KATHMANDU: Various economic indicators in recent months have been deteriorating compared to the past putting the entire economy on pressure. As of July, the balance of payment (BoP) had made a surplus of Rs 1.23 billion from a deficit of Rs 15.15 billion.
The current account deficit had increased by Rs 39.70 billion and foreign exchange reserves had increased by Rs 33.38 billion. Similarly, the trade deficit had begun to rise while remittance inflow was around Rs 90.11 billion.
However, the picture of the economy began to deteriorate after Janardan Sharma took over as Finance Minister.
It has been six months since Sharma became the Finance Minister and that the central bank has also released economic data of the four months of the current fiscal year. Analyzing the data, all the indices are still bad. BoP deficit has reached Rs 150.38 billion. As the balance of payments deficit has increased and the capacity to import has decreased, the government is even borrowing funds from the International Monetary Fund (IMF).
In the first four months, the current account deficit has exceeded 5.23 percent of the total economy. Imports figure have reached Rs 650.29 billion while remittances have been declining on a daily basis. Although the inflation index is lower than projected, it is likely to rise further due to rising oil prices and rising value of dollar.
According to the latest data from OAG, the expenditure system is much weaker than in previous years. Total budget expenditure so far is 24.82 percent while the capital expenditure is pathetic. Though Sharma announced to spend 10 percent budget every month, total budget expenditure of the government in five months stands at 25percent of the allocation.
Statistics show that the finance minister is very weak, immature and incompetent. Even though the economy is in dire straits, he seems to be more obsessed with covering up rather than improving it. Sharma has rarely discussed the strategies needed to improve the economy with stakeholders.
Where did Finance Minister Sharma fail?
When Sharma came to the finance ministry, he failed to bring in experienced secretaries to his team. Sharma, who has little knowledge of the economy, could not bring in experienced secretaries and could not take timely steps to improve even when the indicators of the economy fell. Sharma’s team could not alert him properly and timely even when the economy was going down. His team have not focused on what to do to get out of the current crisis and how to help make the minister successful.
Sharma failed to realize the circumstance and context of the economy at time when he became the Finance Minister. Covid-19 has crippled the economy. He failed to develop a core team, failed to realize the necessity to boost the economy at difficult times like the Covid-19.