Economic Scenario

THE overall economic scenario of the country seems to be in the right direction despite some negative trends in certain areas. According to an analysis report of the Nepal Rastra Bank, the central bank of Nepal, the balance of payment in the first nine months of the current fiscal year posted a surplus of 10.79 billion rupees. It is mainly due to increased inflow of remittances from Nepalese working abroad. This is a positive trend as Nepal now has a comfortable situation as far as foreign currency reserves and balance of payment are concerned, which was rare in the past. The adequate reserve in foreign currency has led to an appreciation of the rupee against some major foreign currencies. But remittance alone does not help consolidate the economy and balance of payment in the long run. The main engine for a sound foreign currency reserve, balance of payment and overall economic development is the export sector. However, the export sector does not appear to be in a healthy condition. The central bank's report states that the export sector has witnessed a continued downward slide. Exports in the first nine months of the current fiscal year saw a decline by 2.9 per cent.

This is by no means a positive symptom. But the other sectors have shown mixed results. The economy of the country had badly suffered due to the decade-long insurgency and conflict. But the situation changed, and economic activities started picking up after the success of Jana Andolan II that restored democracy and also paved the way for the peace process. The situation became more encouraging after a cease-fire between the government and the Maoists was announced and a national comprehensive peace treaty was signed. However, strikes and protests programmes continued at the call of different trade unions, political and ethnic groups. The agitation in the Terai has been long and has hit the economy and other sectors hard. The decline in exports is also mainly because of the frequent strikes in the Terai areas. However, the overall economic indicators have shown positive signs. The GDP growth rate is expected to do better. Past experience has shown that peace is the main requisite for economic and social development. Now the political process is underway to make the peace process a success and ensure state restructuring, which is expected to give a further boost to the economy. The national economy should be the concern of all the political parties irrespective of their ideology. Thus, there must be equal efforts from all sectors to expedite the economic activities and development. The national economy should not be a victim of personal and partisan interest. The ongoing peace process must be successful for sustainable economic development as well. We must understand that our prosperity is ensured only when the national economy booms and flourishes.

Source: The Rising Nepal, June 13, 2007