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The claim was made by three former finance ministers of Nepal– Bishnu Paudel, Surendra Pandey, and Dr Yubaraj Khatiwada– belonging to party Communist Party of Nepal (Unified Marxist–Leninist) (CPN-UML) on Sunday while they made public a 12-point joint statement on the latest economic scenario of the country.
Organizing a press meet on present economic issues, the three former ministers lamented that the country’s economy was heading towards crisis and it should be brought on the right track through positive interference.
“The country’s economy is under the crisis and is moving towards a more critical situation,” they pointed out.
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On Sunday, the Nepal government also suspended the country’s Central Bank Governor Maha Prasad Adhikari over disagreements with Finance Minister Janardhan Sharma and for not doing enough to pull the economy from the doldrums.
Since July 2021, Nepal has seen a decline in forex reserves due to the surging imports, declining inflows of remittance, and meagre earnings from tourism and exports.
By February 2022, the Himalayan country’s gross forex reserves had decreased 17 percent to USD 9.75 billion from USD 11.75 billion in mid-July 2021, according to central bank figures.
The forex reserves are now only enough to sustain the import of goods and services for 6.7 months, below the central bank’s target for at least seven months.
He said that economists, journalists, and other concerned authorities should exert pressure on the government from their sides to bring the economy on the right track as the present government focused only on protecting the coalition government rather than safeguarding the national economy.
Poudel during the press conference claimed that the economic situation of the country was better when the then Prime Minister KP Sharma Oli left the government, but it started showing negative indicators after the formation of the present coalition government led by Sher Bahadur Deuba.
“Economic indicators such as inflation, foreign currency reserves, trade deficit, and balance of payments are in worrisome condition. But the government has not paid any attention toward improving the situation,” he claimed.
Talking about the suspension of Adhikari, Poudel said that ”the action against the governor was objectionable and reprehensible.” He urged the government to immediately rectify the suspension decision.
Pandey, who is also a vice president in CPN-UML, said that inflation was likely to hit double-digit this year as the price of all products is rising.
“With the decline in agricultural production, lack of additional investment capacity of banks, low morale of the private sector and declining development expenditure of the government, the state will not be able to increase capital expenditure,” pointed out Pandey, adding this will also adversely affect employment.
He said that there would be further pressure on foreign currency reserves as imports are increasing despite the decline in the growth of remittance inflow.
“Income from tourism – a major source of foreign currency, will not increase as the war between Russia and Ukraine would affect foreign tourist arrivals. So, it is urgent to take initiatives to strengthen foreign currency reserves by controlling imports,” Pandey pointed out.
Dr Khatiwada said that the country’s economy was in a critical condition and external sector imbalance was growing exerting pressure on foreign currency reserves.
Nepal’s economic instability comes into the limelight at a moment when another Asian nation Sri Lanka is witnessing one of its worst forex crisis that has brought the government in a fix.