It is good to maintain employees as much as revenue, it has to be balanced

The sources of global economic news in Nepal are the reports published by World Bank, International Monetary Fund (IMF) and others. Just a week ago, the World Bank released a forecast report on the world economy. According to the report, the world economy is expected to be lower than expected. After the global financial crisis of 2008, the world economy is about to decline again.

The economic growth of the world became negative during the covid. Now we were in a tight situation. In 2023, if we are not able to coordinate policies and the strong economy of America, European countries, and China are not able to raise the economy, it is seen that our economy will also decline. Economic growth is projected to be only 1.7 percent. It is considered low globally.

The next official projection is on January 30, the IMF publishes the World Economic Outlook. It will have the most recent and updated data. In essence, the global economy appears to be contracting.

In terms of regional comparison, India appears to be in somewhat better condition. India has a projection of 6.6 percent. Due to Covid and Russia-Ukraine war, inflation has increased globally. Its impact has been seen more in developed countries than in countries like Nepal. In those countries, the effect of inflation is seen from losing elections to political careers. In some countries, even the salary of the governor of the central bank is fixed on the basis of inflation. It means that they are more serious about inflation. A tight monetary policy is needed to avoid this.

When countries with large economies go for a tight monetary policy, it affects the exchange rate. The effect of which can be seen in countries with economies like ours. We import a lot of goods. It plays a role in increasing the price. Looking at Nepal’s relationship with the world economy, the share of exports, foreign direct investment and tourism is very low. In the case of Nepal, the main source of foreign exchange is remittances. The order of remittances does not mean that it will decrease today or tomorrow. Even if it starts to fall, it will take some time. Until then, Nepal has time to prepare to avoid its effects. In Nepal, tourism, foreign direct investment (FDI), export channels may be affected. But it can be said that there is no dramatic effect on the source remittances.

Analyzing the context of Nepal, the Ministry of Finance is more concerned. We understand that the Ministry of Finance is only an agency that collects and spends revenue. Until two days ago, the revenue raised by Nepal was not able to cover current expenses. However, looking at this morning, it is seen that the current expenditure is covered by the revenue. Revenue is Rs 461 billion and current expenditure is Rs 458 billion. Adding other income and subsidies to the revenue shows an income of 497 billion rupees.

It is a grant that the government has not been able to raise as expected recently. Looking at Nepal’s foreign aid over the past 5/7 years, the share of loans has increased dramatically compared to grants. The international situation is also similar. 55 billion is expected to be received this year, but only 5 billion has been seen. There is a need to adopt this trend and make a reliable projection in the coming financial year. Because this gap has increased a lot.

An alarming situation, the current expenditure is increasing tremendously, the pace of capital expenditure is very low. A new government has come, a new finance minister has come. There is a need to give some emphasis on capital expenditure. A stable government can do this. Many existing structures can be improved. The imbalance between revenue and expenditure has to be adjusted.

Currently, there are 480,000 army-police personnel who receive salaries from the state. Sri Lanka announced a strategy to reduce its army of 200,000 to 130,000 only two days ago and reduce it to half by 2030.

We also increased the number of security personnel in the name of conflict. From teachers, health workers to civil servants, all the taxes collected by Nepal will be spent on supporting these workers. It has to be balanced. However, this work should not be done today for any stunt.

You have to make a plan, go into dialogue with everyone, and gradually move towards it. Grants are drying up, revenue has its limits. As a result, they have to rely on loans to cover their expenses. The more this gap increases, the more internal debt will have to be raised. This amount is money that can be invested by the private sector, which we have to spend in unproductive sectors.

Nepal has started spending nearly 200 billion rupees annually on social security. How to organize it? Nearly 3.4 million beneficiaries get social security in Nepal. This is a huge amount; it needs to be improved.

The Public Expenditure Review Commission has given good suggestions. Not all topics can be made public today, but many of the suggestions given there can be implemented. It is said that there will be 83 commissions, committees and boards in Nepal. This can be implemented by a cabinet decision.

Not much work has been done in the reform of public institutions. After 2062/63, it has not worked. The task of reforming these institutes is very difficult. We should also analyze the size of our budget. After the earthquake, the size of the budget was suddenly increased. We are constantly increasing it, the budget that increased after the earthquake had to be reduced after that. It has not been able to match the revenue and expenditure. Which also raises questions about the credibility of the budget. The budget should be realistic and credible. A stable government can correct this. How to increase revenue, how to reduce expenses, the finance minister can do a lot of things by following this simple policy. It can be done by creating a dedicated task force.

There is more leakage in revenue in Nepal. Chartered accountants are said to know more about this. By mobilizing them, a strategy should be made to stop the revenue leakage. Training the current employees will not bring more results. This will only increase the cost. Training programs are becoming a means of having fun and being fresh. This ritual should be improved. If one hundred/one and a half hundred chartered accountants are mobilized, many sources of leakage can be found.

Regarding the external account, the question of transparency in import-export arises. Exports are decreasing in Nepal, there is also a question about the sustainability of the goods being exported. Exports of palm oil and soybeans are high. Is this our product? Is this our competitive product? Such business is being done on the basis of relations with India.

It is not possible to increase the export of goods today and tomorrow. The results are seen in 3 years, 5 years or 10 years, but Nepal should focus on increasing the export of such goods. We are not likely to go much higher by selling noodles and incense sticks to China.

The issue of export success is also linked to foreign direct investment. Our situation in exports is disappointing. Let’s start looking for long-term resources by giving immediate concessions in exports. Let’s move towards the area where there is real potential. The new government should do a lot of work on structural reforms through the budget. It has been a long time since the economy was run on ad holism.

The remittances will continue to come in for the next 8/10 years. Statistically, it seems that 23/24 percent of remittances are coming based on the size of the economy. The percentage of remittances from countries with less population than ours may be higher. However, even with such a large population, Nepal is the country that relies more on remittances. It cannot be reduced immediately, but if the income from other possible areas is to be increased, the situation of having to rely on remittances for foreign currency income can be reduced. Tourism is one means of this. We can target countries like Laos, Cambodia, Vietnam as a base.

Before Covid, there were 1.2 million tourists in Nepal, spending 48 dollars per tourist per day and staying for 13 days. It did not have any significant impact in Nepal. Thailand has 40 million tourists, spending $155 per day/per tourist. We can meet Laos, Cambodia, which has not yet become Thailand. Let’s work on what can be done. Since there is no immediate major improvement in exports, the possibility of other possible areas will be explored.

It took us 7 decades to reach 1 trillion exports. However, the potential is now in the information technology sector. If some of the policy problems that today’s youth want and demand are solved, the country can earn a lot of income from this sector. Sometimes we are afraid to make a decision, rather let’s do it with a national consensus, but we have to go for it. For example, the concept of ‘online bank’ can be. Borderless policy is included in this. There is also the issue of allowing the company to be registered outside the country. It seems that we have to go for a slightly liberal policy. If we adopt a policy of taxing only one percent of money coming from outside, many assets can come under the scope of tax. It can be recognized as remittance. Now we have to be afraid and hide. There is a situation in the youth where they have to keep money in their uncle/nephew’s account and hide. Let’s make it a way to enter through formal channels, it will bring in huge resources. There is a huge demand for such manpower worldwide. There are many examples of people who have become wealthy by starting a company with a small investment and selling it for a large sum. Instead of being too strict on this, we should go for a liberal policy. It helps to bring in foreign currency. FDI can also enter this sector a lot. My emphasis is that we are now focused on information technology (ICT).

Remittances are increasing in Nepal. However, this amount is not going to the productive sector. A lot of money went into real estate. More expenditure has been incurred in unproductive areas. It should be improved.

Individuals take as much profit, the state bears as much loss, the state should not go for this kind of policy, it should not happen in an irresponsible state either. This does not mean that we should not go into the policy of squeezing and submerging the private sector. We should move forward in a responsible manner, maintaining balance. Even in the monetary sector, there are many issues that the state has neglected, which need to be improved now. You can also work on this by forming a task force. The result of the improvement in all these areas is in income, saving money. Every sector of the economy is interconnected. Its relationship is broken in Nepal. Managing it is the main task. Now we have to start working on long-term improvements. The new government has got this opportunity. Improvements can be made with small works. Our structures should be made technology friendly. Middlemen should end. Economy based on competition should be promoted. If we start preparations from today, the upcoming budget can cover many reform programs. Source: OnlineKhabar.com