14-20 March 2014 #698

Seeking a revival

Nepali Times caught up with the finance minister to talk about the new government’s top economic agenda.

One of the first ministers to be inducted into Sushil Koirala’s cabinet, Ram Sharan Mahat has emphasised the need to get the country’s economy on track by exploring potential in manufacturing, hydropower, agriculture, and tourism. Nepali Times caught up with the finance minister to talk about the new government’s top economic agenda.

Nepali Times: How does it feel returning as finance minster after six years?

Ram Sharan Mahat: This is my fifth stint at the Finance Ministry and I feel like I am back home. I am well aware of the challenges and responsibility that lie ahead. Nepal’s rulers have neglected the economy for far too long and as a result, the economy is tottering precariously. We need to inject new life into it. Despite these shortcomings, we are performing well on several financial indicators largely because of foreign remittance. For instance inflation is under control and tax revenues are satisfactory. However, investment in the manufacturing sector remains dismal. Manufacturing makes up only six per cent of the national GDP, down from 10 per cent. The development of hydropower projects and transmission lines has been painfully slow and we are still living in darkness.

What are your top priorities?

My first priority is to pass ordinances in the parliament related to finance. The reforms that happened in the 1990s need to be updated. The administration needs to be more efficient and achieve the targets it has set out for itself so that people there is good governance in the country.

How will the new government ensure development and good governance?

The newly elected government is sending out a positive message to investors that all stakeholders are serious about growth. Just last month, Kathmandu hosted two high-profile conferences: one on Business Ethics for a Prosperous Nepal and the other a hydropower summit, which was attended by high level government and private sector officials from various countries, representatives of Asian Development Bank, and prospective investors. If we can maintain political stability in the country, deliver on our commitments in time, and trim down on bureaucratic red tape, large investments will soon start to pour in.

How much importance is the government putting on hydropower?

Our priority is to complete all the projects and programs that lay stagnant. And it is not just hydro, agriculture also has immense potential. If the villages are well connected with roads, irrigation network, and electricity, agriculture in Nepal will undergo a major revolution. Tourism is equally important for the economy, but we need an international airport at Nijgadh and link it with the fast track. Many finance related bills are still stuck in parliament. We just cannot complain about the lack of investment when laws are not being formulated.

Where do local elections stand on the priority list?

Local elections are a national agenda and all political parties are committed to it. Polls are imperative to guarantee financial transparency and accountability at the local level.

How will Nepal progress from a least developing to a developing country when the economic growth has stalled at below 4 per cent in the last decade?

The reason Nepal’s financial system is floundering in uncertainty is because we failed to focus on our economy. If we are willing to shift our focus, then economic expansion is possible in Nepal. Politically driven policies that don’t yield returns need to be discarded from the budget.

How can the government curb criminal activities that currently plague the transportation and medical industry and well as the private sector?

These problems are a result of the lack of rule of law and a weak government. The state needs to reassert its authority to ensure the success of liberal economic system. I am committed to making the tax department more efficient and punishing those who evade taxes.

What about reforms within public institutions that are a burden to the state?

We are planning to invite the private sector in our efforts to manage the now defunct public institutions. We paid millions of rupees to the employees of the Janakpur Cigarette Factory after it was shut. We want to initiate steps to restart Nepal Metal Company, Magnesite, Butwal Threads, Nepal Medicine Limited among others. Instead of being run by the state, these institutions need to function on a public-private partnership model.

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