present political system with federalism has already failed and there is a need to scrape the present costly political system. They have suggested reducing general sector expenditure and increasing capital expenditure. We cannot cut down the administrative expenditure without removing the present federal structure and if we try to follow this system further, we may face bankruptcy shortly. If the Covid-19 pandemic will continue to impact and if the Russian war on Ukraine will prolong, it is obvious for Nepal’s bankrupt soon. As we have identified the problem and without removing it we are unable to function our economy. We have not seen a particular country which has become rich by receiving grant support. For the economic prosperity of the country, it is necessary to reduce general sector expenditure and increase capital investment. Upgrading the nation from a less developed country to a developing nation by taking grant assistance is not genuine progress.
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