KHATMANDU: The government plans to introduce an umbrella economic policy for federal Nepal and all the sectoral polices will be aligned with the umbrella policy to move towards higher economic growth trajectory, according to Deputy Prime Minister and Finance Minister Krishna Bahadur Mahara.
Addressing the inaugural session of the ‘Interaction Programme on Formulation of Economic Policy of Federal Nepal’ organised by the Ministry of Finance here today, Mahara said that implementation of this policy will bring about a paradigm shift in the economy. “There has been no major policy departure on the economic front after the adoption of liberal economic policies in the early 1990s,” he said. “Now we are taking the initiative for a major change to address the resources needed in a federal system and to enhance productivity.”
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All the sectoral policies — productive sector policy, fiscal policy, monetary policy and external sector policy — will be aligned as per the umbrella economic policy. According to Min Bahadur Shrestha, vice chairman of the National Planning Commission (NPC), the economic policy will be directed by the long-term plan of the government and the sustainable development goals (SDGs).
Due to the armed conflict and long political transition in country there was no convenient environment to review economic policies that were adopted in the 1990s. “Nepal has gained a lot from liberal economic policy but it also has had some negative impacts in manufacturing sector due to the import of cheaper products and services,” said Shrestha.
Though the country has achieved higher economic growth after introducing liberal economic policy, the growth pattern in the last 10 years has not been satisfactory with growth standing at a mere 3.5 per cent against average inflation of 8.5 per cent, according to Shanta Raj Subedi, finance secretary.
Also addressing the programme, Rajan Khanal, revenue secretary at MoF, highlighted the need for a diagnostic review and prompt changes in the economic policy to achieve higher growth and stated that the economic policy needs to be amended with the changing times.
Nepal Rastra Bank Deputy Governor Chinta Mani Siwakoti highlighted the need to align sectoral policies and bring new sectoral policies to address the policy gaps. Productive sector policy should cover economic growth, saving and investment, capital formation, agriculture, tourism, forest and trade sector, according to him. Likewise, fiscal policy should cover revenue and expenditure policy, public debt policy and foreign aid policy, said Siwakoti.
Deputy Governor Siwakoti also pointed out the policy gaps which need to be addressed under the sectoral policies like financial sector stability policy under the Monetary and Financial Sector Policy. Similarly, introduction of external trade, foreign direct investment, capital account convertibility and exchange rate policy is also the need of the hour, according to the deputy governor. He further laid emphasis on implementation of policies to achieve the desired output instead of just formulating the policy and shelving it without implementing them.
Experts urged the government that the umbrella economic policy should address the binding constraints of growth and address the policy gaps. They also spoke of need to have a regional balance in the federal system.
