Private sector calls for high-level economic reform commission in Nepal

KATHMANDU: Nepal’s private sector has proposed the formation of a high-level Economic Reform Commission, with the Prime Minister serving as its chairman, to address the nation’s ongoing economic challenges. Chandra Prasad Dhakal, President of the Federation of Nepalese Industries and Commerce, emphasized the need for such a commission during an interaction event titled ‘National Economic Debate, Cooperation for Reforms,’ organized by the Federation of Nepal Chamber of Commerce and Industry in Kathmandu.

President Dhakal asserted that making broad changes to the existing legal framework and management structure alone would not suffice to achieve the desired economic improvements.

He argued that an Economic Reform Commission is imperative to draft a comprehensive reform blueprint and effectively implement it. Dhakal recommended the formation of this commission with the Prime Minister as its chairman and representation from the private sector umbrella organization, as well as high-ranking officials from pertinent agencies, including the Ministry of Economy and Industry, the Planning Commission, and Nepal Rastra Bank.

Acknowledging that establishing such a commission would result in additional expenses, Dhakal proposed a procedure where commission members serve on a voluntary, unpaid basis, emphasizing his commitment to contributing the necessary resources from the private sector.

He underscored the private sector’s significant role in addressing the nation’s problems, emphasizing that Nepal’s private sector is robust and capable of achieving an economic growth rate of around 6% post-COVID. He urged the government to foster a positive environment that boosts private sector morale.

Prime Minister Pushpa Kamal Dahal welcomed the private sector’s proposal, expressing readiness to establish a legally recognized high-level commission. He disclosed that he had already engaged in discussions with the Chief Secretary and pledged to expedite this effort once the finance minister returns.

Prime Minister Dahal stressed that the nation’s economic challenges could not be resolved solely through financial means, emphasizing the need for a comprehensive reform initiative. He advocated for a profound reevaluation of government policy, processes, program development, and budgeting methods.

While recognizing that the current fiscal year’s policies, programs, and budget follow a traditional approach, he expressed his intention to introduce reforms in future planning and budgetary procedures, acknowledging that challenging decisions would be necessary to alleviate economic pressures.

Dhakal argued that Nepal’s economy cannot solely rely on the private sector, urging the government to take immediate steps to address the current economic recession. He called for the creation of an investment-friendly atmosphere, asserting the importance of all sectors and businesses and encouraging a review of why the private sector has not received concessions.

Industry, Commerce, and Supply Minister Ramesh Rizal shared the view that the private sector should be trusted to help the nation prosper. He stressed the necessity of shifting away from traditional perspectives on the private sector and reimagining its role in areas such as education, health, and infrastructure development.

Economist Achyut Wagle observed that, while there may be apparent agreement between the finance minister and the central bank governor, it is not reflected in policy implementation.

He asserted that Nepal’s financial issues were not due to discussions about energy, law, governance, or officeholders, but were longstanding and systematic. He highlighted three essential factors for capital expenditure: desire, willpower, and action plan. Wagle expressed concern that the will to act is often lacking and recommended settling the government’s outstanding dues to contractors to stimulate economic cycles.

Poshraj Pandey, the economic advisor of the Ministry of Finance, advocated for a systematic solution to Nepal’s longstanding economic problems, emphasizing the need for a clear, effective policy framework.

He cautioned against the tendency to prioritize policy popularization over economic improvement, resulting in difficulties in enforcing the rule of law, enhancing governance, and improving service quality.

Bam Bahadur Mishra, Acting Governor of Nepal Rastra Bank, extended his institution’s commitment to collaborating with the private sector to address the nation’s economic issues.

He identified global factors, such as surging crude oil prices, the COVID-19 pandemic, the Russia-Ukraine conflict, and rising interest rates, as key contributors to the economic challenges. Mishra revealed that Nepal Rastra Bank had reduced the bank rate and policy rate to lower interest rates, addressing one aspect of the economic predicament.