Govt initiates high-level dialogue council with private sector to revitalize sluggish economy

KATHMANDU:  In response to concerns about the sluggish economy, the government has established a high-level dialogue council in collaboration with the private sector to explore alternatives for revitalizing economic activity.

Following Tuesday’s discussions on the current economic situation and future strategies, the government has formed the ‘Industry and Commerce Promotion Dialogue Council,’ with the Prime Minister serving as its chairman. Despite robust external indicators, ample liquidity, and falling interest rates, the private sector has voiced concerns about economic stagnation and has called for the removal of obstacles hindering growth.

The dialogue council aims to foster continuous communication between the government and the private sector to address the economic impasse. At the Prime Minister’s request, a separate commission will also be instituted to facilitate government reform and promote good governance.

Prime Minister Pushpa Kamal Dahal emphasized the establishment of robust economic and financial governance to uplift public morale. He issued a warning of strict action against defaulters on loans from banks and financial institutions, including microfinance.

To address financial challenges resulting from economic slowdowns, the government has tasked the Nepal Rastra Bank with facilitating loan repayments for borrowers facing financial difficulties. The bank will study and facilitate loan repayments for those struggling due to economic slackness.

Additionally, the government plans to review and potentially lower interest rates based on recommendations from a commission focused on tax system reform.

Finance Minister Prakash Saran Mahat assured that the state would not take immediate action against non-payment of loans, emphasizing the government’s cautious approach in promoting various sectors such as hydropower, agriculture, tourism, IT, and small industries. While acknowledging structural issues in the economy, he stressed the government’s commitment to addressing them and facilitating capital flow where necessary.

Private sector representatives expressed optimism following discussions with the government, viewing it as a positive step toward boosting private sector morale. Leaders of business associations, including Chandra Prasad Dhakal and Rajendra Malla, commended the government’s efforts to address policy weaknesses and stressed the need for continued dialogue to ensure economic sustainability. They called for policy stability and increased capital expenditure to stimulate economic growth.

Ganesh Karki, President of the Independent Power Producers Association, Nepal (IPPAN), highlighted the importance of Power Purchase Agreements (PPAs) for hydropower projects and urged the government to maintain a single-digit interest rate for investments in the energy sector. As the government sets ambitious targets for electricity production and export, stakeholders emphasized the necessity of conducive policies to drive economic acceleration.