The rays of new hope with a new finance minister; what changes can be expected in the economy?
Mon, Mar 5, 2018 11:51 AM on Exclusive, Featured, Economy, Others, Stock Market,
A new government under KP Oli has been formed with finance minister Dr. Yubaraj Khatiwada. 61 years old, seasoned technocrat; Khatiwada brings a series of experience on the table as he has served in the position of governor of the central bank, Nepal Rastra Bank and vice chairperson of National Planning Commission. He is considered the expert in monetary policy. He is the alumnus of the Delhi School of Economics. His discipline in banking regulation has elevated expectation of Nepalese in terms of overall financial development in the country. During his tenure as a governor, his contribution to rescue banking sector from real estate crisis is quite commendable. His leadership in NRB established a solid foundation for Nepalese banking sector. Khatiwada has been regarded as the architect of economic policies to be adopted by the upcoming government. His involvement in drafting the election manifesto of the Left Alliance has further increased hopes, aspirations and expectations among the general public.
Prime Minister K.P Oli has vowed to boost the economy with the current growth from 4.2% to 12-13%. However, with Nepalese economy suffering the liquidity crunch, how will Khatiwada attain the double digit economic growth as promised by Oli?
The experts, concerned authorities and pioneers have different opinions on the aspects that the newly appointed finance minister cover. However, all their viewpoints agree to the following points:
Tax revenue collection: Ending the bureaucracy
Dr. Khatiwada should move past from the conventional methods of adopting policies in the financial sector of the economy. Newly appointed finance minister is already into action as he has directed the chief of customs office to resolve the loopholes witnessed in revenue collection. It is of no doubt that tax revenue from locals, households and business enterprises is the major source of revenue in any economy. The growth of tax revenue stands at 16%. The leakage in revenue collection due to bureaucrats is not hidden among the Nepalese citizens. Thus, Khatiwada is expected to emphasize on effective revenue collection. The finance ministry must be strict enough with zero tolerance to any malpractice towards the lower revenue collection.
Efficient public finance management: Bring everyone together
The new finance ministry should also work on efficient public finance management. This can be further done by a framework that ensures performance, transparency and accountability in the utilization of public funds. Thus, Khatiwada should not only simply focus on formulating strategies but further collaborate Ministry of Finance (MOF), Financial Comptroller General (FCGO), Public Expenditure and Financial Accountability (PEFA) Secretariat, National Planning Commission (NPC), Office of Auditor General (OAG), Public Procurement Monitoring office (PPMO), Line ministries, Local Bodies, Institute of Chartered Accountant (ICAN) and implement the strategies in order to meet the public finance management reforms.
Investment friendly environment: New enterprises and infrastructural development
Dr. Yubaraj Khatiwada has always defensed speculative activities and rather supported productive sectors during his tenure in NRB. Thus, in the position of the ministry, he is expected to create policies that establish an investment friendly environment for the new entrepreneurs in line. Given his experience as a governor, he is well acquainted to banks reluctant in providing funds for the investment in infrastructural sectors. Commercial banks refrain from lowering the interest rates as they provide funds for infrastructural activities. Thus, in his position, public look forward for the flexible policies that will direct an investment oriented environment in the economy. Beside this, the commitment towards attracting the foreign investment with collaboration to Investment Board of Nepal can also be worked on by the finance minister.
Job centric economic growth: Bidding farewell to remittance
Commercial banks are often blamed for the absence of far sighted vision towards the economy. These banks are accused for creating a misbalance in interest rates of loanable funds and deposit rates as they relied on the remittance as the source of fund in the economy. The liquidity crunch, today, is the result of banks concentration in competing for the expansion of loanable funds and discarding the deposit portfolio. Provided the scenario and decreasing remittance inflow in the country, the new finance minister is expected to bring back jobs from the golf countries. The emphasis by the minister should be given such that current parasitic nature of economy will be transformed into a sustainable job centric economy. The ministry therefore should focus on creating employment within the country so that even the banks can rely on internal economy for the collection of liquid funds.
Effectiveness of federalism: Laws and policies
With the initiation of federalism in the nation, its implication and effectiveness lies in the policies and laws formulated by the finance minister. Khatiwada’s views in the media through several interviews have established him as an advocate of federalism. Khatiwada is obliged towards providing a framework of expenditure for local levels, state and provinces. The budget that the finance minister will formulate should provide a precise definition of federalism.
If Dr. Khatiwada is able to attain the mentioned objectives, the Nepalese economy will establish a stronger foundation. It is of no doubt that a stronger base of economy will always accelerate the stock market. For instance, if the policies formulated by the finance minister will create an investment friendly environment to enterprises, the companies listed in secondary market will also have opportunities to grow. This will ultimately increase confidence among the investors.
While there are opportunities for finance minister, nevertheless there are also challenges that need to be addressed. His desire of establishing Nepal as a self-dependent nation is attached with a number of hurdles. The finance minister will face challenges to decrease the import and expedite the export provided that the nation is going through shortage of financial resources.
In a nutshell, expectations have been lined up, but time has yet to show what the new finance minister has to offer.
What is your take on the newly appointed finance minister? Please do leave you views in the comment section below.
Efficient public finance management: Bring everyone together
The new finance ministry should also work on efficient public finance management. This can be further done by a framework that ensures performance, transparency and accountability in the utilization of public funds. Thus, Khatiwada should not only simply focus on formulating strategies but further collaborate Ministry of Finance (MOF), Financial Comptroller General (FCGO), Public Expenditure and Financial Accountability (PEFA) Secretariat, National Planning Commission (NPC), Office of Auditor General (OAG), Public Procurement Monitoring office (PPMO), Line ministries, Local Bodies, Institute of Chartered Accountant (ICAN) and implement the strategies in order to meet the public finance management reforms.
Investment friendly environment: New enterprises and infrastructural development
Dr. Yubaraj Khatiwada has always defensed speculative activities and rather supported productive sectors during his tenure in NRB. Thus, in the position of the ministry, he is expected to create policies that establish an investment friendly environment for the new entrepreneurs in line. Given his experience as a governor, he is well acquainted to banks reluctant in providing funds for the investment in infrastructural sectors. Commercial banks refrain from lowering the interest rates as they provide funds for infrastructural activities. Thus, in his position, public look forward for the flexible policies that will direct an investment oriented environment in the economy. Beside this, the commitment towards attracting the foreign investment with collaboration to Investment Board of Nepal can also be worked on by the finance minister.
Job centric economic growth: Bidding farewell to remittance
Commercial banks are often blamed for the absence of far sighted vision towards the economy. These banks are accused for creating a misbalance in interest rates of loanable funds and deposit rates as they relied on the remittance as the source of fund in the economy. The liquidity crunch, today, is the result of banks concentration in competing for the expansion of loanable funds and discarding the deposit portfolio. Provided the scenario and decreasing remittance inflow in the country, the new finance minister is expected to bring back jobs from the golf countries. The emphasis by the minister should be given such that current parasitic nature of economy will be transformed into a sustainable job centric economy. The ministry therefore should focus on creating employment within the country so that even the banks can rely on internal economy for the collection of liquid funds.
Effectiveness of federalism: Laws and policies
With the initiation of federalism in the nation, its implication and effectiveness lies in the policies and laws formulated by the finance minister. Khatiwada’s views in the media through several interviews have established him as an advocate of federalism. Khatiwada is obliged towards providing a framework of expenditure for local levels, state and provinces. The budget that the finance minister will formulate should provide a precise definition of federalism.
If Dr. Khatiwada is able to attain the mentioned objectives, the Nepalese economy will establish a stronger foundation. It is of no doubt that a stronger base of economy will always accelerate the stock market. For instance, if the policies formulated by the finance minister will create an investment friendly environment to enterprises, the companies listed in secondary market will also have opportunities to grow. This will ultimately increase confidence among the investors.
While there are opportunities for finance minister, nevertheless there are also challenges that need to be addressed. His desire of establishing Nepal as a self-dependent nation is attached with a number of hurdles. The finance minister will face challenges to decrease the import and expedite the export provided that the nation is going through shortage of financial resources.
In a nutshell, expectations have been lined up, but time has yet to show what the new finance minister has to offer.
What is your take on the newly appointed finance minister? Please do leave you views in the comment section below.
