FM Mahat highlights positive economic outlook: Emphasizes improvements in key indicators and fiscal policies

KATHMANDU: Finance Minister Prakasharan Mahat has conveyed the government’s upbeat stance on the current state of the economy during a press conference at the Ministry of Finance. He asserted that recent indicators show positive trends, addressing rumors and analyses about the economy to counter misinformation.

Minister Mahat pointed out favorable changes in credit flow, external conditions, and overall economic stability. Citing the enhancement of Nepal’s external sector, a surge in tourism, the anticipated decrease in interest rates through monetary policy reviews, and an increase in revenue and government expenditure, Mahat emphasized the ongoing economic improvement.

Reflecting on the challenges faced during the COVID-19 pandemic, Mahat highlighted the central bank’s shift from loose to tight monetary policies and the subsequent impact on the economy.

He expressed optimism about recent improvements, particularly in the current fiscal year, where the focus is on streamlining multi-year contracts and maintaining essential expenses within limits.

Minister Mahat reported a 6 percent increase in capital expenditure, along with revenue growth in customs (13 percent), income tax (12 percent), and value-added tax (7.19 percent).

With the central bank’s policy rate reduction, he anticipated a decline in interest rates, noting that banks and financial institutions have already started lowering rates, with the current base rate at 9.94 percent.

Looking ahead, Mahat emphasized the need for foreign aid to support infrastructure projects, particularly in hydropower, and to bolster road expansion.

He highlighted the importance of cultivating interest in information technology among the youth, announcing an upcoming international investment conference on April 21 and 22 in Kathmandu to promote the sector.

To prevent youth migration, Mahat proposed attracting foreign investment in information technology and discouraging imports, focusing on sectors like hydropower, infrastructure, and tourism for economic development. He underscored Nepal’s historical economic strength, citing increased tourist arrivals, deposit collections, improved revenue, and a positive external sector.

Minister Mahat concluded by advocating for collaboration between the government and the private sector, urging alignment with the prioritized economic sectors to accelerate prosperity and development.