Budgeting time

  • Government must speed up the formation of Reconstruction Authority
Budgeting time

Jul 14, 2015-

On July 1, Bangladesh, along with Kenya, Myanmar and Tajikistan, joined the list of lower-middle income countries. The increased average per capita of these nations now lie between $1,046 and $4,125, according to the World Bank. Meanwhile, Nepal continues to languish on the list of low-income countries with an average per capita of less than $1,045.

According to the 2014-2015 Economic Survey released by the Ministry of Finance on Sunday, the annual income of Nepalis is Rs 75,065. The annual income only increased by Rs 4,483, marginal in comparison to last year’s increase of Rs 8,818. If this trend persists, Nepal might have to postpone its goal of graduating to a developing country by 2022, even though it fares relatively better than other countries in terms of human assets—health, education and nutrition—and economic vulnerability.

The report argues that the April 25 quake, which destroyed schools, health clinics, rural roads, bridges, agricultural land and water supply systems,could push as many as 700,000 people back into poverty. A slump in industries like agriculture, mining and manufacturing are further expected to exacerbate matters.

Some experts, however, are more optimistic about the future of the economy and the quake-affected population. The growing demand for reconstruction labourers and their acute shortage in the market has already resulted in a spike in their daily wages. And because there has been no decline in the amount of remittances coming into the country, economists do not see a reason to be alarmed. Further, since the budget presented yesterday is largely focused on reconstruction, experts see a possibility for the economy to rebound strongly in a year. On the other hand, there are justified fears that Nepal’s domestic production might not be able to fulfill the demand for steel, cement, bricks and timber needed for reconstruction. This could further skew the country’s trade balance in favour of imports. Likewise, a slump in agriculture and increased government spending increases the risk of a rise in inflation.

For now, the Reconstruction Authority, an agency tasked with leading the rebuilding process, is yet to be formed. So there is an urgent need for the government to speed up the process of appointing a competent CEO at the Authority. For in this fiscal year, unlike in the past, it is even more crucial to ensure that the government spends its funds on time and in a transparent manner. Reconstruction of public infrastructure must begin soon to not only ensure that the quake-affected population does not lapse into poverty in the absence of drinking water, sanitation facilities, education and health services, but also to spur the growth of the national economy. A vibrant economy, in turn, is linked to Nepal’s dream of graduating into a developing country by 2022.  

 

Published: 15-07-2015 08:14

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