KATHMANDU — The Asian Development Bank (ADB) has forecasted 5.5 per cent of Gross Domestic Product (GDP) growth in the coming fiscal year 2018/19 in Nepal.
The ADB made this higher forecast hinges on the assumption of normal monsoon and acceleration of ongoing mega projects.
The Edition of Macroeconomic Update of Asia, the main annual publication of ADB, released here today, expected Nepal’s economy to grow at a slower pace of 4.9 per cent in current fiscal year from 6.0 per cent in previous fiscal year weighed down by floods of August 2017 and the erosion of base effect.
On the occasion, ADB Country Director for Nepal, Makhtor Khamudkhanov said, “Production of summer crops like maize and millet is expected to increase in fiscal year 2017/18 as compared to the previous fiscal year while the industrial grow rate is estimated to go down.”
Even with increased capacity utilization of industries, industrial growth is set to be lower in current fiscal year from the high rate in previous fiscal year, largely due to low investment in the manufacturing sub-sector for years owing to political instability and structural bottlenecks, reads Macroeconomic Update.
He said, “Substantive growth in government expenditures and moderate upticks in investment would drive growth in current fiscal year and government expenditures have increased significantly this fiscal year partly for local, provincial and parliamentary elections.”
“Additionally, the government has appointed fiscal transfer of Rs 232.2 billion (about 8.0% of GDP) to local and provincial governments under the federal structures of governance.”
Similarly, average annual inflation is expected to rise moderately to 5.5 per cent in current fiscal year 2017/18 from 4.5 per cent in previous fiscal year.
This is below the inflation target of 7.0% set by Nepal Rastra Bank and external sector stability is vulnerable over the medium-term with slow remittance growth and rising trade deficit, he added.
The Macroeconomic Update also shed lights on the importance of agricultural commercialization in Nepal and the need for its effective implementation by addressing legal, institutional, financial and infrastructural barriers.
Commercialized agriculture via contract and cooperative farming methods can be one of the major sources of revenue generation for the country if practiced on a wider scale.
It will not only help generate local employment but also meet domestic demands with improved crop and livestock production and promote export potential of niche agro products.
Business community demands slash in interest rate
BIRATNAGAR— The industrialists and traders in Biratnagar have asked the government to immediately reduce the high interest rate charged by the bank and financial institutions (BFIs) from the borrowers.
They argued that the interest rate should be around seven percent for the production-based industries and up to nine percent for the trading firms.
At a programme jointly organised by Industry Association Morang and Trade Association Morang on Thursday, the business leaders drew attention of the government to that end adding that job creation for the labour force of 500,000 was not likely only from the industry and trade sectors.
Stressing the need for slashing the interest rate, they also argued the central bank should realise the reality that no bank was running out of loss. The industrialists and businesspersons said that industries and business should flourish to reduce the trade deficit, strengthen the economy and create more job opportunities.
Industrialists Bhim Ghimire, Pawan Kumar Sharda, Sushen Pyakurel, Moti Dugad and others said that bank’s interest rate should be low to increase the domestic investment and lure the foreign investment.