Print Edition - 2018-04-03 | MONEY
Mahat accuses FinMin of ‘cherry-picking’ economic data
Apr 3, 2018-
Former finance minister Ram Sharan Mahat has said incumbent Finance Minister Yuba Raj Khatiwada has “cherry-picked” data to paint a gloomy picture of the country’s economy.
The six-time finance minister’s accusation comes three days after Khatiwada unveiled a white paper on current economic situation of the country, which says macroeconomic indicators are not sound, budgetary position is weak due to fiscal indiscipline and dependence on revenue generated through imports is expediting deindustrialisation process.
“Newly-appointed finance ministers have the right to produce white paper upon joining office. But the white paper should provide unbiased snapshot of the economy, which has not been the case this time,” said the senior leader of the main opposition, Nepali Congress.
This prejudiced attitude, according to Mahat, enabled the new finance minister to assert that the “economy is in a very bad shape, which is not true”. Mahat was offended as he said Khatiwada failed to take a uniform approach in data comparison. “He has compared some of the present data sets with that of 25 years ago and some with that of five years ago. He has also deliberately kept mum about achievements made in the past to mislead the public,” Mahat told journalists on Monday.
For example, the white paper introduced by Khatiwada has said the country’s trade deficit widened by 42 times in the last 25 years from Rs22 billion to Rs917 billion. “But during that 25-year period, the government’s revenue has increased by 62 times,” said Mahat. “Why didn’t he disclose this information? This is cherry-picking.”
Mahat is credited for introducing sweeping reforms in the revenue sector. It was him who introduced value added tax (VAT) regime in the country in the late 1990s, despite huge protests. VAT has now become one of the important sources of revenue for the government. He has also introduced several other reforms in the revenue administration, which have helped Nepal to mobilise resources on its own to finance development activities.
“In the early 1990s, the share of foreign aid in the government’s budget used to hover around 35 percent. That is not the case today. Yet these achievements have not been highlighted in the white paper,” said Mahat.
Despite lobbing criticisms on Khatiwada, Mahat praised the new finance minister for expressing commitment to introduce austerity measures to bridge the budget deficit.
“The haphazard public spending of the last two and a half years has put a dent on state coffers. So, fiscal consolidation is necessary,” said Mahat.
Mahat has always abhorred populist and distributive policies. He even stood against his own party head, Sher Bahadur Deuba, when age limit for recipients of old-age pension was reduced from 70 to 65 years. At that time Deuba was the prime minister.
“The new government should not launch populist programmes because coming days are going to be challenging, as expenditure is expected to rise sharply to institutionalise fiscal federalism,” said Mahat, adding, “But Nepal does have adequate fiscal space as its total debt currently stands at around 30 percent of the GDP.”
Published: 03-04-2018 09:43