FINANCEFINANCE NEWS AND VIEWS Nepal Donors Consultation Meeting- 2008, Special Issue MAGH 2064 JAN-FEB 2008
Government of Nepal Ministry of Finance Singhdurbar, Kathmandu, Nepal In the presence of Hon'ble Finance Minister Dr. Ram Sharan Mahat and Vice President of the World Bank Mr. Praful Patel, Finance Secretary Mr. Vidyadhar Mallik and Country Director of the World Bank in Nepal Ms. Susan Goldmark, signing agreement on 31 January 2008 in Kathmandu.
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;"rgf ljefu FINANCE NEWS AND VIEWS
Published By: Monitoring and Evaluation Division Ministry of Finance Singhdurbar, Kathmandu, Nepal Editorial Committee:
Shree Ram Pant Shiva Kumar Katuwal Hari Prasad Shrestha Mimangsa Adhikari
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Editorial Government of Nepal is organizing Nepal Donors Consultation Meeting (NDCM) 2008 in Kathmandu on February 21-22, 2008. A sizeable number of international delegates and representatives as well as local development partners are participating in the meeting in the context of emerging political and economic situation of Nepal. The meeting will assess immediate and short-term fi nancial assistance to Nepal specially in managing political transition and holding Consituent Assembly election, and maintaining economic stability of the country. The meeting would be fruitful to provide fi rst hand information on state of economy and peace process praticed in Nepal to the global development partners. It would also be helpful to present the resource gap of the economy at this diffi cult moment of transition and rapid change.
The present state of Nepal’s economy is not in a position to bear the cost involved in such rapid change process. In this context, Nepal needs ever increasing support and assistance for inclusive development and socio- economic trasformation. To organize this NDCM, preparatory meetings were held from February 1 to 4, 2008. In the pre-consultative meeting held in February 1-4, 2008 at Kathmandu several policy papers were presented in the ares of: peace process and emerging scenario, economic update, challenges and road ahead, infrastructure development (water resources, road and drinking water sector) ,foreign aid policy, inclusion, education and health sector were presented by the sectoral ministries and large number of expert on the fi eld as well as local donors partners represented and participated. The discussions proved fruitful in revisiting the sectoral progress and outlining future course of action. Participation by large number of experts, local donors, academia, civil society and media in the meeting helped improve better communication and further enhance the relationship in the implementation of agreed agenda.. The pre-consultation meetings help arriving at consensus on issues that Nepal is facing today.
Usually held in every 18-24 month period, the last forteenth meeting of Nepal Development Forum (NDF) was held in May 2004. The 14th NDF was the second to convened in Nepal and the fi rst led solely by Nepal. The next such meeting was scheduled for September 2006. However, evolving political situations, among others, did not allow it to take place in the scheduled time. For this reason, NDCM is going to be organized with a view to encouraging dialogues & refreshing communication with the development partners.
The objective of NDCM are to: share the evolving political situation and status of Peace Process in the country; highlight the development agenda and priorities through dissemination of the Three-Year Interim Plan (TYIP); deliver peace dividend to Nepali people,; seek unfettered support of the development partners for the peace process and development programmes of Nepal; reiterate commitment on Paris Principles of Aid Effectiveness and seek the programmatic and action-bound support of development partners; and build confi dence through enhancing communication among the GON, development partners and Nepali citizens.
In the main event of the forth coming NDCM, the outcomes of the pre-consultation meeting and agenda for future assistance will be presented and discussed along with the presentation of Three-Year Interim Plan (TYIP), and donors’ support to peace and development in Nepal, National Action Plan for Aid Effectivenes, and results since Peace Agreement signed. Thematic/sectoral group discussions will also be made in the areas such as Inclusion, Health, Education, Reconstruction and Rehabilitation, Infrastructure, etc. A time bound action plan would culminate as a follow up of the consultation meeting. Implementation of agreed agenda will be taken up by the concerned stakeholders so that the responsibility of action would not shrink. The Kathmandu NDCM would further open the doors for dialogue between global partners and Government of Nepal with even more urgency to provide ever increasing foreign assistance for the TYIP, peace dividend -including relief and rehabilitation, infrastructure development, implementation of 23- point Comprehensive Peace Accord (CPA), holding of Constituent Assembly elections and strengthening security management for the peaceful transition and socio-economic transformation. Contents Page No.
1. An Overview of Nepal Donors Consultation Meeting 2008 1 2. A Report on Nepal Donors Pre-Consultation Meeting 3 3. j}b]lzs ;xfotf kl/rfng / cGo ultljlw 10 4. Economic Update, Challenges and Road Ahead - Rameshore Prasad Khanal 15 5. Some Observations on the Recent Fiscal Performance and the Reform Process in Nepal - Tula Raj Basyal 30 6. Nepal's Need for Increased External Assistance - Shree Ram Pant 36 7. Reviewing Foreign Aid Policy 2002 - Krishna Gyawali 41 8. Small and Medium-sized Enterprises in Developing Countries: Some Experiences of China - Hari Prasad Shrestha 47 9. Current Macroeconomic Situation 50 10. cy{ dGqLåf/f ah]6 sfof{Gjogsf ;DaGwdf ;lrjx?nfO{ lgb]{zg 55 11. cy{ dGqLåf/f ;fj{hlgs ;+:yfgx?sf sfo{sf/L k|d'vx?nfO{ lgb]{zg 56 12. cf=j= @)^$÷^% kf}if dlxgf;Ddsf] /fh:j c;'nL ljj/0f 57 13. cy{ dGqfnosf] @)^$ ;fn kf}if dlxgf;Ddsf] dfl;s k|ult ljj/0f 59 14. cfly{s jif{ @)^$.^% sf] lwtf]kq ahf/ / ljQLo If]q ;'wf/ sfo{qmd / k|ult ljj/0f 64 15. World Bank / Asian Development Bank ;Fu ePsf] ;Demf}tf ;DalGw Press Release 68 16. cfly{s aif{ @)^#.^$ sf] ah]6 sfof{Gjog k|ult ljj/0f [k|ltj]bgsf d'Vo a'+bfx? (Major Findings)] 70 17. Success Story : Free From the Gridlock of Poverty 74 18. Nepal: Access to Financial Services (Executive Summary) 75 19. Local Donors’ Meeting Statement by Hon’ble Finance Minister Dr. Ram Sharan Mahat, MOF, 16 January 2008 79 20. Speech by Hon. Dr. Ram Sharan Mahat, Minister of Finance, Nepal And Governor of the World Bank for Nepal At the 2007 Annual Meetings of the Boards of Governors of the Bank and the International Monetary Fund (Oct. 20-22, 2007, Washington, DC, USA) 82 21. Photo Gallery: NDCM Pre-consultation Meeting Feb. 1-4, 2008, Kthmandu 85 AN OVERVIEW OF NEPAL DONOR CONSULTATION MEETING 2008
1. Government of Nepal, Ministry of Finance is experiences and progresses of the peace going to organize Nepal Donors Consultation process as well as development orientation Meeting 2008 in Kathmandu on Feb. 21- of New Nepal during transition with the 22, 2008. Prior to main event, preparatory development partners and own citizenry. meetings were being held from Feb. 1-4, The relevance of holding such an event is 2008. justifi ed in a broader context of : 2. Usually held in every 18-24 months, the last • Evolving political situation and (the 14th) meeting of Nepal Development stabilization of peace process. Forum (NDF) was held in May 2004. The • Government's approval of Three-Year 14th NDF was the second to have been Interim Plan (TYIP) through holding convened in Nepal and the fi rst to have elections of Constituent Assembly as been led solely by Nepal. The next such soon as possible; and urgency on its meeting was scheduled for September 2006. implementation to deliver peace dividend However, evolving political situations, to the Nepali people; and among others, did not allow it to take place in the scheduled time. • Need to communicate to the development partners as well the larger citizenry about 3. With a mission of bringing development the progress and achievements made agenda on to the center stage to help and constraints being faced in managing stabilize the peace process and deliver transition. a Peace Dividend during transition the Consultation Meeting will revolve around 4. The objectives of the Consultation Meeting “Supporting Nepal’s Efforts toward Peace would, among others, be: and Development through Three-Year • To share the status of Peace Process Interim Development Plan (2007-2010)”. and evolving political situation in the The Consultation Meeting aims at sharing country;
1 • To highlight the development agenda Effectiveness based on Paris Principles; and priorities through dissemination of • Revisit of Foreign Aid Policy, 2002; the TYIP and GON/development partner collaboration for implementation and • Stock-taking and sharing of progress in delivery; the peace process, including the results since Peace Agreement signed; and; • To seek unfettered support of all development partners for the peace • Holding Thematic/Sectoral group process and development priorities of discussions in areas such as Inclusion, Nepal; Health, Education, Reconstruction and Rehabilitation, Infrastructure, etc. • To reiterate commitment on Paris Principles of Aid Effectiveness and seek 6. Following discussion papers will be the programmatic and action-bound prepared, presented and discussed: support of development partners on the • An Economic Update of the Post- same; and; Janaandolan-II and Report on • Confi dence building through Development Results and Reform communication among the GON, Initiatives; development partners and Nepali • An outline of National Action Plan for citizens; ‘Managing for Development Results 5. In line with the above objectives, the (MfDR)’; following agenda for the Consultation • An outline of National Action Plan for Meeting will be set: Aid Effectiveness; • Dissemination of the Three-Year Interim • A Paper on ‘Foreign Aid Policy, 2004: Plan (TYIP) and seeking support for Revisited’ ; implementation of the agreed key • deliverables; A summary paper on ‘TYIP with highlights on Deliverables’; and; • Securing donors' support to Peace and • Development in Nepal: A Donors' Charter Report on ‘Peace Process and Emerging that encompasses a joint framework/ Scenario’. guideline to follow way of doing business 7. To translate the above concept into practice, and modalities of funding; a detailed Action Plan will be developed and • Outlining a National Action Plan for Aid followed up.
2 A Report on Nepal Donors Pre-Consultation Meeting, Kathmandu (February 1-4, 2008) In a run-up to the Nepal Donor Consultation Rural Infrastructures: Roads, Meeting (NDCM) scheduled for February 21-22, Water Supply, Housing and Urban 2008, Ministry of Finance conducted six sessions Development (February 1, 2008, Hotel Yak and Yeti) of Pre-Consultation Meetings on February 1, 3 and 4, 2008 in Kathmandu. The session was chaired by Hon’ble Member of the National Planning Commission (NPC) The NDCM is being organized with a view Mr. Rama Kant Gauro. A thematic paper on to encouraging dialogues and refreshing “Infrastructure (Roads, Water Supply, Housing communications with the development partners and Urban Development)” was presented by Mr. and our own citizenry at large about the Purna Kadariya, Secretary of the Ministry of country’s development needs, agenda, priorities Physical Planning and Works. The discussants were Ms. Shanti Malla, Mr. Varun Prasad and deliverables and their linkage with the peace Shrestha, Mr. Ki Hee Ryu, Mr. Mukti Prasad process. The NDCM also aims at disseminating Kafl e and Mr. Narayan Govinda Halwai. the progress made in the aftermath of Janandolan- II, focusing on evolving peace process, on-going The presenter highlighted on the status of the reform initiatives, smooth accomplishment of infrastructure sectors, i.e. the Roads (Strategic the forthcoming election of the Constituent and Rural Network), Water Supply (Urban and Assembly and the developmental imperatives. Rural), and Housing and Urban Development in light of the Three Year Interim Plan. He Pre-Consultation Meetings have largely been presented plenty of data showing only 65 out of successful in facilitating dialogue among wider 75 Districts Headquarters are now connected to stakeholders around eight various themes. The the motorable roads. Currently, an estimated 76 diversity of the participation that comprised percent of the population is covered by improved Nepal-based development partners, government water supply and 46 percent by basic sanitation. Likewise, 81 percent of the urban and 41 percent offi cials, representatives of the political of the rural areas are covered by these services. parties, civil society, academia, youths and He further informed that almost 92 percent of private sectors, per se, was encouraging. At the Nepalese households live in their own dwelling beginning of each session, Finance Secretary units and 5.4 percent live in the rented ones. Mr. Vidyadhar Mallik set the agenda with short welcome speech. Mr. Mallik recapitulated the Mr. Kadariya revealed that most of the damages objectives and mission of the NDCM as well caused by the decade-long confl ict were related as Pre-Consultation Meetings. He also clarifi ed to the critical deliveries of services such as police that the NDCM was not meant for any specifi c posts, communication towers, forest posts, health pledging unlike in the regular meetings of posts and so on. He, therefore, emphasized on fast-track mode of reconstruction through Nepal Development Forums. Highlights of specialized agencies so that existing challenges each thematic presentation and the deliberations in land acquisition, staff mobilization in remote therein are as follows: areas, timely mitigation of local issues, weak institutional capacity of local institutions and so
3 forth can be tackled more effi ciently. The presenter roads. Comments were also raised as to paper’s also expressed the hope that the initiatives taken inadequate coverage of the issue of resettlement by the government under program-based and of squatters. Others focused on decentralized result- oriented framework such as Sectoral Plan, notion of local roads. Participants also expressed MTEF, MfDR, Priority Investment Plan, etc. the view that the long list of infrastructure would be instrumental in establishing successful projects needs prioritization. milestones for infrastructure development. The comments from the fi ve discussants/panelists After the presenter responded to the questions followed the presentation. and comments, the Chair of the session, in his concluding remarks, appreciated the productive Ms. Shanti Malla, the fi rst among the discussants/ interactions and hoped that the comments and panelists in this session, mainly raised the issue suggestions made by the participants will be of implementation and highlighted the urgency well taken during fi nalization of the paper. of putting all words into deeds with all sincerity and dedication. Mr. Varun P. Shrestha, a former Water Resources Development GoN Secretary with experience in physical (February 1, 2008, Hotel Yak and Yeti) planning and works, said that the bad condition of roads in countries like Nepal makes them Mr. Prithivi Raj Ligal, former Vice Chairman of prone to earthquakes and therefore, it should NPC chaired the session. Mr. Shankar Koirala, always incorporate the disaster management Secretary of Ministry of Water Resources elements in planning. Mr. Ki Hee Ryu from the presented a paper on the themes- hydropower, Asian Development Bank stressed on the need irrigation and water-induced disaster to optimize the government’s efforts in policy, management. legal and institutional reforms. Mr. Mukti P Kafl e pointed out that there is confusion on the role of The paper focused on the issues of policy central and local agencies in the implementation and legal regime and revealed the status of of infrastructure projects. Finally, Mr. Narayan progress followed by the road ahead and Govinda Halwai raised the issue of duplication challenges. Mr. Surya Nath Upadhyaya, the as many organizations are involved in water discussant, commented that political climate supply schemes. is not conducive and security is vulnerable for the investors. He stressed the need to establish The fl oor contributed enthusiastically with a problem shooting committee and treat water range of constructive comments and suggestions. resources as strategic issue. Another discussant, Some participants pointed out the need to look Dr. Rameshananda Vaidya pointed out that there at informal sector development along with is a threat from GLOF due to global warming which should be taken into consideration. Similarly, he emphasized on domestic capital mobilization and need to build transmission lines. Mr. David Grey, the discussant from the World Bank, remarked that the debate should not be about whether we should go for small or large hydropower but good or bad hydropower. He made it a point that the issue of hydropower development must help nation-building rather than nation-dividing. He pointed to the need for building basin development project and said that water management is a regional public good. He also suggested refi ning the skills of negotiation
4 while dealing with the neighbors. Mr. Ajaya job market, employment opportunities and Dixit, the discussant, commented that the paper improvement in infrastructure. did not refl ect the reality of the sector. He said that the paper did not touch upon the issue of Hon’ble Vice Chairman of NPC Dr. Jagadish federalism and lacked vision as such. Mr. Bhim Chandra Pokharel chaired the session. Vice Neupane, the discussant and Hon’ble Member of President of the World Bank Mr. Praful Patel, Hon’ble Members of the Legislature-Parliament NPC, stressed on the need to integrate drinking Dr. Dilli Raj Khanal and Dr. Prakash Sharan water in this sector and asked why new power Mahat, Hon’ble Member of NPC Dr. Puspa projects were not built despite the issuance of Raj Rajkarnikar, former GoN Secretary and licenses. economic analyst Dr. Bhola Nath Chalise and The participants from the fl oor commented noted economic thinker Dr. Raghav Dhoj Pant were among the Panelists. on a number of issues such as proper resource allocation for Far-Western and Mid-Western Mr Praful Patel said that Nepal was really at a Regions, importance of irrigation and agriculture, historic crossroads, and if it would want to come and adoption of a comprehensive policy for water out of this transition, the country would have to resources development. It was also pointed out fi nd its rightful place in the growth trajectory like that there was a need for local level participation its neighbors in the region have done. He stressed in the hydro projects to ensure sustainability and on the need for inclusive growth, and hoped that cost-effectiveness. Building new transmission just concerns of the Terai and Madhesi people lines, giving emphasis on rural electrifi cation and will be addressed. developing instruments for domestic resources mobilization were also raised. He believed that the NDF after the election will result in much more support from the international community than in the past. On the contents of the paper, he said communication is a strong and effective tool and can help to avoid the perception of statelessness that was mentioned by the presenter. “Communication is perhaps the most critical priority in a transition”, he viewed. Pointing to the need for addressing the disconnect between the announced policies and action on the ground, he stated that employment prospects can be improved through labor sector reforms; the key being not losing better-trained workers to foreign markets, while being inclusive.
Economic Update and Reforms Dr. Prakash Sharan Mahat stressed on creating (February 3, 2008, Hotel Everest) political stability through CA election as the political situation would ultimately determine During the fi rst session, Mr. Rameshore Prasad the pace of other reforms. He said that Khanal, Revenue Secretary of Ministry of democracy raised expectations that were not Finance presented his paper on “Economic matched, hence confl ict and its new dimensions update and Reforms”. He started with a brief which the state has to manage. He hoped for a overview of the past reforms initiatives and political, and more importantly, an economic moved to current economic scenario, issues and consensus, saying “we cannot have a future challenges of the economy. Visualizing the road without economic freedom – for creativity and ahead, he focused, among others, on improved competition and to make choices”. He raised the governance, investment climate, reform in need for inclusive growth, and also for investing
5 in big infrastructure projects while caring for the Dr. Bhola Chalise stressed upon the need small ones which are feasible and sustainable. for rightly focusing on the private sector perspectives. He touched upon the current issues Dr Raghav Dhoj Pant said that the presentation of importance such as privatization, establishing provided a nice picture of prospect and SEZ, enhancing technical capability and retrospect, but the people needed to see the signs transparency needed in regulatory authorities of development taking place, and along with the including the NRB, courts, higher education results, they wanted to see the efforts as well. system, etc. On privatization, he aptly remarked, He also said that the country is experiencing “let us privatize the process of privatization, so stagfl ation – stagnant income and rising that the process is quick, less costly and more price level, with BOP problem and declining effi cient”. reserves—and also suffering from what is called the Dutch disease in that the authorities are Revenue secretary Mr. Khanal responded to the maintaining an overvalued exchange rate that queries and comments made on his presentation. favors imports. He concluded, however, with a He assured that the issues identifi ed in the paper positive note that it is never too late to move in were generic and most of the comments were the right direction, the world is changing, and so productive, which will be incorporated in the must we. paper. He clarifi ed that the buying of Indian currency was the need of the day, remittance Dr Puspa Raj Rajkarnikar agreed with the paper alone was not to cause Dutch diseases, and saying, “it rightly mentioned that Nepal had a privatization was not out of the scene. Having said growth momentum in the 1990s but could not this, he also admitted that there were structural sustain it owing to the armed confl ict”. He problems in the Government that often hindered enlisted the main problems of today as low effective implementation of good policies. growth rate, declining exports and widening income gaps. He opined that the measures to Finally, the Chairperson of the session stressed address them are well narrated in TYIP which on the need for striking a right balance between he said was intended to come out as a consensus positive outcome and lapses in areas of document, though it emerged as a compromise. development. He further emphasized on the need He agreed with earlier speakers on the need for for regional trade integration, inclusion, rural inclusive development. infrastructure development and similar type of interventions that can bring about changes in Dr Dilli Raj Khanal commented that some governance and help win public confi dence. He realization on the policy lapses is critical. conclude by saying that three concepts guiding He pointed to the challenges of inclusive Nepal are prosperity, modernity and justice development, unbalanced development, and to build a prosperous, modern, and Just New income inequality. He saw the urgent necessity Nepal, and that is the road map for the country’s for re-stimulating and re-vitalizing the development in the years to come. economy. Stressing the need for proper enabling environment in the private sector, and also for reorientation towards productive investments, he said that rehabilitation and reintegration, and reducing the vulnerability of the people are critical for ending distributional and structural confl ict. Stressing on the need to redefi ne the role of state, private sector, and also the community, he highlighted on establishing policy coherence and consistency in order to make them compatible with inclusive growth and development.
6 Foreign Aid Policy translate the policy articulations into actions. (February 3, 2008, Hotel Everest) One of the Panelists asked the Government to look into aid effectiveness issues in the context During the second session on the same day, Mr. of international politics. It was viewed that the Krishna Gyawali, Joint Secretary of the Ministry way foreign aid is delivered, it can align with the of Finance presented a paper on “Foreign Aid Government system only when the Government Policy.” Mr. Gyawali proposed a draft “Foreign is committed to reform its public fi nancial Aid Policy 2008” and invited the fl oor for their management system. It was said that the policy deliberations to enrich the revised version of the presented follows globally accepted principles draft. He highlighted on the major departures of aid effectiveness, many of which are refl ected from Foreign Aid Policy 2002, guiding in sectors like education and health. The need principles and objectives of the current draft, for a timeline to translate policy into actions issues and challenges experienced during the was highlighted, so was on a systematic exit implementation of the existing Policy, and the policy. One of the Panelists suggested that the agenda ahead. His presentation shed more lights on-going OECD survey on Monitoring the Paris on the principle of Donor Harmonization for Aid Declaration would contribute to refi ning the Effectiveness articulated in various international draft policy. The fl oor stood quite fi rm with the fora including Paris Declaration, 2005. He deliberations from various aspects. Some argued viewed that unless foreign aid is managed that the policy contained more explanation than effi ciently and effectively on a selective manner the commitment to transformation; some opined so as to achieve the relative self-reliance (i.e., that it may not be the right time to formulate such a the gradual phase out of foreign aid), it will not policy while the political scenario is still not clear; be possible to achieve sustainable development others urged to look back to the circumstances outcome. He also presented the measures for that hindered effective implementation of the effective implementation of the Foreign Aid earlier version of the policy. Policy and emphasized on need for concrete National Action Plan for Aid Effectiveness, The presenter Mr. Gyawali responded to almost among others. all the queries and comments meticulously. He took all the comments as a good helping The session was chaired by Dr. Bimal Prasad tool for the revised draft version of the policy. Koirala, former Chief Secretary of the Finally, the Chair followed his opening Government of Nepal. The Panelists were Ms. remarks and shared the experiences and Bella Bird from DFID, Mr. Matthew Kahane feelings about why the Government is not able from the UN, Prof. Dr. Madan Kumar Dahal to take driver’s seat while managing aid. He from the Tribhuvan University and Mr. Ram opined that one and only thing that can make Binod Bhattarai, former Finance Secretary. aid effective is strong government leadership. Major comments and suggestions given by the Panelists revolved around the issues of aid effectiveness, surge of grants against loan, capacity of the Government, debt trap, conditionality and tied aid. One of the Panelists alerted that the government should not be happy with the surge in grants against loan fi nancing because excessive reliance on grants may make economy costly and ineffi cient. It was said that the policy draft is silent on counter part funds management and also on how and when to
7 Social Sector: MDGs and Social Several participants from the fl oor questioned Inclusion, Education, Health on the possibility of achieving MDGs by Nepal (February 4, 2008, Hotel Annapurna) within the stipulated timeframe due to the lack of effective implementation of the policies Pre-Consultation Meetings on social sector articulated in the TYIP. The fl oor suggested (MDGs and Social Inclusion, Education and for equal allocation of Government resources Health Sector Development) were conducted in and quality education among the marginalized group. three sessions. All the sessions were chaired by Dr. Ram Prakash Yadav. Social Capital: Education
MDGs and Social Inclusion The paper on “Social Capital: Education” was presented by Mr. Balananda Paudel, Secretary, Hon’ble Chaitanya Subba, Member, NPC Ministry of Education. The paper covered presented a paper on “MDGs and Social areas such as EFA and School Sector SWAP, Inclusion.” Dr. Novel Kishore Rai and Ms. Lynn Secondary Education, Technical and Vocational Benette were the Panelists. While presenting Education, Higher Education Reform and issues the paper, Dr. Subba highlighted on the issues of inclusion and quality education. Mr. Ishwor and status of social sector and Millennium Prasad Upadhyaya, Panelist, highlighted on the Development Goals in Nepal. The presenter importance of decentralization, capacity building also revealed the strategic measures planned for and ICT. Another Panelist, Mr. Larsen, Minister, the different communities in Three Year Interim Embassy of Denmark, stressed on the need to Plan. Commenting on the paper, the panelist Dr. address the need of 10-15% children who are Novel Kishor Rai questioned on the reliability still out of the school system and suggested that of statistics used in the paper. He further opined education could be one of the peace dividends. that public and private schools are creating a He emphasized the role of civil society and gulf in the education system. He added that NGOs in education sector. The participants from social inclusion policy should be contextual the fl oor commented on issues such as proper taking history, geography, politics, religion utilization of resources, inclusion of diversity in and culture of the country into consideration. curriculum, quality education and politicization Another Panelist Ms. Lynn Benett expressed of education. her impression that the paper introduced new type of social capital which is different from conventional defi nition of social capital. She also revealed overwhelmingly disintegrated data showing exclusion of certain castes or community in public affairs and stressed on the need for such data for monitoring TYIP.
Social Capital: Health
Dr. Babu Ram Marasini, Joint Secretary, Ministry of Health and Population presented a paper on “Social Capital: Health.” The paper
8 touched upon issues such as the implementation Hon’ble Mr. Malla K. Sundar, Member of the of Sector Wide Approaches (SWAps) in health Legislature-Parliament, Supreme Court former sector, pro-poor guidelines for health sector, free Justice Mr. Laxman Aryal, renowned columnist essential health care services, improvement in Mr. C. K. Lal, social activist Ms. Rita Thapa, drug quality, outreach program, health indicators, Chief of UNMIN Mr. Ian Martin and Hon’ble infrastructure development and human resources Mr. Dipendra Bahadur Chhetri, Member, management. Dr. Dirgha Singh Bam, Panelist, National Planning Commission were among the commented that there is a greater need for donor Panelists, who contributed with their valuable support in health sector. Another Panelist, Ms. comments and suggestions on the theme. The Bella Bird, DFID, stressed on the need to defi ne Panelists emphasized on the need for holding essential services and improvement in fi nancial free and fair election of Constituent Assembly management system in health sector. The within the stipulated timeframe by holding participants from the fl oor commented on the necessary negotiations and discussions with role of private sector in catering to health needs different political and non-political groups, of the people and need to give emphasis on including Madhesi and Janajati. mental health and non communicable diseases. The diversity of the participation ranging from Development Partners through Political Parties to the Youths and Students was encouraging and the deliberations made by them were critical. They were of the view that the peace building initiatives should include economic, political, social, and administrative measures to make this endeavor sustainable, where international community can play crucial positive role.
The Pre-Consultation Meetings organized in preparation for the NDCM have proved fruitful in ensuring participation of the wider community, who have real stake in the peace process and development of Nepal. Contributions made by Evolving Peace Process and Emerging the participants are now in hand to feed into Scenario the revised versions of the paper. Besides, the (February 4, 2008, Hotel Annapurna) inputs collated from these deliberations are also expected to be used as policy feedback in The session was chaired by Mr. Daman Nath the respective sectors. The whole preparatory Dhungana, former Speaker of the House of process helped build confi dence among the Representatives. Mr. Madhav Prasad Ghimire, Government, Development Partners and the Secretary, Ministry of Peace and Reconstruction Citizenry at large. presented a thematic paper on “Evolving Peace Process and Emerging Scenario” that took stock of the progresses, challenges, agenda and strategies for peace building initiatives that the Government of Nepal is undertaking at present. Mr. Ghimire highlighted on policy and institutional arrangements and on actions taken so far for the confl ict resolution and rehabilitation of the confl ict-affected people. He further threw lights on the emerging need of Reconstruction, Rehabilitation, Relief and social reintegration.
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10 FOREIGN AID COMMITMENT FY 2007/08 (2064/65) Donorwise
Rs. In million SN Bilateral (A) Grant Loan Total 1 Australia 0.00 2 Canada 0.00 3 China 857.00 857.00 4 Denmark 0.00 5 Finland 0.00 6 France 0.00 7 Germany 2725.00 2725.00 8 India 6500.00 6500.00 9 Japan 261.62 261.62 10 Netherlands 177.60 177.60 11 Norway 0.00 12 Saudi Fund for Development 985.50 985.50 13 South Korea 227.50 227.50 14 Switzerland 200.00 200.00 15 United Kingdom 0.00 16 USA 0.00 Sub Total 4448.72 7485.50 11934.22
SN Multilateral (B) Grant Loan Total 1 ADB 6290.00 6290.00 2 FAO 0.00 3 IFAD 0.00 4 ILO 194.70 194.70 5 OPEC Fund 636.50 636.50 6 UNDP 0.00 7 World Bank 16238.00 16238.00 Sub Total 22722.70 636.50 23359.20 Grand Total (A+B) 27171.42 8122.00 35293.42
11 Foreign Aid Commitment Projectwise FY 2007/08 (2064/65)
Amount in million S.N. Date of Donor Name of the Project Type of Amount Sector Terms of Agreement ssistance Loan
In Foreign Currency In NRs. 1 July 24, 2007 China Economic and Technical Grant RMB 50.00 428.50 Others Cooperation 2 July 27, 2007 Netherlands Assistance to the Nepalese Grant Euro 2.00 177.60 Others Private Sector through Program for Co-operation with Emerging Markets 3 August 9, ILO Employment Promotion Grant US$ 3.00 194.70 Local 2007 and Peace Building Development
12 Based on Local Economic Development Project 4 September 3, Saudi Bagmati Irrigation Project Loan Saudi Riyal 56.25 985.50 Irrigation Interest Rate: 2007 Fund for 2%, Grace Development Period: 5 Yrs., Maturity: 20 Yrs., Commitment Fee: 0, No. of Payments needed Per Year: 2 5 September 5, Japan Kathmandu - Bhaktapur Grant JY 48.00 27.22 Transport 2007 Roads 6 September 5, Germany Middle Marsyangdi Grant Euro 13.10 1175.00 Power 2007 Hydroelectric Project 7 September India Line of Credit Loan US$ 100.00 6500.00 Others Interest Rate: 14, 2007 1.75%, Grace Period: 5 Yrs., Maturity: 20 Yrs., Commitment Fee: 0.50, No. of Payments needed Per Year: 2 8 September Korea Government Integrated Grant US$ 3.5 227.50 Science & 19, 2007 Data and Training Center Technology (GIDTC) 9 September WFP Umbrella Agrement on 26, 2007 Humanaitarian Assistance to Victims of Natural Disasters and Similar Emergency Situation 10 October 4, World Bank Nepal Biogas Support Grant US $ 5.00 318.00 Science & 2007 Programme Technology 11 November OPEC Fund Road Connectivity Sector I Loan US $ 10 636.50 Transport 26, 2007 Project 12 December Germany Middle Marsyangdi Grant Euro 16.6 1550.00 Power 12, 2007 Hydroelectric Project 13 December China Economic and Technical Grant RMB 50.00 428.50 Others 20, 2007 Cooperation 14 January 9, Switzerland Sustainable Management Grant SFr. 3.579 200.00 Agriculture 2008 of Agricultural Soils in the Mid-Hills of Nepal Phase III 13 15 January 14, ADB Rural Reconstruction Grant US$ 100.00 6290.00 Local 2008 and Rehabilitation Sector Development Development Program (RRRSDP) 16 January 28, Japan Food Aid (KR) Grant JY 400.00 234.40 Supplies 2008 17 January 31, World Bank Poverty Alleviation Fund Grant US$ 100.00 6300.00 Others 2008 18 January 31, World Bank Road Sector Development Grant US $ 42.60 2690.00 Transport 2008 Project 19 January 31, World Bank Irrigation and Water Grant US $ 50.00 3150.00 Irrigation 2008 Resources Management Project 20 January 31, World Bank Education for All Grant US $ 60.00 3780.00 Education 2008 Total 35293.42
FOREIGN AID COMMITMENT Sectorwise FY 2007/08 (2064/65)
Rs. In million S.N. Sector Grant Loan Total 1 Agruculture 200.00 200.00 2 Communication 0.00 3 Education 3780.00 3780.00 4 Finance 0.00 5 Forestry 0.00 6 Governance 0.00 7 Health 0.00 8 Human Rights 0.00 9 Industry 0.00 10 Irrigation 3150.00 985.50 4135.50 11 Labour 0.00 12 Law and Justice 0.00 13 Local Development 6484.70 6484.70 14 Peace Fund 0.00 15 Planning 0.00 16 Power 2725.00 2725.00 17 Science & Technology 545.50 545.50 18 Supply 234.40 234.40 19 Transport 2717.22 636.50 3353.72 20 Water Supply 0.00 21 Women, Children & S W 0.00 22 Others 7334.60 6500.00 13834.60 Total 27171.42 8122.00 35293.42
14 Economic Update, Challenges and Road Ahead
Rameshore Prasad Khanal*
I. Overview of the past reforms to contain fi scal defi cit to a manageable limit even in the face of rising security expenditures. Nepalese economy experienced surge in growth During the tenth plan period, the government rate in the early nineties, which was mainly due implemented a number of reform measures to to economic liberalization and implementation improve revenue effi ciency and, consequently, of a number of structural reforms. The effect annual revenue growth rate remained reasonably of a higher growth rate and its broad-based high in comparison to the growth in GDP. distribution was perhaps the reason behind Reforms in fi nancial sector were intensifi ed with Nepal’s success in poverty reduction. At a a focus on its stability and sustainability. The time when the country was gearing up for government examined weaknesses in service further acceleration in economic growth with delivery system in different sectors and action targeted poverty reduction, economic reform plans to correct them were implemented as a and distributive programs, the armed confl ict priority. intensifi ed in almost the whole of rural area. There was suppression in investment and It was during these low-growth years that the development activities. In order to inject some government was able to introduce sector approach life into the rural economy, government had to in foreign aid mobilization moving along the path adopt community-based approach which, in a of aid harmonization and alignment. Total results- couple of years, proved to be insular to the effects based management may be a far cry, but in core of confl ict and far better alternative to direct sectors the attention now is on monitoring and government implementation. Taking off from reporting critical results indicators. Governance a very low base, the growth during the nineties reform also remained at the heart of overall and the subsequent community approach were reform program, which focused mainly on barely suffi cient to change the socio-economic improving fi nancial accountability, procurement structure of the country. Much of the rural area, reforms and civil service reforms. inhabited by almost 85 percent of the population, still remains in primitive conditions. Financial sector reform focused on achieving stability and robustness in the sector, which As investment climate deteriorated, government was accompanied by critical intervention in spending on development projects slowed down, government-owned commercial and development the immediate priority before the government banks. Two large government-owned banks was protecting the achievements made until are now reporting improvement in fi nancial 2001 and maintaining macro-economic stability. performance, decline in non-performing assets It was for this reason that the prudential measures and enhancement in the quality of front-offi ce were adopted in public expenditure management, services. Agricultural Development Bank carried medium-term expenditure framework was out a massive capital restructuring exercise, introduced and conscious efforts were made cleaned its bad portfolio and has recently attracted huge support from potential shareholders. Two * Secretary (Revenue), Ministry of Finance
15 new laws passed recently by Parliament (Anti- growth remained very low, in spite of accelerated Money laundering Act and Banking Fraud government capital investment in rural areas. Control Act) are expected to foster healthy Private sector in general remained in wait and growth of banking sector. A new bill with a view watch mood, trying to gauge what direction to replacing the Banks and Financial Institutions the political process will take. Industrial and Act has been presented before the Parliament, business safety became the major concern of which once enacted is expected to help the business community as a whole in the wake process of acquisition, merger and consolidation of deteriorating security situation, which was in the banking sector. further exacerbated by trade union demands for job security, pay hike, etc. New legal and institutional framework in capital market seems to be working properly, although In these past seven months of this fi scal year, a close watch from regulatory agency is always however, along with emerging clarity in political necessary. The evolving capital market is process, the economy seems to be picking up. attracting many new small investors, which is a Tourism and service sector is showing signs of good sign for its further consolidation. Nepal’s improvement. Agriculture that suffered most capital market today is capable of providing in the last two years has also been giving good adequate fi nancing for mid-sized infrastructure performance partly due to good rains and also projects, particularly the hydro-power and toll- due to relatively peaceful environment in the road projects. rural side. II. The current economic scenario It is at this time that Nepal is implementing three-year interim plan with modest targets of After the success of popular uprising in early restoring economic confi dence, promoting social 2006 and formation of coalition of major equity and creating a base for socio-economic political parties for peace and socio-economic transformation. Investor confi dence in the transformation, hope of a new Nepal that is economy seems to be picking up, with foreign prosperous, modern and just appeared to be investors showing interest in mega-projects. a reality in the minds of many citizens. In Overall macro-economic stability becomes even these past two years, there have been times of more important at this stage. A review of the high hopes while, on occasions, public psyche current economic situation, therefore, is in order touched the lowest ebb amidst delayed delivery before explaining current challenges and future on certain promises. As every sovereign and agenda. empowered individual is openly ventilating anger and discontent—who expects quick Government Finance transformation in his/her livelihood and general aspirations of people met by government—there Fiscal year ending mid-July 2006 remained have been chaos at times. If properly led and weakest in terms of revenue mobilization and directed, today’s empowered Nepali individual also in terms of public expenditure quality, can provide suffi cient energy for quick socio- although overall fi scal balance was maintained. economic transformation. Beginning FY 2007, revenue efforts were enhanced. Consequently, the monthly collection Although initially fast-moving political and peace on an average increased by over 20 percent process subsequently showed signs of losing track compared to the corresponding period of the and momentum, political leaders have shown grit immediately preceding year. The year closed and courage in fi nding acceptable solutions. In with revenue increase of 21.3 percent, which the meantime, the economy remained virtually was some 3 percentage point in excess of the in stagnation. No new major investments started targeted revenue collection. The revenue/GDP in the fi scal year ending mid-July 2007. There ratio in FY07 rose sharply to 12.2 percent from was some contraction in export sector. Overall 11.2 percent in FY06.
16 For the fi rst time in almost a decade, the capital The overall weekly growth rate in the last six expenditures of the government exceeded months has averaged well over 20 percent with 88 percent of the budget (Rs. 39.72 billion as the latest growth rate recorded at 26.9 percent. against the budget of Rs. 44.97 billion). The Government revenue performance not only average capital budget performance in the last indicates increasing administrative effi ciency ten years had never exceeded 75 percent of the and tax compliance, but also the rebound in budgeted amount. This was made possible by economic activities. aggressively targeting areas where spending could be accelerated and making quick in-year Capital spending for the current year has been adjustments. Substantial progress was made planned at Rs 55.26 billion, a rise of around 39 in a number of rural roads projects opening up percent over the actual spending of the preceding access to markets and opportunities. There was fi scal year. Cash-based capital expenditures huge pressure on current expenditure mainly reported until the third week of January 2008 has for strengthening public safety and security, been 57.5 percent higher than the corresponding providing compensation for families of the period last year. Work on major roads project victims of confl ict and rehabilitation of internally connecting district headquarters is at full speed. displaced people. The actual current spending, Nepal Electricity Authority has started work on however, was contained at 92 percent of the 30-MW Chameliya Project and construction budgeted amount (Rs. 77.12 billion as against the work of 14-MW Kulekhani III is expected to budgeted amount of Rs. 83.77 billion). This was begin soon. The preparatory work for 309- possibly largely due to prudential expenditure MW Upper Tamakoshi Project (expected to be management and also due to savings in interest optimized to 456-MW or higher) and 27-MW repayments (made possible because of currency Rahughat Project is going on in full swing. appreciation and generally low level of interest Accelerated capital spending this year by the in new debt instruments issued during the year). government and public sector undertakings in The actual interest payment on government the area of electricity generation/transmission borrowings was less by about Rs 1.7 billion and telecom services is expected to set the stage compared to the budgeted amount. for a higher growth rate in the next year.
FY07 ended with a treasury surplus of Rs. 3.12 The current expenditures of the government billion. Because of the responsible budgetary showed an upward trajectory at the end of operations even in a diffi cult situation, the fi rst quarter mainly due to election preparatory government was able to confi ne the fi scal defi cit/ expenses, which has now been contained at GDP ratio to 4.1 percent, though slightly higher a manageable level. Current expenditure this than the ratio of 3.8 percent in FY06. year was targeted 27 percent higher than the actual spending of last fi scal year, which is now Government’s outstanding debt liability, which growing at 24.8 percent until the third week of had amounted to Rs. 323.9 billion (domestic Rs. January 2008. 89.9 billion and foreign Rs. 234 billion) in mid- July 2006 declined by 2.5 percent to Rs. 315.9 Government’s treasury position is showing a billion (domestic Rs. 99.3 billion and foreign Rs. healthy surplus, although domestic borrowing 216.6 billion) in mid-July 2007. The outstanding increased sharply in the fi rst six months in order debt/GDP ratio fell from 50.1 percent (foreign to meet rising current expenditures then. Fiscal 36.2 percent and domestic 13.9 percent) in mid- position has smoothened during the latest four July 2006 to 43.9 percent (foreign 30.1 percent weeks due to acceleration in foreign assistance and domestic 13.8 percent) in mid-July 2007. disbursements and rising revenue.
The revenue growth for FY08 has been targeted In spite of prudence in budget management, at 18.2 percent over the previous year aiming recent developments have led government to at raising the revenue/GDP ratio to 13 percent. think about a supplementary budget sometime
17 before the close of this fi scal year. Three events, in domestic borrowing by government may not which were not foreseen at the time of budget be the prudent option. preparation, basically required government to make provision for additional expenditure. The In this context, the approach to fi scal management fi rst is the implementation of 23-point political during the rest of the year would comprise the agreement that allied political forces struck about following seven strategies: (a) being vigilant a month ago. The agreement makes it mandatory on budget operation and containing wasteful for the government to provide for, among others, expenditures; (b) meeting all expenditure payment of pending amount owed to the verifi ed requirements that are necessary for the success combatants and their eventual reintegration and of peace process; (c) meeting all expenses rehabilitation, repatriation and readjustment of necessary for free and fair conduct of the discharged combatants with the payment of their Constituent Assembly Elections; (d) accelerating due amount, rehabilitation of internally displaced public infrastructure-related capital spending persons (IDPs), managing the cantonments and both by the government agencies and public camps, relief and resettlement of the victims sector undertakings; (e) strengthening revenue of the confl ict and rebuilding of infrastructure. administration and controlling leakages so as to The second is the expenditures towards holding achieve maximum possible revenue growth; (f) free and fair Constituent Assembly Elections. mobilizing foreign assistance for expenditures Compromise in election expenditures is related to peace process implementation, and inconceivable. The third expenditure requirement (g) containing fi scal defi cit and domestic emerged due to massive dues of the Nepal Oil borrowing. Corporation to its supplier, which became the reason for disruption in petroleum supplies. Sluggish Economic Growth The petroleum prices were revised twice in a In the context of political transition and the gap of about two months in the second quarter related disturbances, Nepal’s economic growth of this fi scal year. People accepted the price rate in the recent years has remained low, rise in anticipation of unhindered supplies. The compared over time and also across the countries. third price rise recently met with massive public The deceleration in the growth rate has been protest, even as the supply situation was not the other feature of this period. As a positive improving. It has now become necessary for the development, it is now projected that the growth government to rescue Nepal Oil Corporation by rate in the current fi scal year will reach 4.5 giving it enough cash to discharge its payables percent, approximating the budget estimate of so that petroleum availability in the market could 5 percent, mainly due to the 5.2 percent growth be ensured. expected in the agriculture. The agricultural As mentioned above, the government has declared growth is attributed to the favorable monsoon, its intention of presenting supplementary budget with the paddy occupying 20.8 percent share in in the Parliament at an opportune moment in the agricultural GDP, estimated to grow by 16.8 the near future. As expenditure requirements percent. The non-agricultural sector is estimated become clear, the size of the supplementary to rise by 4.3 percent during the year. budget will be known. It may be possible to meet Regarding the low-growth situation in Nepal, a sizeable portion of the additional expenditure FY02 witnessed the lowest positive growth through budget savings in different sectors. (0.1 percent) during the entire period since FY Given the growth in revenue and also donor 1974/75 when the systematic compilation and interest in fi nancing some of the expenditures publication of the national accounts had started. related to peace process, pressure on domestic During the following period, the growth rate borrowing will not be that signifi cant. In view of became negative on two occasions, in FY 1979/80 liquidity crunch that some sub-sector within the (2.3 percent) and FY 1982/83 (3 percent). fi nancial sector is reporting lately, a further rise
18 In FY03, the fi rst year of the tenth fi ve-year plan, neighboring economies are rising almost at the growth rate was 3.9 percent followed by 4.7 double digits, it is dissatisfying to note that percent in FY04, 3.1 percent in FY05, 2.8 percent Nepal continues to suffer from such low-growth in FY06, and 2.5 percent in FY07. The growth rate syndrome. In a least developed country like during the fi ve years thus averaged 3.4 percent; Nepal, such constraints on growth would further lower than the low-case growth projection of the complicate the delivery of the socio-economic tenth plan (4.3 percent). During the fi ve years development outcomes for the large mass of prior to FY02 (namely, FY 1996/97 through the poverty-ridden populace including attaining FY01), the growth rate averaged 4.9 percent. The progress in the attainment of the millennium growth rate during the earlier fi ve-year period development goals. (FY 1991/92 through FY 1995/96) had averaged 5 percent. It may be observed that some sectors Monetary Sector posted impressive growth even in FY07. These sectors were housing, rent and business services Though the net foreign assets (NFA) of the (8.7 percent), fi nancial intermediation (8.6 banking system rose by a slower rate of 4.2 percent), transport, communications and storage percent in FY07 over the growth of 23.8 percent (8.1 percent), education (5.6 percent), health (5.2 in FY06, the growth of the net domestic assets percent), and other services (5 percent). (NDA) by 20.5 percent in FY07 over the 11.1 percent growth in FY06 resulted in a broad The recent growth performance looks bleak also money (M2) growth of 14 percent in FY07 in comparison to the global and the South Asian compared to its growth of 15.6 percent in FY06. averages. According to the World Economic The narrow money (M1) grew by 12.1 percent Outlook (October 2007, IMF), world’s output in FY07 compared to the growth of 14.2 percent growth during the four-year (2004-2007) period in FY06. averaged 5.2 percent. The emerging market and developing economies (per capita income up FY07 also marked some rise in the share of the to US$ 11,115) attained an average growth of private sector credit as percent of the outstanding 7.8 percent during the period. In Asia, China’s domestic credit, which reached 75.8 percent average growth rate was 10.8 percent. In South in mid-July 2007 from 75.5 percent in mid- Asia also, the average growth during the period July 2006. At the same time, the net claims on looked comfortable: 8.9 percent in India, 7.1 the government as a share of the outstanding percent in Pakistan, 6.3 percent in Sri Lanka, domestic credit remained at 21.7 percent in mid- 6.1 percent in Bangladesh, and 3.3 percent, the July 2007 from 22 percent in mid-July 2006. lowest, in Nepal. With the population growth However, the higher domestic credit growth estimated at 2.2 percent in Nepal, the average (16.7 percent in FY07 compared to the 11.7 annual per capita output during this period grew percent growth in FY 2005/06) along with the by 1.1 percent only. In contrast, the output per higher private sector credit growth (18.9 percent capita in all the emerging market and developing in FY07 compared to the 14.4 percent growth in economies grew at an average of 6.6 percent. FY06) could not be transmitted into the output expansion as desired as the GDP growth estimate The IMF projection of Nepal’s economic growth for FY07 signifi cantly squeezed to 2.5 percent for 2008 is not optimistic either. The emerging (agriculture 0.7 percent and non-agriculture 3.6 market and developing economies are projected to percent) from 2.8 percent (agriculture 1.1 percent grow by 7.4 percent. The South Asian economies and non-agriculture 4.6 percent) in FY06. So, are also expected to register respectable growth the credit expansion in relation to that of the rates in 2008: India 8.4 percent, Pakistan and previous year did not support output expansion. Sri Lanka 6.5 percent each, and Bangladesh 6 This signals the continued need for improving percent. The growth rate of China is projected the transmission of the fi nancial resources into at 10 percent. The projection for Nepal is still the real output. modest at 4 percent. In a situation where the 19 During the fi rst fi ve months of the current fi scal At the same time, there has been a higher year (mid-December 2007), narrow money and increment in the remuneration index. Salary broad money grew by 4.8 percent and 9.5 percent index rose by 6.3 percent and wage index rose respectively. Their corresponding growth rates by 10.9 percent (combined index by 9.8 percent) during the same period last year were 2.7 percent in FY07 as compared to the rise of salary index and 4 percent. During this period, time deposits by 0.3 percent and the wage index by 5.3 percent grew by 11.7 percent this year compared to the (combined index by 3.9 percent) in FY06. The growth of 4.6 percent last year. During the period, growth rate of GDP price defl ator was 6.3 the growth rate of domestic credit this year is percent in FY05, 6.4 percent in FY06, and 8.3 10.4 percent (last year 2.8 percent), private sector percent in FY07. credit 10.9 percent (last year 6.5 percent), and net claims on the government 4.8 percent (last During the fi rst fi ve months of FY08 (mid- year minus 11.1 percent). The net claims on the December 2007), consumer prices on an annual government as a share of the outstanding domestic average basis increased by 6.1 percent compared credit rose to 20.6 percent in mid-December to a rise of 7.6 percent in the corresponding 2007 from 19.0 percent in mid-December 2006. 12 months ending in mid-December 2006. For the FY08, the growth rates of narrow money National wholesale prices rose by 9.2 percent and broad money are currently projected at in mid-December 2007 compared to the rise 14 percent and 16.5 percent respectively. The of 8.4 percent in mid-December 2006. Point- banking system’s domestic credit growth and wise, consumer price index during the fi rst fi ve the private sector credit growth are projected at months rose by 5.7 percent compared to the rise 18.3 percent and 19.1 percent respectively. The of 7.3 percent during the same period last year. BOP position, which went negative in the fi rst The point-wise wholesale price index during few months of FY08, has recently improved this year rose by 6.1 percent compared to the and projected to remain in surplus for the entire rise of 8.9 percent in the corresponding period year on the assumption of the availability of the last year. Point-wise, the salary and wage rates foreign assistance as estimated in the budget. in mid- December 2007 showed a rise of 8.0 These projections are in conformity with the percent (salary index 10.9 percent and wage rate requirements for a framework that supports index 6.9 percent) over the combined growth of economic growth without compromising 10.2 percent in mid- December 2006. The price macroeconomic stability. rise in the POL products in the fourth and the fi fth month of this fi scal year is expected to raise Price Situation the infl ation projection by one percentage point. The projection for this year’s rate of infl ation is During FY07, the price situation continued to thus adjusted to 6.5 percent. However, the price exert pressure, though reduced from the previous expectation may not be realistic in the context of year’s level. Supply factors and constraints in need for further petroleum price rise and rising supply management at times threatened the goal food prices globally. of price stability. As measured by the consumer price index, the average price rise during FY07 External Sector reached 6.4 percent. The rate of core infl ation at 6 percent in FY07 as compared to the 4.5 During the fi rst nine months of FY06, trade percent in FY06 indicated that the items other defi cit had risen by 29.1 percent. During the than the rice and rice products, vegetables, fruits, same period in FY07, the trade defi cit rose by energy and transport also played a prominent 13.3 percent. Tourism earnings during the nine role in maintaining the infl ation at 6.4 percent. months of FY06 had decreased by 16.9 percent. The growth of wholesale price index in FY07 The tourism earnings rose by 3.2 percent during averaged 9 percent, similar to the 8.9 percent the same period in FY07. Foreign exchange rise in FY06. reserve rose from US$ 2.1 billion in mid-July 2006 to US$ 2.5 billion in mid-July 2007.
20 During FY 2006/07, export in the Rupee terms 2007 and the merchandise import capacity of the rose by 0.9 percent as compared to the growth of reserve fell from 11.4 months in mid-July 2006 2.6 percent in FY 2005/06. However, due to the to 10.3 months in mid-July 2007. In US$ terms, Rupee appreciation vis-à-vis the US dollar, the however, the forex reserve rose by 14.3 percent aggregate exports in US dollar terms rose by 3.9 to US$ 2.5 billion in mid-July 2007 compared to percent. Major export commodities to countries the growth of 20.6 percent to US$ 2.2 billion in other than India, such as, ready-made garments, mid-July 2006. However, the comfortable level woolen carpets, and Pashmina, declined by 16.1 of foreign exchange reserve despite the reduced percent, 4.1 percent and 41 percent respectively BOP surplus implies that there are no immediate during FY 2006/07. As a result, the export/import risks and vulnerabilities affecting the external ratio fell to 31.7 percent in FY 2006/07 from 39.3 sector stability of the economy. percent in FY 2004/05. The share of export in total trade fell from 28.2 percent in FY 2004/05 During the fi rst fi ve months, trade defi cit rose to 24.1 percent in FY 2006/07. The export/GDP by 5.7 percent in FY08, 15.7 percent in FY07, ratio came down to 8.4 percent in FY 2006/07 and 28 percent in FY06. During this period, from 10 percent in FY 2004/05. Accordingly, the the current account balance came down from trade defi cit/GDP ratio rose from 15.4 percent in a surplus of Rs.1.0 billion in FY06 to a defi cit FY 2004/05 to 18.2 percent in FY 2006/07. of Rs. 43 million in FY07, and a defi cit of Tourism receipts in FY 2006/07 rose by 6 percent Rs. 542.3 million in FY08. The net transfers over an 8.7 percent decline in FY 2005/06, (grants, workers’ remittances, pensions, and signaling some recovery in this sector. The Indian excise refund minus the debit payments tourism payments increased by 32 percent in in such items) during the period rose from FY07 compared to a rise of 23.4 percent in FY06. Rs. 45.3 billion in FY06 to Rs. 51.4 billion in One new development with respect to tourism FY07 and Rs. 58.7 billion in FY08. The tourism since FY06 has been the negative fi gure of the earnings during this period rose by 67.2 percent net tourism earnings, refl ecting the excess of the in FY08 compared to the declines of 3.5 percent tourism payments over the tourism receipts. The in FY07 and 23.4 percent in FY06. Net tourism negative earning amounted to Rs 5.7 billion in earnings during this period amounted to Rs 0.9 FY07 (receipts Rs. 10.1 billion and payments billion (minus) in FY06, Rs. 2.7 billion (minus) Rs. 15.8 billion) from a negative Rs 2.4 billion in FY07, and Rs.1.6 billion (minus) in FY08. (receipts Rs. 9.6 billion and payments Rs. 12 The number of tourists in 2007 exceeded half billion) in FY06, implying excess of outfl ows a million and nine new international airlines over infl ows in this sector. started operation during the year. Workers’ remittances during this period increased by 17.6 The BOP surplus narrowed down in FY07. The percent in FY08 to Rs. 47.4 billion compared to BOP surplus in FY06 was Rs 25.6 billion, which a growth of 9.5 percent in FY07. BOP surplus fell to a surplus of Rs 5.9 billion in FY07. The during the fi ve months in FY08 was Rs. 24.1 contraction in the BOP surplus resulted from the million compared to the corresponding periods’ reduction in the current account surplus which surpluses of Rs. 5.8 billion in FY07 and Rs. 5.7 was mainly attributed to the reduced growth in billion in FY06. Foreign exchange reserve rose the current transfers. The workers’ remittances from US$ 1.89 billion in mid-December 2005 rose by 2.5 percent to Rs 100.1 billion in FY07. to US$ 2.39 billion in mid-December 2006 and Despite the BOP surplus, the offi cial foreign US$ 2.61 billion in mid-December 2007. These exchange reserve in the domestic currency terms reserves in mid-December of 2005, 2006 and in mid-July 2007 saw zero rise, compared to the 2007 were suffi cient to fi nance the respective growth of 27 percent in mid-July 2006, due to year’s merchandise and service imports for 8.2 the appreciation of the domestic currency. The months, 9.0 months, and 8.0 months. reserve remained at Rs. 165.1 billion in mid-July
21 III. Challenges deterioration in investment climate, brought disruptions in the revival of tourism industry Nepal today is undergoing political and social and, most importantly, eroded public confi dence transformation of far-reaching implications. in government. Without properly tackling this It is not quite certain what direction will this challenge, any economic reform program or transformation take, but one thing is clear: accelerated government investments will not be people want more economic and political producing desired results. power at the local level. The eleven-year long confl ict had many human casualties, caused Unemployment/Underemployment damage to economic growth and private-sector investment. However, it exposed many of the Unemployment has been a serious challenge social anomalies, increased mass awareness and to economic and social life. On the one hand, empowered people. People want change and economy has not been able to generate adequate they want it quickly. Much of what they want is employment opportunities for people entering about change in their livelihood and they expect employment market every year (estimations show government to be partner in their quest for that some 300,000 people enter employment economic progress. It is in this search for better market every year). On the other, whatever government that the issue of federal structure is employment opportunities are available is under debate. It is about how economic resources accessible to only already privileged category of are used and how it better serves people. It is people. There are primarily two reasons for this: not only about political space but also about fi rstly, lack of transparency in the recruitments economic space. The challenges that Nepal is done by private sector and in some cases even by facing today, therefore, need to be analyzed in the public sector (people enter public corporation this perspective and future course defi ned. through contractual appointments initially and later get permanent appointment through closed Rising aspirations and perceived weakness competition); secondly, due to differential levels of government of education and upbringing, youths from a large segment of society cannot stand up to the People want quick solutions to everyday problems competition. they are facing and they think government hears them only when extreme measures, such as Underemployment is rampant in rural areas road blockade or civic disruptions, are adopted. where people mostly draw their livelihood Oftentimes, a demand by one group of people from agriculture. Agriculture employs about 78 contradicts with the interest of other group/s. And percent of the workforce (of which, 67 percent when demand of a group is met, the other group are the farmers with some land and 11 percent emerges with even stronger protest program to are landless farm laborers), while it generates do otherwise (a case in point was the demand of about 33.1 percent of GDP. Clearly, agriculture temporary teachers to be granted special package productivity is very low. for their permanent appointment without passing through the rigors of recruitment that was The unemployment problem is further conceded when Education Bill was passed by aggravated by extremely protective labor law the Parliament but was subsequently vehemently that discourages relatively riskier investments opposed by the University students who thought by entrepreneurs. Established business houses their opportunity for employment was robbed by and industries do not think of short-term dead-woods). Phenomenon like this has become expansion and then contraction when market everyday affair, and helpless public feels that the is down, because if they hire laborers for short- government is virtually non-existent. term expansion it becomes extremely diffi cult for them to fi re when the business is down. Such activities have threatened public safety, Investors are, therefore, very cautious in both distracted peace process, contributed to new investments and expansions, which they do
22 so only when they are sure that business will not Poor infrastructures face serious problem in the foreseeable future. Eleven district headquarters are not yet connected Widening income gap by motorable roads. Many district headquarters in the hills have motorable road connection which, Nepal living standards survey 2003/04 had one however, is operable only during fair weather. good thing to report—that the poverty level went Poor road connectivity has been the biggest down from 42 percent to about 31 percent. But bottleneck to the equitable development of rural the unpleasant part is that the Gini coeffi cient areas and this has contributed to the feeling of went up from 0.34 to 0.41 indicating widening exclusion from the national mainstream. gap between rich and the poor and, at the same time, rural-urban disparity increased. Income In remote areas, airline services have also not inequality, if not addressed in time, could fuel been reliable due to the poor condition of airport another social discontent. facilities.
Access to fi nance and market Electricity supply is available to only about 48.5 percent of the total population (with some Economic liberalization of the last decade had 2100 VDCs having some form of electricity tremendous impact on the growth of banking supply on a limited scale). The country has been and fi nancial sector more than any other experiencing power shortage since the fall of sector. The number of banking institutions 2006, which is expected to continue until year has increased so has the quality of front-offi ce 2013 if projects in pipeline or under construction services. This expansion has, however, catered complete as planned without any hindrance. to the needs of urban and formal sector. Banking This kind of energy crisis is going to hit Nepal’s network in the rural areas has narrowed in the growth expectation and additional industrial last ten years and at the same time micro-fi nance investment. Already, manufacturing industries institutions operating in the rural areas under are worst hit due to power outages. Grameen-replicators, co-operative or other self- help format are constrained due to the absence After the liberalization in telecom sector, Nepal of reliable wholesale fi nancing. Agricultural has made good progress in improving tele- Development Bank remains the only bank that density. The latest report says that tele-density directly addresses the needs of small farmers/ has improved to over 10 percent from as low as entrepreneurs in the rural areas. As a result, a 4 percent in the beginning of tenth plan period. large section of rural population still depends Some 3000 VDCs have some form of telephone upon informal sector for their fi nancing needs. connection in a limited scale. There are instances Limited access to fi nance has been one of the that villages with better telephone service have reasons for the low growth of small and medium been able to achieve higher productivity of their enterprises in the rural areas. inhabitants, because telephone provides quick and real-time connection with the markets. While there is limited access to fi nance, rural farmers in many areas also have limited access to Rehabilitation and Reintegration market due to transportation diffi culties. Along with the diffi culty of physical movement, there is Due to armed confl ict, many people were a tremendous degree of information asymmetry. displaced from their place of habitat and Right information is the key to getting good their means of livelihood uprooted. After the prices for the produces that rural farmers Comprehensive Peace Accord last year, displaced and entrepreneurs have. Right information at people are returning to their homeland. Not all appropriate time also helps producers in choosing have returned, but the situation is improving. the right product for production. These people need fi nancial and moral support in order for them to reestablish in their occupations.
23 The magnitude of assistance and support to be in containing the numerical growth (which Nepal provided is not yet known fully, but the task of Rastra bank tried once with a sort of moratorium reestablishing them all is certainly not easy. on new licensing). When qualifi ed applicants seek licenses, it may be against open market and Eleven-year long confl ict also left thousands liberalization policy to stop new entrants into of families with human tragedies. The exact the market. This situation, therefore, demands picture is not available, but many of the families stronger regulatory environment and, at the same lost the main person earning livelihood for the time, encouragement for banks and fi nancial family. Many children have become orphans. institution to go for merger and acquisition. Rehabilitation of such people is a challenging task as fi nance alone will not help. They have Reforms in government-owned commercial and gone through horrifi c times and mental recovery development banks have not yet completed. We from such shock needs special human care. cannot foresee any relaxation in the process and pace of reforms taking place in these There are about 19,000 Maoist combatants in institutions. the cantonments waiting to be integrated into some form of mainstream services. The recently Nepal’s capital market is in a nascent stage, but it signed 23-point political agreement requires is developing as a place for raising capital for large government to arrange for their integration enterprises. Recently, market rose drastically. It in a manner outlined in the said agreement. has been noticed that the market does not have These people may need proper training and adequate fi nancial instruments for price stability orientation before any integration is done. At to take place and earn investors confi dence. It the same time, some 4,000 out of 6,000 or so was in this perspective that government decided disqualifi ed combatants are to be discharged to offl oad some of its holding in Nepal Telecom from the cantonments. Letting them go off with in the secondary market. This, along with the just few thousand Rupees of allowances is not proposed new bond issue by Nepal Electricity going to solve the problem. These people need Authority (NEA), will provide suffi cient to be provided with opportunity for education or investment opportunity in the capital market. The training of their choice. Perhaps, in some cases, recent move by the government and NEA will they may need support to start a new vocation. have two good things: (a) Public corporations will from now on need to be accountable to the Maintaining stability and growth of the ordinary shareholders/debt-holders, which will fi nancial market press them to be fi nancially better managed and produce better fi nancial results. (b) Capital Healthy fi nancial sector is important for overall market will gain depth, width and maturity economic growth, especially the growth of creating ground for major investments being manufacturing, tourism, hydropower and service fi nanced from public issues. Capital market sector. Some progress has been made in fi nancial has proper regulatory and legal environment. sector reform that is being implemented for some However, the regulatory environment needs to years now. The task is not yet complete. In the be functional and effective. This is where the fi rst place, much of the banking sector suffers challenge lies. Sound capital market is necessary from poor loan portfolio. Big and infl uential for accelerating investments in hydropower and borrowers who, in spite of their asset base, have manufacturing sector. willfully defi ed banks’ call for repayment or restructuring the loan. In the recent past, some Macro-economic stability action was taken on a few of them. It seems that desirable results are not yet coming. Investment climate in general deteriorated and economic growth suffered, but Nepal did not face A number of new banks and fi nancial institutions any serious problem during the fi rst fi ve years are being set up every year. There was diffi culty of this millennium when the armed confl ict had
24 intensifi ed. This was possible in many ways due made some structural changes, including hiring to government’s ability in maintaining macro- additional hands. Three issues are important to economic stability. Targeting public expenditure make police force effective in its role as law and prioritization, adopting multi-year approach enforcement agency: (i) Proper orientation to to budgeting, maintaining discipline towards all police offi cials in their expected role towards fi scal defi cit, containing infl ation and maintaining people, i.e., changing the mentality from a comfortable level of foreign exchange reserve “serving the rulers” to “serving the people”; were key components in achieving macro- (ii) Equipping police force with means of economic stability. quick communication and mobility including expanded use of information and communication As sustainable peace is within sight and many technology; (iii) All new recruitments into police Nepalese have high hopes of a new Nepal, force to be made inclusive (this is necessary as macro-economic stability is even more important people should feel that police force is not from a to ensure sustained, high economic growth. different ruling class, which is not their own) Macroeconomic stability will increase investor confi dence in the economy, which is the necessary The other aspect of law enforcement is the condition if we aim to attract additional new capacity of government in defending the cases investments so essential for achieving a higher in court of law. This aspect was virtually economic growth. ignored in the past. Legal defense capacity of government needs a serious overhauling. This IV. Road Ahead requires a close coordination between police and government attorneys and their capacity to The road ahead, in the current context, needs collect and present evidence in favor of the cases to address the above challenges. First and that the government fi les. foremost, of course, as outlined in precise terms in the three-year interim plan, is restoring public Improvement in law enforcement capacity of the confi dence in the government. Voices are often government can help build public confi dence in heard that there is a situation of “statelessness” in government. many cases or there is the absence of state. There may not be clarity in what these voices mean, Reengineering government front-line offi ces: but one thing is clear that public confi dence in Much of the public, or for that matter investor government’s capacity to govern has seriously or business community, is frustrated with eroded. This is not a good situation and needs government, because its front-line offi ces are to be corrected. We must be mindful that during not client-friendly. Howsoever good the policy- times of massive transformation, as the one that making institutions or ministries may be, unless Nepal is currently traversing, uncertainties are there’s delivery at the local level, the governance bound to prevail in some cases. But this should will always be considered poor. It is, therefore, not happen in everyday life. In this context, the necessary to continue and intensify the process fi rst and foremost task ahead which needs to of reengineering front-line offi ces which has be done without losing time is improving and started in a small scale in some sectors. The core strengthening governance. Other challenges component of this should be the following: also need to be addressed systematically through • Examining all procedures and eliminating policy reforms and actions. This paper will now those that are not necessary, deal with what needs to be done in the immediate future. • Examining all paperwork and reducing as much as possible, Improving governance • Introducing information technology and web- Improving law enforcement capacity: Nepal based services in government offi ces where Police and Armed Police Force have recently mass public contact takes place every day,
25 • Making public hearing and citizens’ charter a ignore the following two issues: (a) ensuring necessary component of governance, labor welfare, and (b) arriving at a consensus among workers and employers. • Introducing public satisfaction reporting as a component of performance appraisal of • Trade facilitation: The customs reform is concerned employees. an ongoing agenda which is moving with the objective of trade facilitation. A new Customs Devolution of activities to local governments: Act that incorporates many of the good practices This is without doubt a better alternative to direct in customs administration as recommended delivery by central government agencies. Local by the World Customs Organization and WTO governments will exist no matter what form of will be in enforcement very soon. In addition, state restructuring that the new constitution will the following components of trade facilitation prescribe. Therefore, it is necessary that the pace are at varying stages of implementation and of devolution is not slowed. will be pursued without any compromise: (a) improving customs infrastructure that is Improving investment climate good for fast clearing of the consignments; Accelerated public and private sector (b) reducing steps and the related paperwork; investment is necessary to increase employment (c) minimizing human interface with the opportunities and, at the same time, address the introduction of new ICT infrastructure; (d) underemployment problem of rural areas. While extending offi ce hours for customs clearance public investment needs to be channeled to with the provision of attractive incentive developing and maintaining economic and social scheme for employees. infrastructures, private sector investment will go Customs reform will help minimize time and cost to places where there is good return. Private- in international trade, but there is a high cost for sector’s expectation of good return on their trade due to internal barriers, such as, (a) frequent investments must be respected in the fi rst place. blockage of highways as people use them to exert This is a pre-condition. At the same time, there should be a proper investment climate where pressure on the government, (b) road barriers private sector (both domestic and foreign) feels by local government for the collection of local comfortable risking its investments. In order to taxes. Both of these have been made illegal, but improve investment climate, government will enforcement has not been effective. This is an need to pursue the following agenda: agenda that enforcement agencies need to pursue in the immediate future. • Labor reform: Excessively protective labor • law works to the advantage of only the existing Tax policy and administration: Nepal has labor force in the formal sector and constrains made tremendous progress in instituting the growth of formal sector. When due to a better legal environment for internal tax poor investment climate new enterprises are administration. With view to improving not set up, new job creation is minimal. More investment climate, loss carry forward importantly, due to the lackluster growth provision under the Income Tax Act was of formal sector, hundreds of thousands of extended to seven years for all businesses and workers would have to seek jobs in riskier and twelve years for businesses in infrastructure lowly-paid informal/household sector. Labor projects with effect from the current fi scal law that is fl exible in relation to hiring and year. The self-assessment regime in Income fi ring and one that makes exit from business Tax is working well and efforts are underway easy would attract more investments in the to make audits more transparent to taxpayers, economy. Labor law reform, therefore, needs wherein tax offi cers will be answerable why to be pursued vigorously. However, it must revisions were found necessary in the self- be understood that this reform should not assessment declarations.
26 Large Tax-payer Offi ce has recently prepared barriers to exit will be systematically comprehensive audit manual in collaboration examined and reforms introduced. with advisors from the IMF. This will further improve the quality of tax audits. • Skills improvement: Businesses require skilled human resource for their effi cient Many businessmen complain that tax clearance operation. As long as the workers’ productivity certifi cate is made mandatory even in places in Nepal does not improve, Nepal could where its requirement is not apparently necessary, hardly become attractive destination for thereby increasing cost and hassles to the foreign investors. The government is paying businesses. Provision of tax clearance certifi cate due attention to skills improvement program. is defi nitely good for ensuring tax compliance; The skills for employment program will target however, its issuance procedure and production both domestic and foreign market needs. requirements need a review. This will be done in Three new polytechnic institutions will start the immediate future. offering technical training in the near future. The government needs to scale up skills Improvement in local government taxation and training activities addressing both the quality its administration is an ongoing agenda. This and quantity dimensions. will be done with a view to harnessing more revenues for the local governments and, at the • Easing the restrictions on investments same time, ensuring that businesses do not face abroad: This may not truly sound as unnecessary hardship. promoting domestic investments. However, that is not the case. As investors feel less • One-stop services for potential investors: restriction on investing outside whenever Government has promised to create an there are good opportunities available, they autonomous and high-powered Investment will feel comfortable investing in Nepal. In Board, which will provide one-stop services view of this, government has recently drafted to potential investors. Efforts will be made to a new law intending to repeal the current law reduce the average number of days required that places severe restriction on investments for setting up a new business. Closely allied abroad. to this is the requirement of different types of permits and licenses by different agencies. Reforms in job market Problems created by such provisions will be reviewed and unnecessary requirements Mandatory public information for new eliminated. Wherever permits are necessary recruitments: Barring central government and for environmental or public safety concerns, public corporations, the entire organized private the procedures will be simplifi ed. sector including public limited companies are least transparent in their recruitments. Job • Easing the barriers to exit: Secured market must at least ensure “equal opportunity Transaction Act was promulgated with a for equally competent people”. This has not been view to enabling lenders exit quickly from the norm in a sizeable portion of job market. their bad loans, among others. The Act to Therefore, it is necessary that all recruiters in be in operation requires a Registry Offi ce, formal sector be required to make information on which has not been created yet. It would be job vacancies available publicly and recruitments done soon. Perhaps most important for quick based on competitive process that is transparent. exit from a loss-making business is proper If it adds to the cost for recruiting businesses, insolvency procedure. It was for this reason then the government can provide free-of-charge that the Insolvency Act was promulgated. forum for job advertisements. The Company Registrar’s Offi ce has been designated as Insolvency Administration Ensuring compliance to social inclusion in Offi ce and has become operational. Other recruitments: Uneven access to economic
27 opportunities is not the problem of government adds substantial value to rural economy and can alone. It is a larger social problem which affects also generate additional employment. There every sector. That is why, there is a widespread are different schemes that the government runs frustration among different communities which through Cottage and Small Industries Department is sometimes refl ected violently. This needs to and other agencies. Agencies such as PAF could be addressed by all collectively. Government also be involved in promoting market-oriented has recently come up with inclusion program SMEs in the rural areas. in its recruitments for civil, police and teaching services. It is also being expanded to the public Focus on non-timber forestry product corporations. This is not going to be enough. potentials: High hills and the Himalayan region Private sector and non-government sector also possess potential for the commercialization need to be inclusive in their recruitments. It is, of non-timber forestry products. Extraction therefore, necessary to forge a new consensus on of plants like Yarchagumba has been rampant social inclusion in job market while, at the same and ill-organized in the recent years. There are time, ensuring entry of quality human resource other high value plants that could be harvested. that the private sector may ask for. The future orientation of Ministry of Forest Addressing rural under-employment and and Soil Conservation should be on how these riches could be harnessed for the benefi t of local creation of employment opportunnities communities. Commercialization of agriculture:This Interim measures for short-term employment is the quickest way to addressing rural creation: In order to create short-term underemployment. Structural change in rural employment opportunities in the rural areas, employment through workers’ transfers to other public works program using community sectors takes a little longer time and requires implementation modality will be scaled up different skills level. Currently, a few projects with additional resources transferred directly to under the government are addressing this, along communities. with one-village-one-product (OVOP) scheme in major road corridors. Such programs need to Reform in rural fi nance and other be scaled up. infrastructures Improving market access and imparting The Agriculture Development Bank will continue marketing skills to farmers: Market access and expand its rural portfolio. The ownership and fi rstly requires road infrastructure that connects management of major Rural Development Banks producing pockets with consumption centers. But more important than this is the institutional have been made more responsive to the local framework and storage facility that helps pooling needs. Comprehensive Micro-Finance Policy, produces of small producers. Co-operative which will defi ne the regulatory framework for framework has been showing good results in micro-fi nance institutions, has been worked out dairy and coffee producing areas. It has also and will be announced soon. been experimented with success in Junar (sweet orange) producing areas through OVOP program. As micro-fi nance institutions do not have reliable Programs run by Poverty Alleviation Fund (PAF) wholesale lending institution, a National Micro- and non-government organizations need to focus Finance Fund will be established. on these activities along with imparting pricing and marketing skills to farmers. Rural access improvement has been the priority of the government and will continue to be so. Supporting agro-based SMEs: A little primary Community approach to implementation will processing using locally-manageable technology be the modality for rural roads construction
28 and maintenance. Critical airports in the remote The government has already declared the districts will be upgraded. intention of corporatization and privatization of Nepal Stock Exchange. This will be implemented One of the objectives of telecom sector reform and the regulatory capacity of Securities Board program has been expanding the rural telecom will be strengthened so that the capital market coverage. Telecom service providers are operates effi ciently. encouraged and supported to expand their network in all rural areas. Macro-economic stability
Infrastructure improvement As macro-economic stability is the core mantra of the government for accelerating overall Roads connecting district headquarters have been economic growth and development in the country, accorded highest priority in budgetary allocation reforms in budget preparation, implementation, and implementation. The government has set the and monitoring will continue as the priority objective that all the district headquarters will focus of the fi scal policy. MTEF process will be connected by motorable roads within the next be further strengthened and spending agencies three years. will be made accountable for the development results. Borrowings and fi scal defi cit will be Electricity generation capacity needs to be contained to a desirable level with the continued expanded. For this reason, the government is thrust on the mobilization of increased amount encouraging private sector to initiate projects. of revenue. The focus of monetary operation For proper regulation in this sector, a new will be on containing the infl ation at the desired Electricity Act has been drafted and new law on level. Electricity Tariff Board has been proposed. New in-country and cross-border transmission lines Improving public fi nancial management are being planned and implemented. and fi nancial accountability system
Rehabilitation and reintegration First phase of public procurement reforms have successfully been implemented. It has now This is an important agenda before the government become necessary to enhance procurement and adequate funds are being provided for this skills in whole of government through training purpose. programs and publication of manuals. Public Procurement Management Offi ce is working Maintaining growth and stability in the in this direction. Reform in public fi nancial fi nancial market management system is a continuing process for which areas of weaknesses have been identifi ed The fi nancial sector reform is a continuing and future reform will focus on correcting agenda. However, some of the core components them. of this reform, such as action against willful defaulters, preparing government-owned banks as fi t and proper candidates for privatization have not yet been completed or not bearing desired results. This will continue to remain as a priority of the government.
The performance of Debt Recovery Tribunal will be reviewed and necessary measures will be undertaken to strengthen it.
29 Some Observations on the Recent Fiscal Performance and the Reform Process in Nepal
Tula Raj Basyal*
Introduction with structural defi ciency in transparency, accountability, commitment and dedication for As evident to all, Nepal’s socio-economic the people characterized the period just before development structure has remained under- the second popular uprising when the democratic developed and the development outcomes process was stalled. The revenue mobilization modest. At the same time, Nepal is moving and resource utilization aspects were not moving through a period of political transition which smoothly. The weekly central treasury position needs to be brought into normalcy soon for as on April 28, 2006 compared to the same ushering in an environment that would open up period in the previous year showed a 3.1 percent the opportunities for faster economic growth negative revenue growth. trajectory like the one that Nepal’s neighbors have been experiencing over the years. There Besides the weakness in the revenue is the need to appropriately and timely address mobilization, the expenditure side was not well- the problems and challenges facing Nepal’s directed and coordinated although the pressure economic development efforts for attaining on the recurrent expenditure then was low success in ensuring reasonable standards of compared to the period that followed. Despite living for the people in general on a sustained the increment in the foreign cash grants by 70.7 basis. Priority accorded to the economic percent to Rs. 7.1 billion, foreign cash loans by development agenda will enable us to overcome 81.5 percent to Rs. 2.8 billion, domestic loans the challenges and attain the development goals. by 84 percent to Rs. 7.1 billion coupled with the Despite the immense diffi culties associated 4.1 percent decline in the principal repayment with the transition, it is satisfying to note that to Rs. 7.7 billion, the capital expenditure as on the fi scal performance and stance of Nepal’s April 28, 2006 compared to the same period in macroeconomy has not only been encouraging the previous year could only rise by 31.5 percent but also moving in the right direction. to Rs.10.1 billion.
The Record Since May 2006, revenue mobilization efforts were strengthened, resulting in the mobilization The people’s movement of March-April 2006 of 34.6 percent of the annual revenue during the followed the reinstatement of the House of remaining two and a half months of the fi scal Representatives on April 24, the swearing-in year compared to the corresponding fi gure of of the Prime Minister on April 30, 2006, and 30.5 percent in the previous year. Accordingly, the formation of the Council of Ministers on the annual revenue mobilization for the FY May 2, 2006. An unpredictable environment 2005/06 posted a 3.1 percent rise.
* Senior Economic Advisor, Ministry of Finance.
30 For the FY 2005/06, the revenue mobilized 89.9 billion and foreign Rs. 234 billion) in mid- had amounted to Rs 72.3 billion. The target for July 2006 declined by 2.5 percent to Rs. 315.9 FY 2006/07 was Rs 85.4 billion, an increment billion (domestic Rs. 99.3 billion and foreign Rs. of 18.1 percent over the previous year’s 216.6 billion) in mid-July 2007. The outstanding realization. The revised estimate of the revenue debt/GDP ratio fell from 50.1 percent (foreign for the year was Rs. 86.1 billion. The actual 36.2 percent and domestic 13.9 percent) in revenue mobilized during FY 2006/07 not only mid-July 2006 to 43.9 percent (foreign 30.1 surpassed the original target but also exceeded percent and domestic 13.8 percent) in mid-July the revised estimate, and aggregated Rs 87.7 2007. The progress made in the mobilization of billion, an increment of 21.3 percent compared resources through revenue and foreign grants and to the 3.1 percent growth in FY 2005/06. So, the the control in the growth of the fi scal expansion FY 2006/07 remained the record year in that the could be regarded as a very welcome step on the actual revenue mobilized exceeded the revised public fi nance front. estimate for the year. Likewise, the revenue/ GDP ratio in FY 2006/07 rose sharply to 12.2 Regarding the situation for the current FY percent from 11.2 percent in FY 2005/06. As 2007/08, the capital expenditure compared with per the revised estimates of the budget, foreign the revised estimates for FY 2006/07 has been grants witnessed a growth of 15.3 percent to Rs targeted to grow by 51.9 percent. The target for the 16 billion in FY 2006/07 compared to a decline revenue growth is 18.2 percent and the revenue/ of 3.9 percent in FY 2005/06. GDP ratio is 13 percent. The fi scal defi cit/GDP ratio is expected to remain below 5 percent. The In FY 2006/07, speedier expansion of the budget for FY 2007/08 has given special focus recurrent expenditure and the capital outlays on the targeted programs and activities aimed at resulted in the growth of the total expenditure reducing the poverty level in the country. A total at a rate (18.9 percent) higher than the previous of Rs.51 billion has been earmarked for programs year’s (8.1 percent). However, the rise in the like the rural infrastructure, capacity and income non-debt resources (revenue and foreign grants) enhancement, assistance for the local bodies, by 18.6 percent in comparison to their lower people’s participation-based programs, social growth at 1.9 percent in FY 2005/06 resulted in security, etc. that have the potential to directly the fi scal defi cit growth of 20.1 percent in FY contribute to the objective of poverty reduction. 2006/07 compared to the rise of 37.3 percent in Compared to the allocation for FY 2006/07, the FY 2005/06. To meet the expenditure needs as allocation for education has been increased by well as the issue calendar targets so as to help Rs. 5.4 billion to aggregate Rs. 28.4 billion. improve the resource management and fi nancial Health sector has been allocated Rs. 12.2 billion, market conditions, the domestic borrowing Rs. 2.9 billion more than that allocated in FY amounted to Rs 17.9 billion. There was a treasury 2006/07. surplus of Rs 3.1 billion in mid-July 2007 in comparison to the overdraft of Rs 1.1 billion in The revenue growth rate till December 28, 2007 mid-July 2006. has remained 22.3 percent compared to the 14.3 percent growth in the corresponding period of the Because of the responsible budgetary operations previous year. On the basis of cash transactions, even in a diffi cult situation, the government was total budget expenditure till December 28, 2007 able to confi ne the fi scal defi cit/GDP ratio to 4.1 increased by 42 percent compared to the 9.4 percent in FY 2006/07, though slightly higher percent growth during the same period last year. than the ratio of 3.8 percent in FY 2005/06. During this period, the growth of the recurrent Government’s outstanding debt liability, which expenditure has been 24 percent and the capital had amounted to Rs. 323.9 billion (domestic Rs. expenditure 105.9 percent. The growth rates
31 during this period last year were recurrent relief and rehabilitation needs, constituent expenditure 8.3 percent and capital expenditure assembly elections, cantonment management 17.5 percent. Principal repayment increased by for the Maoist combatants, and increment in 109.4 percent compared to its slower rise at 9.2 the remuneration of the employees. Despite the percent last year. Foreign cash grants decreased rising expenditure requirements, the government by 39.6 percent compared to a growth of 118.4 is committed to maintain the fi scal defi cit at percent last year. Borrowings increased by 58.3 around fi ve percent of the GDP. The overall percent (domestic 79.8 percent and foreign 23.5 indicators on the government fi nance have percent) compared to the last year’s growth of remained at a manageable proportion, a testimony 34.8 percent (domestic 68.4 percent and foreign to the government’s serious commitment and minus 4.8 percent). responsible stance in resource mobilization and fi scal prudence. During the past 17 months since mid-August 2006, overdrafts in the central treasury position Reform Process have occurred in two instances only —mid- October 2006 and mid-October 2007. For the Despite the diffi cult environment, fi scal reforms rest 15 months, there were cash surpluses, which are being carried out with an urgent priority had reached the highest level of Rs. 14.9 billion while the past reform initiatives are being in mid-March 2007. Even the overdraft fi gure of strengthened. As regards fi scal transparency, Rs. 3.6 billion in mid-October 2007 was within the government is committed to implementing the ceiling as fi xed by the Nepal Rastra Bank the IMF recommendations made recently as Act 2002, i.e., fi ve percent (viz., Rs. 4.3 billion) part of the technical assistance to improve of the previous year’s adjusted revenue of the public fi nancial management and in the fi scal government (Rs. 86.5 billion), The treasury transparency module of the Report on the position as on December 28, 2007 shows a cash surplus of Rs. 0.2 billion. Observance of Standards and Codes (ROSC). These include broadening the coverage of fi scal The government has intensifi ed its efforts on reporting, progressive reduction in the off-budget revenue mobilization. The continued emphasis funds, and improvements in cash management on improving the different tax areas will help through the introduction of a treasury single improve the tax realization while the divestment account. Public Procurement Regulation and of 15 percent share capital of the government in Travel Expenditure Regulation have already the Nepal Telecom will raise the non-tax revenue. been implemented. Steps have moved forward The budget’s target for revenue mobilization is, for establishing commercial benches in the six therefore, expected to be met. The government courts. feels that the budget projections of the foreign grants (Rs 27.5 billion) and foreign loans (Rs The Large Taxpayer Offi ce (LTO) has conducted 17.4 billion) will be met with the goodwill and the comprehensive audit of the large tax-payers. growing commitments of the donor community. The LTO will further improve its operations by The government also believes that the capital adopting a risk-based methodology for audit. outlay should not be disturbed, especially in the The parliament has approved a new, overhauled environment of the low-growth syndrome that Customs Act to facilitate trade, consistent with the economy has been experiencing in the recent the WTO and other international commitments. years. With the installation of the wide area network (WAN) for headquarters and fi ve large customs During the current period of the political offi ces, the focus of the Customs Department transition, there has been a sharp pressure on would be on the installation of the ASYCUDA the recurrent expenditure due to the security, system and improvements in management
32 practices and procedures. New Customs Act and implemented under the assistance of the World regulations will soon be implemented. Bank, IMF and DfID including the regulatory reform process has helped in reducing the ratio The fi scal sector has become more effi cient and of non-performing assets (NPA), curtailing the strong in the context of the domestic development fi nancial intermediation cost, improving the requirements and in response to the international range and delivery of the fi nancial products and economic imperatives and commitments. The services, broadening the reach and access of international tariffs are reduced and the domestic the fi nancial system, increasing the capacity of tariffs are rationalized. The fi scal responsibility the central bank, and attracting more and more and sustainability has increased, as refl ected in investments into the fi nancial system. Action the greater mobilization of revenue, controlled has been taken against willful defaulters of the level of the fi scal defi cit, improved expenditure bank loans exceeding Rs. 50 million. Their management despite pressures mounting on the passports were cancelled and they have been recurrent expenditure, and reduced ratio of the denied appointment in the public positions. Their outstanding debt of the government as percent investments in the government securities have of the GDP. to be auctioned and the proceeds used for the repayment of the loans. They have been denied The government has given immense priority payment of their deposits (both in domestic and for strengthening the health and improving foreign currencies) and the property kept in the the operations of the fi nancial institutions bank lockers will be freezed. Actions against the that are under its ownership. In addition, the willful defaulters are continuing. government is committed to support the growth and soundness of the entire fi nancial system as As the major component of the FSR, the catalyst for expediting the economic growth management teams were appointed to improve and ensuring macroeconomic stability in the the management capacity of the two state-owned country. The central bank has been empowered banks. The management team in the Rastriya and made directly accountable for the monetary Banijya Bank (RBB) has been working since policy prudence, fi nancial sector development, January 16, 2003. The management team in regulatory and supervisory responsibility, and the Nepal Bank Limited (NBL) was placed on management of the foreign exchange system as June 17, 2002 through July 21, 2007. The NRB the critical components of the macroeconomic management team has been working in the NBL management, with the focus on reducing the risks since July 27, 2007. The profi tability as well as and vulnerabilities in the fi nancial system and the managerial and operating systems in the banks attaining the goals of price stability and balance has since improved though the higher levels of of payments consolidation. Accordingly, various NPA and negative networth have still remained legislative measures have been introduced the problematic areas. So, recovering the past or refi ned and arrangements for managerial overdues of these banks, meeting the capital improvements effected. adequacy norms in view of their large negative networth, and divesting them into the hands of Financial sector liberalization focused on competent strategic investors have remained institutional growth and prudential regulation and the biggest challenge. The government, by its supervision has helped make the fi nancial system available means, is also not in a position to meet larger, broader and competitive. Along with the its share of the resources required for meeting number of the institutions, their quantitative the capital adequacy requirement in these banks. as well as the qualitative dimensions have Another government-owned fi nancial institution, expanded. The ongoing fi nancial sector reform the Agriculture Development Bank (ADB/N), (FSR), the priority strategy of the government, was transformed into the commercial bank on
33 March 16, 2006 as per the recommendation The Board welcomed the government’s of the consultants appointed under the Rural commitment to enhancing fi scal transparency. Finance Sector Development Cluster Program The Board also suggested improving effi ciency- of the ADB. The divestment program of some enhancing structural reforms and infrastructure shares in the ADB/N has come into the fi nal investments. stage and the second and fi nal installment (US$ 16 million) as part of the capital restructuring in Under the three-year period of the the ADB/N has already been disbursed by the PRGF, SDR 49.9 million (70 percent of the ADB. quota) was approved on November 19, 2003. However, before November 2006, only a total Nepal has been successful in maintaining of SDR 14.26 million was released through macroeconomic stability even in the current two installments dated November 19, 2003 stage of transition the prudent management of and October 20, 2004. No amount was released which is so critical for determining the course during 2005 due to lack of progress in pursuing of political transformation and socio-economic reforms and demonstrating credible commitment development. The track record in furthering to macroeconomic stability. The subsequent reforms, strengthening the macroeconomic progress since attained in these directions made structure and restoring macroeconomic stability further releases possible, amounting to SDR even in the extremely diffi cult situations has 14.26 million on November 17, 2006, SDR been appreciated by the donor community as 10.69 million on June 13, 2007 and SDR 10.69 well. The fourth review report of the Poverty million on November 9, 2007. Reduction and Growth Facility (PRGF) prepared by the IMF and dated May 30, 2007observed that The Three-Year Interim Plan (FY 2007/08- the government’s efforts and achievements— FY 2009/10) of the government has specifi ed continued macroeconomic stability and further its main mission as laying the foundation for progress in structural reforms under trying socio-economic transformation so as to build circumstances—merited international support. prosperous, modern and equitable Nepal. The While completing on November 9, 2009 the objective of the Plan is to make direct positive fi fth and fi nal review of Nepal’s economic impacts on the lives of the people through reduced performance under the PRGF, the Executive levels of unemployment, poverty, and disparity Board of the IMF commended Nepal for and through contributing to the establishment implementing prudent macroeconomic policies of the sustained peace. The Plan has specifi ed a and structural reforms under diffi cult political number of strategies for attaining the objective. circumstances. According to the Board, as the Reconstruction, rehabilitation, relief and peace process moved forward, achievement of readjustment; inclusiveness; and physical as sustained higher economic growth and poverty well as social infrastructure development have reduction rested on the resolution of political remained the priorities of the Plan. Accordingly, uncertainties and continued implementation of the Plan has envisaged various targets in the key structural reforms in the fi scal, fi nancial and economic and social sectors. public enterprise sectors. The Board observed that continued macroeconomic stability was The donor community’s deep desire to help contingent on prudent fi scal policies that took Nepal’s progress is evident in their generous into account the changing needs of the country. support commitments, especially through the The Board believed that the 2007/08 budget was grants. The World Bank approved on December 7, appropriately focused on boosting social sector 2007 its largest-ever support package worth US$ and infrastructure spending, raising the revenue/ 253 million (Rs. 15.9 billion) in grants, which GDP ratio, and limiting domestic fi nancing. Nepal and the World Bank signed on January 31,
34 2008, for projects like the Poverty Alleviation contributed for the maintenance of the Fund, Education for All, Irrigation and Water macroeconomic stability in the country. While Resources, and Road Sector Development. In the macroeconomic situation remained broadly January 2008, the Asian Development Bank stable, the stability could not be transformed (ADB) approved US$ 10 million (Rs. 6.3 billion) into higher output level and development grants, the highest-ever single component so far outcomes due to the weakness in the spending provided by the ADB. The four-year project, side of the government and the problems faced which begins in 2008, is centered on remote 20 by the private sector in increasing investment districts focusing on poverty reduction, inclusive and other economic activities. Resources could development, governance and decentralization, not be deployed for the investment activities as rural infrastructure, growth in economic and desired, also due to the pressure on the recurrent employment opportunities, rural transport, and expenditure in the prevailing environment of the other supplementary infrastructure. political transition.
Conclusion Peace is crucial for the socio-economic development of Nepal. Effectively addressing The economy has been affected by a period the current problems and disturbances of political transition. So, the economy is and meaningfully concluding the political predominated by the non-economic factors. The transition have become the pre-requisites to social and ethnic tensions, frequent blockades the sustained peace and development. The and disturbances, and the weak security situation holding of the constituent assembly elections negatively affected the economic environment in as scheduled on April 10, 2008 would hold the general and the investment climate in particular. key in this direction. Such an environment will Accordingly, the sectoral as well as the contribute immensely in the mission of further macroeconomic performance produced mixed strengthening the fi scal position, enhancing its results. Even in such circumstances, the fi scal effi ciency and effectiveness, and consolidating situation remained strong as refl ected in the the macroeconomic stability in the country. This comfortable level of the resource mobilization, will pave for attaining a sustained, high and broad- surpluses in the treasury position, and prudent based economic growth, so essential for meeting levels of the government borrowings and the the poverty reduction and other development outstanding debt stocks. goals of the country. All the stakeholders should The responsible stance and encouraging extend their responsible and cooperative hands performance in the fi scal front mainly in these pursuits.
35 Nepal's Need for Increased External Assistance
Shree Ram Pant*
Introduction infrastructures as well as reinvigorate the sluggish economy. At this juncture, utilizing more foreign aid After the decade-long insurgency, Nepal is in the has been considered as a compulsion rather than a process of political stabilization. With the signing of choice. The forthcoming Nepal Donors’ Consultation the 23-point Comprehensive Peace Accord (CPA), Meeting (NDCM) 2008, scheduled during February Nepal ushered into an arena of peace. The 21 - 22 in Kathmandu, would definitely further open stabilization and institutionalization of peace is the up the doors for dialogue between the global partners commitment and priority of foremost national and the Government of Nepal (GON) for chalking importance. Institutionalization of peace is a very out a bright future in Nepal’s development endeavor. complex and cumbersome task ahead elsewhere in The broader theme of the meeting would thus be the conflict-ridden countries, globally. Nepal is by interlinking the ‘Peace and Development’ with the no means an exception. Despite some policy specific objectives such as sharing current status of initiatives toward economic liberalization, time and the peace process in the evolving political scenario in again interrupted privatization process and higher and Nepal, disseminating the country’s development wide ranging growth in the first few years of the last needs and priorities and stock-taking of required decade, the development outcomes have remained resources centered around the Three -Year Interim modest because of the size of the economy, level of Development Plan (TYIP), seeking pragmatic development, state of poverty, regional disparities, commitment from development partners about the large under-employment, low per capita income and long-term support to Nepal’s development, and so agriculturally dependent economy . Moreover, the on. The Plan aims at improving the lives of Nepali sizable number of people secluded from the people through reduced level of unemployment, development process over the decades, and poverty poverty, and disparity and through contributing to the and unemployment remained unabated. Therefore, establishment of the sustained peace. Reconstruction, Nepal’s socio-economic development initiatives need rehabilitation, relief and readjustment, inclusiveness to be made meaningful for a vast segment of the and physical as well as social infrastructure population. To meet all these challenges, the viable development have remained the priorities of the TYIP. solution would be the inclusive economic development for which sustainable peace is a The mission of the TYIP is laying the foundation for prerequisite. People of all walks of life expect the socio-economic transformation so as to build access to peace dividend at a very faster rate and prosperous, modern and equitable Nepal. The global are, infact, impatient too. This peace dividend partners are well aware of the Nepalese development constitutes an important outcome for the people at priorities. The government is also fully committed large. toward the implementation of the projects and in achieving the results in stipulated time, cost and quality. Agenda This is by no means easier said than done as Nepal is embarking upon holding the Constituent Assembly Nepal is moving towards the crossroads of the rapid election on April 10, 2008 as well as meeting various change. For this to happen, the economy needs much demands including those agreed on the 23-point more resources to reconstruct the ruined Comprehensive Peace Accord. * Joint Secretary, Ministry of Finance.
36 GDP Growth tariffs. The continued focus on making the tax regime friendly for investment, business and other tax payers Growth Domestic Product (GDP) is estimated to also contributed to the favorable growth in the grow by 4.5 percent for the current year, agriculture revenue. Introduction of the incentive – based tax output growth is 5.2 percent and non-agriculture audit and collection system also helped in raising the output at 4.1 percent due to favorable monsoon and revenue compliance and its efficiency. growth in service sector respectively. The GDP growth rate was very low at 2.5 percent in FY 2006/ Inflation 07 due to unfavorable monsoon coupled with sluggish growth in the industrial and service sector. Year over year (Y-O-Y) consumer price inflation rate is about 5.7 percent as compared to 7.3 percent in Government Revenue the corresponding period of the last year. The rise in the average price level in the first five months of the Maintaining the macro-economic stability and current year is 6.3 percent as compared to 7.1 strengthening the balance of payment situation, which percent in the same period last year. The average has been strained by the declining export sector and price in the current period rose by 9.1 percent in fledgling manufacturing sector also constitute the food and beverage group and in the non-edible and major challenges for the economic management services group by 3.3 percent while the rise in the prudence. Despite manufacturing and export sectors’ price level was 6.8 percent and 7.5 percent dismal performance, revenue growth is encouraging, respectively in the same period last year. The rising which registered 25.4 percent growth during the price level of food and beverage group was current six-month period. Government revenue accounted for mainly the hike in the petroleum mobilization amounted to Rs. 47.39 billion in the first products among other political and social reason as six month of current FY 2007/08 compared to an well as rise in the commodity prices in the international increase of 19.7 percent in the same period last year. market. The slowdown in the price level of housing The revenue growth further expanded at a 31 percent goods and services; fuel, light and water, and to Rs. 55.34 billion in the month of 2064 Magh (Feb. transport and communication group contributed to 12, 2008) compared to 17.9 percent in the the fall in the inflation rate in the review period. corresponding period last year. The target for revenue growth is 18.2 percent to Rs. 103.66 billion and Government Expenditure revenue GDP ratio is 13 percent in the current fiscal year. The government target for the current fiscal year The government expenditure on a cash basis 2007/08 is thus expected to be met. However, the increased by 30.2 percent to Rs. 58.28 billion in the government received foreign cash grants of Rs. 5.22 first six months of FY 2007/08 compared to an billion as compared to Rs. 7.93 billion during this increment of 11.9 percent in the same period last period last year, which declined by 34.17 percent, year. The increasing government expenditure was on more concerted efforts are needed to meet the account of rise in recurrent capital and principal budgetary target of mobilizing foreign assistance repayment. As of February 12, 2008 total expenditure projected at Rs. 44.83 billion. Various agreements rose by 31.1 percent to Rs. 68.12 billion, the signed in the current period will pave the way to recurrent rose by 20.6 percent, capital by 79.1 receive more grants assistance in the next half of the percent and the principal repayment by 40.6 percent. current fiscal year. The recurrent expenditure rose by 21.8 percent to Revenue Reform Rs. 38.24 billion in the current FY 2007/08 compared to an increase of 10 percent in the same period last The favorable growth in the government revenue has year. The higher growth in recurrent expenditure was become possible through the introduction of the due to increase in the preparation of Constituent various reform initiatives in the field of taxation, Assembly election, peace related expenditure, relief covering legislation, procedural improvement, and rehabilitation, salary hike of government administrative simplification and rationalization of the employees and other administrative expenditures and 37 so on. The capital expenditure increased by 66.3 of rising recurrent and capital expenditures is not only percent to Rs. 10.28 billion compared to the 25.9 daunting but that GON has also been put in a percent rise in same period last year. compulsion to meet all these requirements in a very short span of time. The rising expectation of the The loan investment of Rs 500 million to the Nepal people, management of cantonments and payment Oil Corporation (NOC), share investment of Rs. 1.75 to combatants, rehabilitation of internally displaced billion in Agriculture Development Bank and Rs. 520 persons (IDPs), relief and rehabilitation of the conflict million in the Nepal Electricity Authority, the release affected and victims, rebuilding of infrastructure, of Rs. 1.2 billion for the Poverty Alleviation Fund formation of a number of commissions and and the disbursement of funds to local authorities committees , payment of the dues of the Nepal Oil contributed to the significant rise in capital expenditure. Corporation, holding of the Constituent Assembly To meet the deficit financing, the government elections and the increased need for security mobilized Rs. 8.20 billion through the fresh issuance management aggravated the situation over the of securities and the cash balance of the Government already resource- crunch economy with continuing with the Nepal Rastra Bank (NRB) amounted to Rs. need to pursue previously launched programs on 7.7 billion. Including the previous years’ cash balance poverty alleviation, unemployment reduction , of Rs. 3.12 billion, the outstanding cash balance of infrastructure development, expansion of economic the Government with Nepal Rastra Bank (NRB) opportunities to the poor, marginalized, Terai- stood at Rs. 10.19 billion in mid-January 2008. The Madhesi, dalits, janjati, adibasi and women, amount so far raised through the issuance of securities besides attaining progress in the regular and already is 40 percent of the budgeted ceiling of Rs. 20.5 billion committed investments aimed at achieving higher and for 2007/08. The net domestic borrowing of the broad-based economic growth. government remained at Rs. 4.39 billion, adjusting Rs. 3.8 1 billion of principal repayment in the Rs. 8.2 The Financial Sector Reform billion domestic loan. Of the total budget deficit amounting to Rs. 3.26 billion, Rs.2.36 billion was The challenges ahead are to continue and sustain the financed through external borrowing. Because of the reform process which has already been committed cash surplus of Rs. 7.07 billion, the amount borrowed and have come to a stage where only more reforms exceeded the budget deficit by Rs.3.81 billion. constitute the deserving alternative. In this context, the financial setor reform is showing encouraging Expenditure Reforms results. Rastriya Banijya Bank’s Non Performing Assets (NPA), which stood at 60.15 percent to Rs. The government has accorded high priority for the 16 billion at 2060 Asahad end (July 2003) is now expenditure management, with focus on priorilization, 29.16 percent to Rs. 7.40 billion at 2064 Asahad effeciency, effectiveness, accountability and end (July 2007). Similarly,Nepal Bank Limited’s transparency. Utmost attention has been paid to avoid NPA which stood at 60.47 percent in 2060 Ashad resource crunch for the high-priority projects. The end (2003 July) is now stood at 14.45 percent (July Medium-Term Expenditure Framework (MTEF) has 2007). The Agriculture Development Bank (ADB/ remained the basic foundation for allocating resources N) reform process is taking its root and recent move under the government budgets. A number of other by the GON to divest 5 percent share is also reforms in the public sector financial management have encouraging, with the issuance of 12.5 crore share been implemented in order to ensure accountability call a hovering Rs. 4 billion is estimated to have been and efficiency in the resource use. Prominent among applied for by the share holders. The deposit amount these are the introduction of the legislations on public procurement and governence reform as well as the in these banks under reform has been increasing every implementation of the budget formulation guidelines. year with the beginning of the reform process. Re- engineering of Nepal Rastra Bank is also showing a The demand for resources is all-time high and meeting fruitful results since various organizational and legal the resource requirements is a challenging task as provisions have been put in place. A number of well. Living up to the budgetary limit in an environment legislative improvements have occurred in the financial
38 system reform. Prominent among them are the placed at a very critical and trying moment as at the legislations on anti-money laundering, banking frauds present. The changing profile of assistance structure and control, secured transactions, insolvency, debt from loans to grants assistance is a welcome move recovery, banks and financial institutions and by the global partners keeping in view our national companies. priorities and the debt sustainability requirements in consideration of the rising resource needs. The World The Capital Market Bank and the Asian Development Bank have provided first ever largest grants assistance to Nepal. The reform in share market is evident with the increase The World Bank has provided (US$ 253 million) of Nepse index to 958.91 points on Jan , 14, 2008 RS. 15.9 billion for the poverty alleviation fund , ( the first six month of the current year) from 683.95 education for all, irrigation and water resources and points in 2064 Asahad end (July 2007), The share road sector development. The Asian Development market capitalization reached Rs.301.86 billion which Bank has provided Rs. 6.3 billion (US$ 10 million) accounted for 38 percent of GDP compared to 25.9 for the poverty reduction, inclusive development, percent in mid-July 2007. The Banking and financial governance and decentralization, rural infrastructure, sector is the single largest contributor to such healthy growth in economic and employment opportunity and growth. rural transport etc. In the first six months of the current FY 2007/08 various agreements concluded between Reform process has already begun in the field of the GON and the bilateral and multilateral donors margin lending too. A number of reform action have amounting to Rs. 35.29 billion. Out of the total foreign been undertaken including increasing the number of aid assistance amounted to 77 percent to Rs. 21.17 share brokers, computerization & online transaction, billion and loan assistance 23 percent to Rs. 8.12 various legal and organizational reforms in the current billion. Further, the bilateral assistance constitutes period , besides, Nepal Security Exchange Board 33.81 percent to Rs. 11.93 billion and multilateral Rules,, Security Market Operation Rules, & Security assistance 66.19 percent to Rs. 23.36 billion. Professional Rules (brokers, investor & market Besides, other bilateral and multilateral donors maker) have been inacted and came into force. As a pledged further assistance which are in the pipeline result, a healthy growth is expected in the capital reaching to an agreement would also increase but market so as to meet the resources gap for the not in sufficient amount. Previously, Nepal used to corporate and infrastructure development. receive grant assistance in the form of technical assistance from these institutions. This increased and The capital market has remained vibrant given the changing portfolio of grant assistance manifests in the increasing participation and interest shown by the growing concern of the lending institutions to improve people in general and the ever- increasing investment the socio-economic development further at a fast rate in Nepal Telecom and the Agriculture Development and sustainable basis and achieve the Millennium Bank and other Financial Institutions. Also, the interest Development Goals (MDG) as well as transforming shown by the local investors and the foreign joint Nepal into a sustainable new Nepal, given their long venture and direct investors in the field of hydro partnership with Nepal’s development process and power, fast track road, airports, telecom and other the challenges that Nepal is currently encountering. infrastructure projects besides, in the industrial, The total development need (capital outlays) alone service and financial sector areas demonstrate the would amount to Rs. 179 billion (at 2006/07 constant investors trust and confidence in the management of prices) during FY 2007/08 through FY 2009/10 as the economy. envisaged in the Three Year Interim Plan (TYIP) besides other peace related expenditure of very Future Assistance urgent nature. Of this capital outlay Rs. 140.7 billion (grant Rs. 84.2 billion and loan Rs. 56.5 billion would The role of global partners, bilateral and multilateral, have to be financed through foreign assistance. The have had a key role to arrive at such a stage and resources gap would be even more than stipulated in would continue to play even more important role in TYIP while adding an immediate peace related the days to come especially when the country is expenditure of about US dollar 500 million (Rs 32
39 billion) which is not entirely included in capital outlays years. Nepal needs to demonastrate accountability but should have to be borne by the GON. and transparency in the management of public finance while seeking increased foreign assitance. Nepal Peace Trust Fund Accordingly, prioritization and rationalization in public The establishment of Nepal Peace Trust Fund expenditure management and reform in governance (NPTF) is another milestone to mobilize international have been undertaken to manage public finance resources for facilitating the peace process. So the efficiently and effectively. Despite our serious and NPTF needs much more generous support from our sincere endeavor, the resource available domestically global partners. The UN Trust Fund is also supporting would remain far short of the requirements. Nepal, the peace process by allocating resources at its perhaps never felt the greater need for external disposal into national priority. Both the funds will be financial assistance than what is being felt at the utilized for providing an immediate and short term present. The increased foreign assistance is essential relief and rehabilitation, reconstruction and not only for sustainable peace and stability but also management of transition economy into a sustainable for ensuring inclusive social justice and hope for the and vibrant economy. These funds would be brighter future. The global development partners are channeled to distribute Peace Dividend to the conflict aware of this special Nepali situation and are eager affected and victims. to strengthen the hands of the GON to come out Conclusion from these abnormal and difficult times and also to continue and sustain with more urgency and intensity Nepal has made utmost efforts toward mobilizing for the inclusive development and reform process in increased amount of revenue in the past couple of the days to come. •
NDCM 2008 Pre-consultation Meeting Participants.
40 Reviewing Foreign Aid Policy 20021
Krishna Gyawali2 Conceptual Departure Nepal’s Case
Foreign aid in the form of Official Development Nepal embarked on receiving foreign aid with the Assistance (ODA) includes developmental, launching of the First Five-Year Development Plan, humanitarian, commercial and cultural aid, and should 1956-61. A substantial portion of development possess at least 25 percent grant element and high expenditure, averaging about 55% per year, has since degree of concessionality in lending, but excludes been financed through foreign aid. In 2006-2007, military aid and private capital inflow. However, this foreign assistance, including all bilateral and notion of foreign aid is conventional as it confines aid multilateral loans, grants and Technical Assistance – the transfer of resources from more developed to (TA), averaged around 5% to 6% of Gross Domestic less developed countries – to ODA alone, not Product (GDP) and aid financed about 25% to 30% capturing trade and investment both at bilateral and of total government expenditure. multilateral level even when the governments will be at the receiving end. Therefore, there is a need for Foreign aid continues to play a pivotal role in Nepal’s redefining aid in terms of Development Partnership socio-economic development. Apart from its and donors as Development Partners, along with contribution to building physical infrastructure, widening its scope to include trade, FDI and private developing social capital, erecting institutions and capital inflow, to make a clear conceptual departure setting the reform climate, it has remained crucial to in favor of more politically correct facet of the aid meeting the overarching objective of poverty regime. reduction, as articulated in the government’s past periodic plans including the current Three Year Interim Foreign aid, despite the criticisms such as it generates Plan (TYIP), 2007-10. aid-dependency, erodes national self-reliance, breeds corruption, leads to inequality, and intoxicates people In the past recent years, a new dimension of foreign with its short-lived, myopic and unsustainable aid contribution has been noticed in Nepal as it has deliveries, has remained largely unavoidable and been helping us restore and stabilize peace and unstoppable even to its critics. This is because of its democratic governance through peace-funding and mixed success stories as well as growing other supporting activities in the aftermath of the interdependence among nation–states with the surge decade-long (1996-2006) conflict. During the of globalization and its irresistible ramifications. heydays of political stalemate, donors chose to remain However, there is a growing consensus about its role selective in their engagement with the government, in that it should supplement rather than substitute the and alert and sensitive to the outbreaks and upshots countries’ own development efforts and initiatives. of conflict. Development partnership was managed In a sense, it has become more of a necessity than a even amidst the deadlock, and instruments such as choice for developing countries as it replenishes Basic Operating Guidelines (BOGs), “Do No Harm” resources gap, helps develop national capacity and Policy and Conflict-Sensitivity Analyses (CSAs) were enables and facilitates development process. applied to this end. 1. This article draws on the Draft Foreign Aid Policy 2008 presented recently in one of the pre-consultation sessions of the Nepal Donors Consultation Meeting 2008. The author is grateful to Finance Secretary Vidyadhar Mallik for providing a broader outline for the review. For reading the Draft Policy, visit www.ndcm2008.gov.np 2. Mr Gyawali is a Joint Secretary and Head of the Foreign Aid Coordination Division, Ministry of Finance.
41 However, during the inglorious royal stint (February of donors’ activities so as to avoid duplication, Focus 2005 to April 2006), donors at large withdrew their on Results or ‘outcomes’ rather than mere ‘outputs’, support and foreign aid dwindled. The success of and Mutual Accountability and Transparency of People’s Movement II in April 2006 led to a new donors and the government in fulfilling this political consensus with the signing of the commitment. Nepal has been a signatory to this Comprehensive Peace Accord (CPA) on 21 Declaration and is committed to its implementation November 2006. This created a momentum in favor with full sincerity. of peace and democracy (Loktantra), giving further impetus to donor support for peace and development. Need for Policy Review It is thus evident that in Nepal, peace, democracy and development need to be treated in a simultaneous The Foreign Aid Policy that currently exists was sequence rather than in isolation. Foreign aid is formulated in 2002, which was the country’s first- expected to reinforce this inter-linkage and donors ever policy document on ‘disciplining’ foreign aid need to heed this approach. mobilization. The Policy was launched in the aftermath of the Nepal Development Forum, 2002 which in Nepal’s aid receiving trend has seen significant turn was held on the eve of the Rome Meeting on changes both in terms of source and composition. Harmonization 2003. Therefore, the Policy is much The share of bilateral assistance has declined to in line with the basic principles of donor around one-fourth of the total aid receipt. The ratio harmonization advocated by the Rome Declaration of grant assistance had shown a declining trend until and subsequently reinforced by the Paris Declaration fiscal year 2001/02. Beginning 2002/03, however, on Aid Effectiveness, 2005. However, since a the average annual grant disbursement ratio has number of initiatives have been launched with renewed increased to about 60 percent of the total aid receipt, emphasis on aid effectiveness measures between reaching the amount of Rs 13 billion against the annual 2002 and now which need to be addressed in the loan disbursement of Rs. 7 billion. Strikingly, even Policy, it needs review. Coincidentally, there could the multilateral agencies such as the World Bank and have been no better time to undertake this task as Asian Development Bank have moved to providing the country has passed through a critical phases of grant, owing to their respective policy shift. However, its political history and is now ready for long-term about 40 percent of aid is still occupied by Technical transformation. Assistance, which needs to gradually reduce. The external debt which accounts for about 55 percent National Imperatives: Any national policy of GDP, has also posed a challenge to debt document needs to undergo timely updating in regular sustainability. intervals with required frequency. Moreover, important intervening events trigger further revision Aid Efficiency and Effectiveness even more pressingly. The April 2006 People’s Movement and the momentum that it created in favor Nepal has been supportive of all international of peace, democracy and development has become initiatives to aid effectiveness and donor one such stimulant to revising the Foreign Aid Policy. harmonization. We have been party to the Millennium As these elements have been well recognized as Summit (2000) that set out the Millennium emerging national agenda of the country, new foreign Development Goals. We have endorsed Monterrey aid policy should best address them by streamlining Conference on Financing Development (2002), Rome donor support to that direction. The new policy high-Level Forum on Harmonization (2003), and should realize the fact that there has emerged a new Marrakesh Roundtable on Managing for Results Compact of Peace and Development highlighting the (2004), all of which culminated into the Paris necessity of linking them together in harmony, rather Declaration on Aid Effectiveness (2005). The Paris than waiting for development to happen until peace Declaration rests on such principles as Country is fully and finally restored. This compact should also Partners’ Ownership of the development agenda, incorporate democracy without which both of them Alignment of assistance to the Country Partners’ would not achieve popular credibility and legitimacy systems, priorities and procedures, Harmonization required for its acceptability in the eyes of domestic 42 as well as international stakeholders. Similarly, there developed to developing countries, which though has is also felt a need for another ‘compact’ in the form not yet been covered by ODA. Foreign Aid Policy of alignment and partnership between the of any aid recipient country should take a prime and government, citizens and international development unfailing notice of such developments and respond partners to work together towards the same goal. to them accordingly in line with the national priorities and possibilities. Likewise, the recently launched Three Year Interim Plan/TYIP (2007-10) which has envisioned a New Major Departures from FAP 2002 Nepal with the dream of building a ‘modern, just and prosperous’ nation-state has defined new objectives, Addressing New Context: Foreign Aid Policy of priorities and deliverables for the next three years today’s Nepal, like any other national policy with a period, characterized as an interim timeline of broader appeal and outreach, should primarily take ‘transition’. Foreign Aid Policy should attach into account what might be called a ‘post-conflict deserving importance to these objectives and set its transition perspective’ in its goal and direction. priorities for the short, medium and long terms. All Although Nepal has no doubt passed through a these imperatives have made a fresh ground for bloody political conflict that took heavy toll on the initiating timely revision of the said Policy without any country’s socio-political and economic fabric, it has unjustified delay. not yet reached the ‘post-conflict’ phase. The country for some time has been grappling with the International Initiatives and Innovations: A management of transition which is often mired by the number of international initiatives have been mismatch between people’s competing claims and undertaken in the last decade in the area of foreign demands and the state’s available capacity and aid management. To name a few, Millennium Summit resources to meet them. Besides, people’s aspirations 2000 set the MDGs and urged donors to ensure the for peace, democracy and development have risen availability of required resources, Monterrey to an unprecedented level. Donors need clear policy Conference 2002 focused its objective on Financing approach to apprise them of the current for Development at the global scale, Rome circumstances, and foreign aid policy would have to Declaration on Harmonization 2003 defined what shoulder this burden. Markedly, they have begun to harmonization would mean both to development argue for taking the journey of peace and partners and partner countries and urged them to development together, and rightly so. abide by the agreed initiatives, and Paris Principles on Aid Effectiveness 2005 charted a course of action The current interim plan – TYIP – has come out in with identifying prominent areas of aid effectiveness special circumstances as elucidated above. It focuses and defining indicators for measuring the success of on economic revitalization through relief, their application. The elements such as country reconstruction and rehabilitation (RRR) to address ownership, alignment, harmonization, results the post-conflict transition. Peace dividend needs to framework or Management for Development Results be delivered, peace process needs to be well funded, (MfDR), predictability of aid and ‘longer term and resource gaps for achieving RRR need to be partnership, and mutual accountability are the tenets met. Domestic resources are far too short of meeting of Paris Declaration. the cost of these needs, hence foreign resources mobilization. Besides, private sector potential needs Foreign aid has also been impacted at the global level to be optimally mobilized for developing infrastructure by the shifting global priorities, and this time in favor projects through encouraging FDI and private capital of poverty with the perceived fear that poverty breeds inflow. Foreign aid should be geared to achieving terrorism. As a result, fighting poverty to help stop these objectives in the changed context. terrorism has largely become a consensual global agenda. Economic globalization through expanding Addressing New Issues: With the advent of trade, private capital inflow and investment crossing Loktantra in the country, issues such as inclusion, the sacrosanct boundaries is another influencing equity, state restructuring, and alternate service phenomenon when it comes to resource transfer from delivery through communities have received new
43 height. The government’s attention has been drawn strategies to be adopted by the Foreign Aid Policy to implementation and delivery challenges, 2008. management of fiduciary risks and launching of quick impact and visible projects. Rights- based approach Priorities: In the short term, agenda such as to development has entered active national agenda managing transition, implementing TYIP as PRSP- after the Interim Constitution recognized people’s II, continued reinforcement of MTEF, delivery of fundamental rights to their socio-economic upliftment. Peace Dividend, launching Quick Impact Projects Voices have arisen in favor of demand-driven (QIPs) with visible or tangible impacts, and focusing development. Support to communities and community management and improving Public strengthening community ownership and management Financial Management (PFM) should be the priorities has been put into focus by non-government where foreign aid should be channelized. Speaking development partners. Similarly, rebuilding home- of the long-term priorities, adherence to Paris grown good practices such as Sector Wide Approach Principles with a jointly adopted National Plan on (SWAp) and expanding it to other sectors such as Aid Effectiveness comes first as it would ensure rural infrastructure are other imperatives calling for harmonization of donor support with enhanced reorientation of our foreign aid policy. country ownership. Similarly, achieving New Nepal Vision, meeting MDGs, leading transition towards Guiding Principles and Objectives: New foreign transformation that would lead to socio-economic aid policy should clearly cherish a New Nepal Vision and political restructuring of the state and society, which is based on the conceptual foundation of maintaining fiscal sustainability, ensuring environment- economic prosperity, social justice and modernity. friendly development, expanding and re-strengthening TYIP has elaborately articulated the goals and SWAps, harmonizing TAs with creating a pool objectives to realize the vision, through reducing whereby the government’s priorities and choices poverty, meeting MDGs, and achieving broad-based would receive preference over the donors’, optimizing and sustainable economic growth. Furthermore, grants over loans except for revenue-generating and strong linkage between peace, democracy and growth-boosting infrastructure development projects, development (PDD Compact), inclusion and equity promoting public-private partnership, and as enshrined in the Interim Constitution, compliance encouraging FDI and private capital inflow could be the long-term priorities of the Policy. Moreover, with Paris Principles, compatibility and convergence mobilizing the whole system of aid management to between foreign-aided and nationally executed achieve self-reliance and sustainability through projects, and self-reliance or sustainability in the building institutions, internalizing and institutionalizing longer term are other elements that can be the guiding the reforms gains and developing national capacity principles and objectives of new foreign aid policy. should be the longer-term perspective of our foreign aid policy. Policies and Strategies: Concessional loans in selected high-return infrastructure development Issues and Challenges projects are welcome, but no conditionalities will be accepted unless they come within a common policy Aid Environment: Without a conducive, platform applicable to Development Partners and development-friendly environment and clearly stated Country Partners with equal degree of compliance. vision and goals, aid cannot be mobilized to the Optimization of grants, plea for budgetary and optimal extent. The question is how this can happen. programmatic support, streamlining TAs through Most often, blames for all wrongdoings are shifted choosing free-standing rather than tied-up TAs and to politicians and political situation. But bureaucrats using them for knowledge and technology transfer and technocrats involved in managing and and innovation, revenue mobilization, optimal use of coordinating aid have a role to play which is even capital stock, streamlining INGOs operation, more crucial. Developing positive attitude towards development of private sector, and strengthening of work, building optimism on positive impacts of the partnership with civil society organizations (CSOs) works done, focusing more on results without or NGOs are some of the major policies and compromising procedural discipline, enhancing 44 professionalism in work and personal behavior, Financial Accountability (PEFA) which has just been enriching knowledge and competence through finalized is a prime challenge before the government continuous learning and adaptation and becoming and especially the Ministry of Finance. Meeting this sensitive and respectful to the diversity of claims and challenge will help reduce the donors’ concern about demands coming from the ordinary citizens are some fiduciary risks, enhance cost efficiency and of the essential attributes public bureaucrats or the effectiveness, ensure good value for money, and result mangers need to develop and adhere to. in better development outcomes. The PEFA framework addresses the issues such as accounting Aid Predictability: Making aid predictable would and auditing, and streamlines external audit. help the planners and implementers ensure the Empowering Office of the Auditor General (OAG), availability of required resources. This, in turn, will establishing its legitimacy and acceptability before the help implement the MTEF smoothly, and contain the donors, complying with the system of Parliamentary leakage or unjustified diffusion of resources. oversight and abiding to the government budgeting Moreover, we need from donors a longer- term procedures are other pertinent areas PEFA will take partnership commitment to implement the TYIP into account. Foreign Aid Policy needs to clearly objectives. stress on observing its requirements and provisions for enhancing aid effectiveness. Aid Fragmentation and Duplication: This is another area we need to refocus. More concerted Capacity Constraints: The government suffers from efforts for harmonization, ownership and leadership a two-prong deficiency in capacity development and are needed to stop this phenomenon, and the sincere utilization in the sense that it is either under-developed, compliance to the proposed National Action Plan on meaning there is a dearth of trained and competent Aid Effectiveness would hopefully cure these ills. people, or under-utilized, referring to a situation where even the trained resources are not tapped to Aid channeled outside Government: A number of the benefit of the institution. In some cases, bilateral donors are intent on channeling aid outside ‘disempowerment’ of trained personnel is noticed, the government mechanism, especially through suggesting that they are stripped of needed authority NGOs/INGOs. Some donors prefer the modality of and resources to fulfill the prescribed responsibilities. direct implementation. Donors are welcome to Recognition and Reward including through non-fiscal choose the modality they find efficient, but only upon compensation is also very much needed. agreeing with the country partner. In whatever they do, they are expected to go along with the Use of TAs: There is a pressing need for creating a government’s stated development objectives and TA Pool Fund which will help TA Harmonization. priorities (in this case, TYIP), use the country systems The government should clearly and fully have a voice and procedures for implementation and report to the and choice in selecting, recruiting and mobilizing the government every activity that takes place under the TA resources, mainly the consultants. In addition, programs and projects with their assistance. internationalization and institutionalization of outcomes after the TA is complete is invariably lacking and Aid Tracking: The Foreign Aid Coordination should therefore be put into priority. Division in the Ministry of Finance is in dire need of installing the aid tracking system to ensure that all Results Framework: Focusing on outcomes rather pledges or commitments and disbursement or than on procedures has long been propagated both delivery of aid are recorded, timely updated and by development partners and country partner. MfDR applied as and when required. There is in offing a has recently been put into the agenda in this context. plan to establish and operationalize what is called However, low visibility of its success is a problem Aid Information Management System (AIMS) in the needing immediate attention. Besides, mutual FACD/MoF to address this concern. accountability and transparency, especially to increase allocative efficiency of development partners and Strengthening Public Financial Management implementation efficiency of country partners, needs (PFM): Implementing Public Expenditure and even more urgent consideration.
45 Harmonization at local level: This would call Policy would also require these, and more so because harmonization of activities between donors vis-à-vis it reflects the country’s image of performance and national government, and also across the national finds place in donors’ assessments. To be specific, a government institutions. There are cases where well-suited and functional institutional mechanism at donors at the local level have been less enthusiastic the policy level to guide and advise on foreign aid in sharing the information about their activities with management, strong monitoring of aid performance the government. For instance, they are reported to including through AIMS, continuous and reinforced have formed and operated what they call Donors harmonization with stakeholders both domestic and Advisory Group, but hardly anything comes to the international, and joint adoption and observance of notice of the government unless pursued at a more National Action Plan on Aid Effectiveness (which will informal and individual level. Similarly, the government be based on Paris Principles) should be the agenda agencies themselves, particularly the ones involved ahead for those involved in aid management and in foreign aid management at the policy level such as coordination. Together, implementation of TYIP with the National Planning Commission and respective divisions and sections in the development line deserved focus on economic revitalization, RRR and ministries, need much smoother coordination on a other sectoral priorities in relation to foreign aid is regular basis. equally necessary. Agenda Ahead Last but not the least, the compact between peace, democracy and development needs to continue for Implementing policy is always a prime policy agenda. long time to come and at least until the Post-Conflict This is also a challenge. What requires meeting this Transformation stage. This is because transition needs challenge in the first place is to make a policy that is to complete smoothly, peace needs to sustain and be implementable. Similarly, sincerity of intent, adequacy institutionalized, and democracy needs to take roots. of authority and resources, and a conducive work Needless to say, development will have its fitting climate are needed at equal magnitude. Foreign Aid presence ensured all along the process.
•
46 Small and Medium-sized Enterprises in Developing Countries: Some Experiences of China
Hari Prasad Shrestha*
Introduction necessary to improve industrial structure, facilitate open market and promote fair competition for the Small and Medium-sized Enterprises (SMEs) in development. In addition, innovation of financial developing countries absorb mounting employment products and services needs to be promoted, in urban and rural areas and plays important role in investment mechanism for starting business to be national economy and social development. In improved and diverse financing services needs to be developing countries, the national economy requires provided. To bring economic system in right track high production for internal consumption and export and to accelerate it, SMEs development is considered growth. Moreover, the widening economic gap to be backbone for developing countries. between the urban and the rural population are creating troubles. The lower accessibility of the Status of the Chinese Economy in 2006 minority ethnic people, disabled and women in national mainstream has been also a big challenge. China’s GDP was 20.94 trillion Yuan, an increase of 10.7% over the previous year. National revenue The greatest challenges for the developing countries reached 3.93 trillion Yuan, a year-on-year increase of to develop their economy are: a conflict between rapid 769.4 billion Yuan. Profits of large industrial enterprises economic growth and voluminous consumption of rose 31%, an increase of 444.2 billion Yuan. recourses and ecological deterioration, social development lagging behind economic development, China’s import and export volume totaled US$ 1.76 widening disparity between different regions in social and economic development, constrained posed by a trillion, a year-on-year increase of 23.8%. Paid-in large population and scarce resources and foreign direct investment reached $69.5 billion. inconsistencies between some existing laws, People’s living standards improved substantially. A regulations and policies and actual needs for total of 11.84 million residents entered the workforce. sustainable development. In addition, the social security system is inadequate, the pressure on The main works accomplished in 2006 were prolific employment is heavy, the economic structure is less in China. The central government adopted a series than rational, the operation system of the market of timely macroeconomic regulatory measures to economy is not improved, infrastructure is address major problems affecting economic underdeveloped, a serious waste exists in the performance, such as overheated investment, exploitation of natural resources, and environment excessive money and credit supply and serious trade pollution is serious. imbalance. Work related to agriculture, rural areas and farmers was intensified. Steady progress was Deepening economic globalization and accelerating made in building a new socialist countryside. transfers of industries and services around the globe Adjustment of the economic structure was has brought new opportunities and challenges. It is accelerated. China made comprehensive plans for * Mr. Shrestha is associated with Ministry of Finance. overall reform in administration, investment,
47 environment, energy and communication. The central owned economy. The Ministry of Information and government spent 77.4 billion Yuan on science and Industry is in charge of national strategies, and overall technology, 53.6 billion Yuan on education, 13.8 plans for development of the information Industry. billion Yuan on health and 12.3 billion Yuan on culture. The Ministry of Science and Technology was established to build a long-term strategy to develop Four commercial banks of China have been listed science technology, policies to facilitate technology- among top 10 enterprises of the world. The 30 years led economic and social development. of Chinese reform has accelerated GDP to 9.8% and 29 fold increases in urban per capita income and 27 Currently, among the 3.026 million Chinese fold increases in rural per capita income are enterprises as legal persons, (excluding 23.77 million considered to be remarkable achievement. One can individual industrial and commercial operators) more easily visualize changing scenario in Chinese society. than 99% are SMEs. Statistics show that 50 percent For example, previously, bicycle, radio and watch of China’s GDP, 60% of export and 43% of taxation were important stuffs to marry a girl and now car are contributed by SMEs. SMEs are major player in and house have been essential things for the marriage. social employment, absorbing over 75 percent of urban employed labors. It is major driving force for SMEs Profile Chinese economy.
The National Development and Reform Commission The classification of SMEs in China is in accordance plans to develop and reform the economy in China. with the standards of developed countries or The Department of Small and Medium-sized international standards. The following is the definition Enterprises was established to study the relationship of SMEs and micro enterprises in the People’s between SMEs and development of a non-state- Republic of China with regard to statistical regulations:
Sector-specific SMEs definitions Industrial Sector: Small Enterprises 300 - 2000 employees 30 - 300 M Yuan in sales 40 - 400 M Yuan Asset size Medium Enterprises >2000 employees >300 M Yuan in sales >400 M Yuan Asset size Construction: Small Enterprises 600 - 3000 employees 30 - 300 M Yuan in sales 40 - 400 M Yuan Asset size Medium Enterprises >3000 employees >300 M Yuan in sales >400 M Yuan Asset size Wholesale: Small Enterprises 100 - 200 employees 30 - 300 M Yuan in sales Medium Enterprises >200 employees >300 M Yuan in sales Retail: Small Enterprises 100 - 500 employees 10 - 150 M Yuan in sales Medium Enterprises >500 employees >150 M Yuan in sales Transportation: Small and Medium >500 employees >30 M Yuan in sales Enterprises Posts: Small and Medium >400 employees >30 M Yuan in sales Enterprises Hotels and restaurants: Small and Medium >400 employees >30 M Yuan in sales Enterprises
48 Problems and Measures • ineffective incentive policies Currently, the SMEs in China are confronted with • lack of financing the following problems: • uneconomical-scale of operation and widely The Government has introduced measures to promote dispersed the growth of individual and private-owned enterprises to: • outdated equipment and low level of technology a. Operate almost all types of industries and • lack of skilled workforce commerce, except for a new kinds of industrial • low level of operation and management expertise products and raw material • lack of access to international market b. Undertake business abroad. • imperfect legislations c. Cooperate with foreign partners. •
NDCM 2008 Pre-consultation Meeting Participants.
49 Current Macroeconomic Situation
In the review period, the government received foreign World Output cash grants of Rs 5.22 billion. The GON had received foreign cash grants of Rs 7.93 billion in the According to the IMF’s World Economic Outlook, corresponding period of the previous year. January 2008, world output growth is estimated at 4.9 percent in 2007 and projected at 4.1 percent in Government Expenditure 2008. The advanced economies are estimated to have grown by 2.6 percent in 2007 and projected to grow In the first six months of 2007/08, the government by 1.8 percent in 2008. The finiancial market strains expenditure on a cash basis, increased by 30.2 originating in the U.S. sub-prime sector and associated percent to Rs 58.28 billon compared to an increment losses on bank balance –sheets were mainly of 11.9 percent in the same period last year. The attributed to the deceleration in the growth in the most increase in government expenditure was attributed advanced ecnomies. The world output growth was to the substantial rise in all categories of the earlier projected at 5.2 percent in 2007 and 4.8 government expenditure, i.e. recurrent, capital and percent in 2008 (World Economic Outlook, October principal repayments. 2007). The emerging market and developing econoimes grew by 7.8 percent in 2007 and are In the review period, the recurrent expenditure rose projected to grow by 6.9 percent in 2008. by 21.8 percent to Rs 38.24 billion compared to an Developing Asia grew by 9.6 percent in 2007 and is increase of 10.0 percent during the corresponding projected to attain a growth of 8.6 percent in 2008. period in the previous year. The higher growth of China and India have immensely conbributed in this recurrent expenditure was on account of increased growth expansion. expenditure on relief-related activities, the salary hike of government employees, the rise in peace-related GDP Growth Estimate in Nepal expenditure, additional expenditure relating to the preparation for the constituent assembly elections, In Nepal, the economic growth rate in FY 2006/07 and other administrative expenditures. remained at a modest level of 2.5 percent (agriculture 0.7 percent and non-agriculture 3.6 percent). With In the review period, the capital expenditure jumped the expansion in the agriculture output at 5.2 percent by 66.3 percent to Rs 10.28 billion compared to an following the favorable mansoon and the non- increase of 25.9 percent in the same period last year. agriculture output at 4.1 percent, the overall growth rate in FY 2007/08 is projected to reach 4.5 percent. The loan investment of Rs 500 million to the NOC, share investments of Rs 1.75 billion in the Agriculture Fiscal Situation Development Bank and Rs 520 million in the Nepal Electricity Authority, the release of Rs 1.2 billion for Government Revenue and Foreign Cash the Poverty Alleviation Fund (PAF) and the Grants disbursement of funds for the local authorities During the first six months of 2007/08, the government contributed to the significant rise in the capital revenue grew by 25.4 percent to Rs 47.39 billion expenditure compared to an increase of 19.7 percent in the Sources of Deficit Financing corresponding period last year. The increase in customs and excise on account of administrative reforms, a rise During the first six months of 2007/08, the government in VAT revenue and income tax revenue, as well as the budget witnessed a deficit of Rs 3.26 billion. During growth rate in non-tax revenue accounted for such a the same period last year, the budget had reflected a healthy growth of the government revenue. surplus of Rs 3.95 billion. The budget deficit in the
50 current year resulted from higher growth of 3. Net foreign assets (NFA), after adjusting foreign government expenditure. exchange valuation gain/loss, increased by Rs 24.1 million in the review period compared to a Of the sources of deficit financing, the government rise of Rs 5.78 billion (4.1 percent) in the mobilized Rs 8.20 billion through the fresh issuance previous year. Despite the elevated level of of securities. The cash balance of the GON with the remittances and a boom in tourism, NFA NRB amounted to Rs 7.07 billion. Including the remained almost stagnant on account of a previous years’ cash balance of Rs 3.12 billion, the deceleration in foreign assistance, a higher level total cash balance of the GON with the NRB stood of payment to Indian Oil Corporation (IOC) by at Rs 10.19 billion as in mid -January 2008. The Nepal Oil Corporation (NOC) and an amount raised through the issuance of securities unsatisfactory performance of export in the represented 40 percent of Rs 20.5 billion, the ceiling review period. for the total domestic loan in 2007/08. Domestic Credit Till mid-January 2008, domestic loan amounting to 4. Compared to a growth of 2.8 percent in the Rs 3.81 billian was repaid, resulting in a net domestic previous year, domestic credit increased by 10.4 borrowing Rs 4.39 billian. percent in the review period. An acceleration in Of the total budget deficit, Rs 2.36 billion was private sector credit including an increase in financed through the external borrowing. claims on government accounted for the rise the domestic credit. Other Current Macroeconomic Situation 5. Net claims on government increased by 4.8 (Based on the First Five Months’ Data of 2007/ percent in the review period as against a decline 08 of Nepal Rastra Bank) of 11.1 percent in the previous year. A higher growth of expenditure relative to resource Monetary Situation mobilization accounted for the rise in claims on government in the review period. Money Supply 6. Claims on financial institutions increased 1. Broad money (M2) registered a growth of 9.5 significantly by 100 percent in the review period. percent in the first five months of 2007/08 Such claims had grown by 29.5 percent in the compared to a growth of 4.0 percent in the same previous year. Commercial banks’ short-term period last year. Likewise narrow money (M1) placement at finance companies, development increased by 4.8 percent in the review period banks and other financial institutions resulted in compared to a growth of 2.7 percent in the the rise in the claims on financial institutions in previous year. An increase in domestic credit on the review period. account of an increase in credit to the 7. Compared to a growth of 5.6 percent last year, Government of Nepal (GON) and the private private sector credit showed a rise of 10.9 sector contributed to the acceleration in monetary percent in the review period. A pick up in the aggregates in the review period. growth of the private sector credit was on 2. Time deposits increased by 11.7 percent (Rs account of the commencement of three new 31.55 billion) to Rs 300.18 billion in the review commercial banks and credit expansion in period compared to a growth of 4.6 percent in production, construction, transport and the previous year. Besides the elevated level of communication and service sector by remittances, commencement of banking commercial banks in the review period. In the transactions by three new commercial banks and review period, the areas such as production of branch expansion by the existing commercial iron rod, textiles, cement, transport equipments, banks contributed to the significant rise in time real estate and residential construction absorbed deposits in the review period. an increased amount of bank credit.
51 Reserve Money billion in the review period compared to Rs 5.12 8. Reserve money grew by 2.1 percent in the review billion last year. Significant acceleration in the period, which had declined by 1.2 percent in private sector credit off-take resulted in the rise the previous year. Notwithstanding a decline in of both inter-bank transaction and the use of SLF NFA of the Nepal Rastra Bank (NRB), a rise in in the review period. net claims on government contributed to the Short-term Interest Rates increase in reserve money in the review period. 13. The short-term interest rates increased in the Purchase and Sale of Foreign Exchange review period. The weighted average monthly 9. The net purchase of US dollar 464.8 million from 91-day Treasury bill rate stood at 3.59 percent the commercial banks resulted in the injection of as in mid-December 2007 compared to 1.98 liquidity of Rs 29.76 billion in the review period. percent a year ago. Similarly, the weighted Last year, such net purchase was US dollar average monthly inter bank rate remained at 4.73 394.5 million leading to the liquidity injection of percent as in mid-December 2007 compared Rs 28.9 billion. to 1.34 percent a year ago. Interest rates on the deposits of commercial banks remained constant 10. The purchase of Indian currency by way of selling in the review period. A decline in excess liquidity US dollar 550 million amounted to Rs 35.08 as a result of an increase in private sector credit billion in the first five months of 2007/08. During drove up the short-term interest rates in the the same period in the previous year, the purchase review period. of Indian currency had amounted to US dollar 320 million, an equivalent of Rs 23.39 billion. A Securities Market higher level of payment by NOC to IOC in the 14. The year on year (y-o-y) NEPSE index increased review period compared to the previous year by 101.7 percent to 1025.91 points in mid- and a widening current account deficit with India December 2007. This index was 508.58 a year resulted in the rise of the purchase of IC in the ago. review period. 15. The y-o-y market capitalization increased by 151 Open Market Operations percent to Rs. 322.62 billion in mid-December 11. For managing short-term liquidity, net liquidity 2007. Market capitalization to GDP ratio amounting to Rs 6.81 billion was absorbed increased to 40.6 percent from 17.9 percent a through reverse repo auction of Rs 5.57 billion year ago. Of the total market capitalization, bank and outright sale auction of Rs 1.24 billion in the and financial institutions held the largest share. first five months of 2007/08. During the same 16. Total paid up capital of the listed companies stood period in the previous year, net liquidity of Rs 18.38 billion was absorbed through outright sale at Rs. 23.85 billion in mid December 2007, an auction of Rs 5.89 billion and reverse repo increase of 16.3 percent over the period of one auction of Rs 12.49 billion. Compared to the year. This increase was due to the additional previous year, a higher private sector credit off- listing of securities. take and the increased purchase of IC through 17. Total number of companies listed at the NEPSE the sell of US dollar lowered the absorption of reached 142 in mid-December 2007 compared liquidity in the review period. to 141 a year ago. Of the listed companies, 107 Inter Bank Transactions were bank and financial institutions, 21 production and processing industries, 4 hotels, 12. Inter bank transactions of commercial banks 5 business entities, 3 hydro power and 2 cumulated to Rs 143.76 billion in the review companies in other groups. period compared to Rs 77.14 billion in the previous year. In addition, the use of standing 18. Monthly turnover to market capitalization ratio liquidity facility (SLF) availed by the commercial stood at 0.85 percent in mid- December 2007 banks from the NRB cumulated to Rs 36.19 compared to 0.73 percent a year ago.
52 19. The twelve-month rolling standard deviation Wholesale Price Inflation stood at 185.4 in mid-December 2007 26. The y-o-y wholesale price inflation slowed to compared to 56.2 a year ago. 6.1 percent in mid-December 2007 from the 20. Nepal Securities Board (SEBON) granted level of 8.9 percent a year ago. The moderation permission to issue ordinary shares of Rs. 274.4 in the wholesale price inflation was on account million to seven companies, and right shares of of the slow growth in the prices of agricultural Rs. 2.21 billion to other ten companies in the commodities group and domestic manufactured first five months of 2007/08. commodities group compared to last year. The price of agriculture commodities declined to 5.3 21. Government bonds of Rs. 3.1 billion were percent from 10.2 percent last year. In this additionally listed at the NEPSE in the first five group, the price of spices declined by 10.6 months of this year. As of mid-July 2007 such percent in the review period compared to a rise bonds amounting to Rs. 7.05 billion were listed of 34.4 percent in the corresponding period last at the NEPSE. year. Likewise, the prices of food grains, pulses Inflation and livestock production group rose by 5.0 percent, 9.6 percent and 2.1 percent respectively Consumer Price Inflation compared to the respective rise of 16.5 percent, 22. The y-o-y inflation moderated to 5.7 percent in 23.7 percent and 9.6 percent last year. The prices mid-December 2007 from 7.3 percent a year of cash crop as well as fruits and vegetable rose marginally in the review period compared to last ago. The moderation was on account of the base- year. The wholesale prices of domestic effect of hike in prices of petroleum products in manufactured commodities group rose by 6.3 March 2006 and the nominal appreciation of the percent during the review period compared to a Nepalese currency against the US dollar. growth of 9.1 percent in the previous year. Within 23. Group-wise, the index of food and beverages this group, the prices of construction material and group rose by 7.1 percent compared to a rise of food-related products rose by 11.1 percent and 7.3 percent a year ago. Within this sub-group, 5.2 percent respectively in the review period the prices of pulses rose by 14.4 percent, oil and compared to last year’s rise of 17.6 percent and ghee 12.5 percent, grains and cereal products 10.3 8.8 percent respectively. Likewise, the wholesale percentand milk and milk products 6.4 percent. price index of imported commodities rose However, the prices of sugar and sugarrelated marginally to 7.1 percent in the review period products declined by 17.0 percent during this from 7.0 percent a year ago. period. The index of non-food and services group National Salary and Wage Rate rose by 4.1 percent compared to a rise of 7.3 27. The Year over year (Y-O-Y) salary and wage percent last year. The deceleration was on rate index rose by 8.0 percent in mid-December accounts of the lower level of rise in the prices of 2007 compared to a rise of 10.2 percent a year housing goods and services; fuel, light and water; ago. Such moderation was mainly on account of and transport and communication subgroups. low pressure on wage rate index notwithstanding 24. Region-wise, the price level in Kathmandu a 17 percent net increment in the salaries of civil Valley, Terai and the Hills rose by 4.9 percent, servants, including security personnel, teachers 6.2 percent and 5.3 percent respectively in the and employees of public enterprises announced review period. Last year, the respective rates effective from mid-July 2007. The wage rate index rose by 6.9 percent in the review period were 6.8 percent, 7.4 percent and 7.6 percent. compared to a rise of 11.7 percent last year. The frequent general strikes in the Terai region Within the wage rate index, the index of was the driving factor for a higher rate of the agriculture laborer rose by 3 percent compared inflation in Terai, relative to other regions. to a high rate of 12.8 percent last year. In the 25. In mid-December, 2007, the y-o-y core inflation review period, the index of industrial laborers moderated to 4.7 percent from 6.7 percent a and construction laborers increased by 12.4 year ago. percent and 9.8 percent respectively.
53 External Sector Situation 32. Based on the monetary statistics, the overall balance of payments (BOP), which was at deficit Foreign Trade and Balance of Payments for last couple of months, returned to a surplus 28. In the first five months of 2007/08, total exports of Rs. 24.1 million in the first five months of fell by 6.9 percent as against a rise of 0.2 percent 2007/08. The BOP had registered a surplus of in the corresponding period of the previous year. Rs. 5.78 billion in the corresponding period of Of the total exports, export to India plummeted the previous year. by 9.3 percent in 2007//08 compared to a Foreign Exchange Reserves marginal growth of 0.9 percent in the same period of 2006/07. Exports to other countries also 33. The gross foreign exchange reserves stood at posted a decline of 1.4 percent in comparison Rs. 165.37 billion in mid-December 2007, rising to a decline of 1.2 percent in the comparable by merely 0.2 percent from the level of Rs period of the previous year. 165.11 billion in mid-July 2007. Such reserves had increased by 3.8 percent in the corresponding 29. The decline in the exports to India was primarily period of the preceding year. In terms of US attributed to the decrease in the exports of dollar, gross foreign exchange reserves rose by vegetable ghee, toothpaste, chemicals, textiles 2.7 percent to US$ 2.61 billion in mid-December and wire. Similarly, exports to other countries 2007. In the same period of the previous year, also dropped arising from the lower exports of such reserves had risen by 7.6 percent. On the woolen carpet, pashmina, readymade garments, basis of the import figures for the first five months Nepalese paper & paper products and tanned of 2007/08, the current level of reserves is skin. sufficient for financing merchandise imports of 30. In the first five months of 2007/08, total imports 10.3 months and merchandise and service grew merely by 1.5 percent compared to a imports of 8.0 months. growth of 10.0 percent in the corresponding Price of Oil and Gold in the International Market period of the previous year. While imports from 34. The price of oil (Crude Oil Brent) in the India rose by 2.4 percent in the review period international market surged by 48.9 percent to compared to its growth of 10.5 percent in the US$ 93.19 per barrel in mid-December 2007 corresponding period of 2006/07, imports from from US$ 62.58 per barrel in mid-December other countries were at the same level of 9.2 2006. Likewise, the price of gold rose by 26.6 percent as the comparable period in the previous percent to US$ 789.50 per ounce in mid- year. December 2007 from US$ 623.75 in the 31. An upsurge in the import of vehicles and spare previous year. parts, M.S. billet, hot rolled sheet in coil, other Exchange Rate Movement machinery & parts and pipe & pipe fittings, among others, from India and an increase in the 35. In comparison to mid-July 2007, the Nepalese import of gold followed by telecommunication currency appreciated by 2.53 percent vis-à-vis equipment & parts, electrical goods, transport the US dollar in mid-December 2007. It had equipment & parts and other machinery & parts, appreciated by 3.71 percent in the among others, from other countries led to the corresponding period of the previous year. The exchange rate of one US dollar remained at Rs. slight rise in total imports in the first five months 63.25 in mid-December 2007 compared to Rs. of 2007/08. 71.45 in mid- December 2006. •
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dfggLo cy { dGqL 8f= /fdz/0f dxtn ] ;/sf/sf kl/ofhgfx?] ;f ] j7sdf} /fli6o« ofhgf] cfofusf] dfggLo pkfWoIo 8f= a9L kl/0ffddvL' lx;fan ] ;rfng+ xg' kg' tkm{] { gkfn] ;/sf/sf hubLzrGb | kfv/] nn] ] ks| ofdf[ w/] } clNemgeGbf' jf:tljs ;lrjx?nfO{ ljz]if cfu|x ug'{ePs]f 5 . pxfFn] lhNnf ?kdf lzw | ljsf; sfo { z?' u/L cTofjZos sfddf ljzif] ;b/dsfd' hf8] g\ ] ;8sx? tyf knx?' ;dod } ;DkGg ug {' kg,{] Wofg k¥ofpg' cfux| ugeof{' ] . ;fy } pxfnF ] lgdf0f{ ;DkGg 6G8/x?] :jR5, kf/bZfL { / klt:kwL| { 9un+ ] -ljBtLo' dfWodjf6 knx?' x:tfGt/0f xg' kg' ,{] gof F kn' lgdf0f{ ;dod } ;DkGg ;dt_] bflvnf ug {] kfpg ] Joj:yf ldnfpg,] sf7df8f +} pkTosf xg' ' kg {] / kl/ofhgf] :yndf sfd ePsf ] blvg] kg' {] s/fdf' leq ;8s lj:tf/ l56f ] u/fpg,] lqejg' ljdfg:yndf eflts} hf]8 lbg'eof] . ;ljwf' lj:tf/ u/L ;jfsf] ] u0f:t/df' ;wf/' ugkg{' ,{] ;dbfonfO' { ljBfno x:tfGt/0f sfo,{ sIff sf7f] lgdf0f,{ kf7ok\ :tssf' ] pQm a7sdf} gkfn] /fi6 « assf+} sf=d ' ueg/{ si0faxfb[ /' 5kfO,{ lbjf vfhf / s0ffnL{ c~rn ljzif] sfos{ dnfO| { dfgGw/sf ] klg pkl:ytL lyof.] gkfn] ;/sf/sf ljleGg ;dod } sfofGjog{ ug { lgbzg{] lbgeof' ] . ;fy } pxfnF ] ufdL0f| dGqfnosf ;lrjx?af6 cf—cfkmgf\ ] dGqfnosf ] rfn " cf=a=sf] ;8s ;hfn+ / ahf/ kxr' sfos{ d| nIo cg;f/' sfofGjog{ ah]6df ljlgof]lht /sdx?sf] cfof]hgfx?df ul/Psf ug,{] kmfx/d] nfsf} ] bL3sfnLg{ ;dfwfg ug { sf] Recycling vrx?sf{ ] nIo cg;f/' sflt{ s{ dlxgf;Dd eP u/sf] kult| Joj:yf ldnfpg,] ICD sf ] :yfkgf ug { cWoog ug,{] nf8] ;l8ªsf] ] ;d:of ;dfwfg ug { ljBtdf' lghL Ifqsf] ] nufgL ljj/0fx? k:t| t' ePsf ] lyof ] . cfslift ug,{] lgzNs' cfifwL} lj/fdLn ] kfpg ] Joj:yf ldnfpg] ;fxL] sfoqmddf{ cydGqfno{ ah6] tyf sfoqmd{ dxfzfvfsf nufot ah6df] k/sf] sfox?nfO{ { kefjsf/L| ?kdf sfofGjog{ ;x;lrj s[i0fxl/ afF:sf]6fn] ljleGg dGqfnox?df ug { ;dt] lgbzg{] lbgeof' ] . kfif} % ut ] cy { dGqfnodf ljlgoflht] rfn ' jifsf{ ] ah6sf] ] sfofGjogdf{ xfn;Dd kfKt| cfoflht] gkfn] ;/sf/sf ;lrjx?sf ] ;xeflutfdf cf=j= @)^$.^% sf ] ah6] jStJodf pNnv] ePcg;f/' ådfl;s} ePsf kultsf| ] ;dLIffTds l6Kk0fL ugx'{ b“' } cfufdL lbgdf sfofGjog{ kult| ;dLIffsf ] j7ssf} ] qmddf jxfnF ] ;f ] lgbzg{] dGqfnox?n ] ;dod } kult| ljj/0f pknAw u/fpg cfux| lbgePsf' ] xf ] . ug{'eof] . •
55 cydGqLåf/f{ ;fjhlgs{ ;:yfgx¿sf+ sfosf/L{ kd| vx¿nfO' { lgbzg{] cy { dGqfnodf ^ df3, @)^$ df cfoflht] ;fjhlgs{ ;f ] sfoqmddf{ dfggLo cydGqL{ 8f= /fdz/0f dxtaf6 ;:yfgx¿sf+ sfosf/L{ kd| vx¿sf' ] ;xeflutf /xsf] ] 5nkmn sfo { ;Dkfbg ubf { lglestfk{ j" s{ u/L Joj;flos bli6sf[ 0f] sfoqmddf{ ;fjhlgs{ ;:yfgx¿sf+ ] eflts} tyf ljQLosfo{ /fvL ;jfk] jfx| ug { / cfkmgf ] ;:yfsf+ ] kultdf| Wofg lbg kult| dNof" sg+ Pj + ;dLIff ug {] sfo { ;DkGg eof.] ;f ] ca;/df lgbzg{] lbg ' eof ] . ;:yfgx¿df+ sfifsf] ] Joj:yf gu/L ;j } ;fjhlgs{ ;:yfgx¿sf+ ] jtdfg{ cj:yfdf ;wf/' u/L bfloTj l;hgf{ ug { gxg' ,] ldtJooL 9ªuaf6\ ;rfng+ ug{] cfufdL lbgdf Joj;flos ¿kdf ;rfng+ ug { / ;jf] kjfxdf| ;:yfgn+ ] sfo { ;rfng+ ubf { :jtGqtfkj" s{ Jofj;flos ofhgf] ;/ntf tyf kefjsfl/tf| Nofpg ] ljifodf ;xeflutfdns" / sfoof{ hgfcg] ;f/' ;rfng+ ug { / cy { dGqfnon ] ;bj} 5nkmn u/L ;f ] ;DjGwdf a9L ;hu /xL kefjsf/L| ;xofu] ug {] atfpgeof' ] . ;fy } ;j } sfosf/L{ kd| vn' ] ljQLo sfofGjogsf{ ] kltj4tf| ;dt] ;j } sfosf/L{ kd| vx¿af6' cg;fzg' sfod u/L ljQLo ;Ifdtf a9fpbF } ;:yfgx¿+ k|s6 eof] . ;f] cj;/df ;+:yfgx¿sf] v'b ;DklQsf] k0f" tof{ Joj;flos ¿kdf ;rfng+ u/L j:t ' tyf ;jfsf] ] -networth_ cj:yf, gfkmf gfS;fgsf] ] l:ylt ;:yfsf+ ] efsf cfklt" nfO{ { lgoldt, ;xh, klt:kwf| Tds{ / kefjsf/L| ¿kdf gf3sf] ] C0f / ;fjf,F Jofh, cjsfzsfifsf] ] Joj:yf, sfifsf] ] pknAw u/fO { ;fjhlgs{ ;:yfgx¿+ ;/sf/L sfifdfly] lge/{ Joj:yf gul/Psf bfloTj, nvf] kl/If0fsf ] l:ytL km¥of6} /xgsf' ] ;6f ;Ifd eO { hgtfnfO { ;jf] k¥ofpg' sl6a4 eO{ ug { afsLF a?h] ,' ;wf/' ;lxtsf ] Jofj;flos ofhgf] gfS;fgL] nfUg lgb]{zg lbg'eof] . sdL ug {] sfo { ofhgf] , ;fjhlgs{ vl/b Pgcg] ¿k' ;:yfg+ P]g lgod kl/dflh{t u/L ljQLocg'zf;g, ;'zf;g, pQm cj;/df cy { ;lrj >L ljBfw/ dlNnsn ] of ] 5nkmn ldtJolotf / kf/blztf{ Nofpg ] nufotfsf ljifodf ule/tf+ sfo{qmdjf6 ;fj{hlgs ;+:yfgx¿sf] sfo{s'zntf clej[l4 kj" s{ cGtlqmof eof ] . o; ksf/sf| ] jxt[ 5nkmn cGt/lqmof ug{ ;3fp k'Ug] ljZjf; JoQm ug'{ePsf] lyof] . o:tf] sfoqmd{ cy { dGqfnod } cfofhgf] ePsf ] of ] klxnf ] cj;/ 5nkmn sfo{s|d lg/Gt/ hf/L /xg] / ;+:yfgx¿sf ePsf ] / ;xefuL sfosf/L{ kd| vx¿af6' o:tf ] sfoqmdn{ ] ;d:ofx¿ uxg¿kdf ljZn]if0f u/L ;dfwfg ug{ cy{ lg/Gt/tf kfpg'kg]{ / cy{ dGqfnosf] lgb]{zgnfO{ dGqfno ;b}j ;xof]uL /x]sf] ljrf/ JoQm ug'{eof] . uDeL/tfkj" s{ sfofGjog{ ug {] kltj4tf| JoQm ugeof{' ] . /fh:j ;lrj >L /fd]Zj/ vgfnn] ;j} ;fj{hlgs ;+:yfgx¿sf] sfo{ If]qdf kl/cfPsf sl7gfOx¿sf ] ;dfwfg ;fjhlgs{ ;:yfgx¿nfO+ { Jofj;flos ¿kdf ;rfng+ u/L ug{ :ki6 sfo{ of]hgf;lxt cy{ dGqfnodf k|:t't ul/Pdf ;doj4 sfoof{ hgf] agfO { kefjsf/L| ¿kdf ;rfng+ u/L ;b}j ;sf/fTds b[li6sf]0fn] ;xof]u ug]{ ljZjf; lbnfpFb} ;jf] tyf ;ljwf' kjfxdf| kefjsf/Ltf| ldtJolotf / ;zf;gsf' ] ;xeflutfsf] nflu ;a}nfO{ wGojfb lbg' eof] . jfl0fHo cge' lt" xg' ] u/L ;rfng+ ug { ;fjhlgs{ ;:yfgsf+ kd| vx¿af6' tyf cfk"lt{ ;lrj >L k'?iff]Qd cf]emfn] ;+:yfgx¿n] ufle/tfkj" s{ sfo { ug {] kltj4tf| JoQm eof ] . ;fjhlgs{ pTkfbsTj a9fpg] cgfjZos vr{ 36fpg] / ;dog';f/ ;+:yfg k|d'vx¿;+u cy{ dGqfnoaf6 o:tf] sfo{qmddf gof F kljwL| kfKt| ug { koTgzLn| xg' kg' {] atfpg'eof] . ;+:yfg cfofhgf] ePsfdf] kd| vx¿af6' ;Gtfif] JoQm eof ] / cfufdL ;dGjo dxfzfvf k|d'v >L lzjaxfb'/ /fodfemLn] pQm lbgx¿x¿df klg o:tf ] cGt/lqmof sfoqmd{ lg/Gt/ ul/g' sfo{qmd ;+rfng ug'{ePsf] lyof] . ;f] cj;/df sf=d'= kg {] cfjZotf dx;;' eof ] . sDtLdf jifsf{ ] Psk6s o:tf] sfoqmd{ ug {] / ;:yfgsf+ ;d:ofx¿ s ] xg' / ;/sf/sf] dxfn]vf lgoGqs / cy{ dGqfnosf pRrkb:y ckIff] s ] xg' eGg ] ;DaGwdf 5nkmn eof ] . clws[tx¿sf] ;xeflutf /x]sf] lyof] . •
56 gkfn] ;/sf/, cy { dGqfno cflys{ jif { @)^$÷^% sf ] kfif} dlxgf;Ddsf ] /fh:j c;nL" ljj/0f rfn " cflys{ jif { @)^$÷^% sf ] kfif} d;fGt;Dddf ?= $& #= cGtMz'Nstkm{M– cfly{s jif{ @)^$÷^% sf] kf}if ca { #* s/f8] (% nfv /fh:j ;sng+ eO { ut cflys{ jif{ dlxgf;Dddf o; zLifs{ cGtut{ ?= $ ca { (% s/f8] %$ @)^#÷^$ sf ] ;fxL] cjlwsf ] tngfdf' @%=#& kltztn| ] al4[ nfv @ xhf/ /fh:j ;sng+ ePsf ] 5 . o;n ] sn" ePsf ] 5 . sn" /fh:jdWo ] s/ /fh:jtkm { ?= $) ca { !^ /fh:j c;nLdf" !)=$^ kltztn| ] ofubfg] lbPsf ] 5 . s/f8] % nfv !# xhf/ c;nL" ePsf ] 5 . o; } u/L $= s/ tkm { M– cflys{ jif { @)^$÷^% sf ] kfif} dlxgf;Dddf u/s/tkm} { ?= & c/a @@ s/f8] *( nfv *& xhf/ /fh:j o; lzifs{ cGtut{ ?= * ca { #( s/f8] () nfv ## c;nL" ePsf ] 5 . o; cjlwdf sn" /fh:j c;nLdf" s/ xhf/ /fh:j ;sng+ ePsf ] 5 . o;n ] sn" /fh:j /fh:jsf ] cz+ *$=&% kltzt| / u/s/} /fh:jsf ] cz+ c;nLdf" !&=&@ kltztn| ] ofubfg] lbPsf ] 5 . !%=@% k|ltzt /x]sf] 5 . %= /lhi6zg]« b:t/' tkm{ M– cflys{ jif { @)^$÷^% sf ] kfif} /fh:j c;nLsf" ] zLifsut{ tngfTds' ljj/0f lgDgfg;f/' 5 M dlxgf;Dddf /lhi6zg]« b:t/' ?= ! ca { #% s/f8] *% nfv !^ xhf/ /fh:j ;sng+ ePsf ] 5 . o;n ] sn" ! eG;f/ dx;ntkm" { M– cflys{ jif { @)^$÷^% sf ] kfif} /fh:j c;nLdf" @=*& kltztn| ] ofubfg] lbPsf ] 5 . dlxgf;Dddf hDdf ?= ( ca { ^& s/f8] ^& nfv ^$ xhf/ /fh:j ;sng+ ePsf ] 5 . o;n ] sn" /fh:j ^= ;jf/L ;fwg s/ tkm { M– cflys{ jif { @)^$÷^% sf] c;nLdf" @)=$@ kltztn| ] ofubfg] lbPsf ] 5 . kfif} dlxgf;Dd ?= *$ s/f8] @* nfv ^* xhf/ c;nL" ePsf ] 5 . o;n ] sn" /fh:j c;nLdf" !=&* @= dNo" clejl4[ s/ tkm { M– cflys{ jif { @)^$÷^% sf] kltztn| ] ofubfg] lbPsf ] 5 . kfif} dlxgf;Dddf ?= !$ ca { (@ s/f8] &( nfv #) xhf/ /fh:j ;sng+ ePsf ] 5 . o;n ] sn" /fh:j &= u/s/} /fh:j tkm { M– cflys{ jif { @)^$÷^% sf ] kfif} c;nLdf" #!=%) kltztn| ] ofubfg] lbPsf ] 5 . dlxgf;Dddf ?= & ca { @@ s/f8] *( nfv *& xhf/ u/s/} /fh:j c;nL" ePsf ] 5 . o;n ] sn" /fh:j c;nLdf" !%=@% kltztn| ] ofubfg] lbPsf ] 5 . • gkfn] ;/sf/ cydGqfno{ /fh:j cg;Gwfg' ljefusf ] cg/f' w] cfos/, dNo" clejl4s/,[ eG;f/ dx;n,' cGtMzNs' h:tf /fh:jsf ] rxfj6' ePsf ] jf xg' ;Sg ] hfgsf/L lbgxf' ;] \ . lsg sxf“ • sfggn" ] tkfOnfO{ {+ k/:sf/' lbg ] Joj:yf 6]lnkmf]g M !^^)—)!—%%))) u/sf] ] 5 . -k;f} gnfUg ] kmfg_] kmofS;\ M )!—%%$@)@# tkfOsf{ ] gfd, 7ufgf] ufKo] /xg5] . • Od][email protected] • tkfOnfO{ { sf/jfxLsf ] hfgsf/L lbOg5] . jj;fO6] M www.dri.gov.np
57 ] ] % { sf 126=16 125=37 ' ngfdf 127=06 116=45 168=55 139=78 123=24 128=75 118=85 225=41 117=44 120=84 340=45 124=84 t -¿= )))_
] o; cjlwsf % ] 5=37 114=05 60=13 48=56 99=35 } if;Ddsf ' ngfdf 106=64 123=75 114=20 130=42 114=08 109=80 116=70 140=42 kf nIosf ] t ] % 93=39 111=90 ' ngfdf 74=17 132=43 60=89 93=74 87=64 105=72 } if dlxgfsf t 101=19 108=12 131=13 131=98 119=55 101=23 86=45 118=71 106=80 123=05 8 130=57 109=32 142=65 135=34 141=64 128=97 113=51 142=20 500=45 214=49
{ s@)^$÷^% @)^$÷^% ut aif =34 113=85 % ' ngfdf nIosf 37=29 63=34 49=30 24=92 10 11 12 13 59=32 131=11 31=84 45=71 49=65 111=86 49=60 124=29 49=79 141=19 43=64 40=60 47=09 t
jflif ' nL ljj/0f " nL nIosf kf 518199 342101 40=05 180939 297705 1510671 55=95 7538733 51=55 1374699 3580703 9453464 51=34 5474466 48=71 9676764 4955402 ] /fh:j c; 978990 395,701 392960 842868 77=86 474005 7907510 224,800 1591393 1358516 6583530 7228987 3604044 6439814 8399033 9074000 35167049 40160513 41750579 47389500 13085848 14927930 50 " nLnIo c; 27293 99779 37874 300,900 84645 210136 1,350,000 669152 232910 137765 1932967 1510216 7,198,300 7687449 888094 5178338 902062 4583034 350000 4519587 5570108 ] 2821061 1785519 4328782 15029200 10700418 } ifsf 7 8 9 } if dlxgf;Ddsf 27528 64826 98568 62200 36800 ] kf 177645 891469 713824 225000 1013351 3168310 284447 3331704 4704011 1596200 1272200 1464605 8609304 nIo c; 6 ] 815610 670183 372599 " nL @)^$÷^% kf 247572 5322313 } if;Ddsf 6545789 1191172 8118244 4442137 7819801 6194442 3044170 31606358 12560381 2477956 ] c; { @)^$.)^% sf ] dfq kf 53513 415093 73926 271163 27290 231230 48999 17343 555111 2963253 1012523 2738518 698148 3778863 } ifsf 3981677 4 5 2865957 6008569 7085423 11067100 37800800 11653474 { s jif ' dfg @)^#÷^$ sf 726000 cfly 854100 1389599 470000 { s cg 2317500 143037 8205701 2700000 15593300 11239900 735849 3346100 230345 14625500 1082500 18412000 1448969 16869199 10523201 29651900 2184818 22705056 80962200 19489300 1088812 103667256 aflif ] jf ' Ns ' / { s -@)^$÷)^%_ kf { { { } / s/ /fhZj Ns ' « ] zg b:t } } } 7f/L 7f/L 7f/L " n /fhZj + ;f/ tkm " =c=s= tkm hDdf s/ /fhZj ;jf/L ;fwg s/ hDdf u cfGtl/s pTkfbg cGtMz /lhi6 Jofhs/ s/ tkm cfos/ 3/ hUuf jxfn s/ k ef/tLo cGtMz d pTkfbg, ljqmL, ; lgsf;L cGo s k s/ zLif k e 2 3
58 cy { dGqfnosf ] @)^$ ;fn kfif} dlxgf;Ddsf] dfl;s kult| ljj/0f dGqfno÷lgsfosf] gfdM cy{ dGqfno @)^$ ;fn kfif} dlxgf c dfl;s ?kdf ;DkGg ePsf dVo' dVo' sfdsf ] ljj/0f s kl/df0f vnfpg' ;lsg ] sfdsf ] ljj/0f ;Dkflbt kd| v' sfox?{ of ] dlxgfsf] rfn' cf=j=sf] ut jifsf{ ] ;fxL] dlxgfsf] pknlAw of ] dlxgf;Ddsf ] tngfdf' o; dlxgfsf] pknlAw kult| -kltztdf_| cfGtl/s /fh:j ljefu ! PAN btf { -;Vof_+ 2969 10400 127=83 @ VAT btf { -;Vof_+ 553 3189 124=57 #d=c=s/" lkmtf { -?= xhf/df_ 284746 1499289 63=69 $dqLk} 0f" ed0f| -;Vof_+ 508 2683 385=49 %cg;Gwfg' -;Vof_+ 13 47 188=00 ^ Full audit ;DkGg -;Vof_+ 264 1316 152=14 & cfsl:ds lg/LIf0f -;Vof_+ 168 813 91=04 * cfos/ aSoftf} c;nL" -xhf/df_ 16140 891880 652=58 (a?h] " ;Dk/LIf0f -?= xhf/df_ ==== 198868 114=98 !) sn" /fh:j c;nL' -?= xhf/df_ 8633207 2954540 129=74 eG;f/ ljefu ! ef/tLo cGtzNs' lkmtf { kfKt| 210136026 1510671068 @ cGt/fli6{ o« dNo;" rL" ljt/0f 211 # Generalized system of preferences ;DalGw kqfrf/ 938 $ lg/LIf0f ed0f| 010 % clVtof/ b?kof' u] cg;Gwfg' ;DaGwL kqfrf/x? 03 ^as+} Uof/G6L] ;DjGwL 534 & a:t ' k/LIf0f÷ a:t ' alus/0f{ ;Vof+ 150 786 * eG;f/ PhG6sf] ] kdf0fkq| gljs/0f 1 225 ( dx;n" ;ljwf' kbfg| ul/Psf ] ;Vof+ 104 748 !) s6g' lts} ;ljwf' kbfg| ul/Psf ] ;Vof+ 30 388 !! j088] jo/] xfp;sf ] Ohfhtkq gljs/0f 3 119
59 !@ dNo" kg/fjnf' sg] ;ldltsf ] a7s} 13 !# dNo" kg/fjnf' s] ;ldltsf ] lg0fo{ ;Vof+ 21 48 !$ hfrkf;F kl5sf ] nvf] kl/If0f -PCA_ 25 !% IfqLo] dNof" sg+ ufi7L] 03 !^ j088] jo/] xfp;sf ] Ohfhtkq hf/L 116 /fh:j cg';Gwfg ljefu ?= xhf/df ! eG;f/ rf/L] k7f/L} lgoGq0fsf ] l;nl;nfdf ljleGg ldltdf sJhfdf lnPsf d2fx?sf' ;fdfgx? hkmt u/L w/f6L} ;dt] lnO{ cfjZos sf/jfxL e}/x]sf] . 5684 21788 27472 @d=c=s/' 5nsf] ] cfzsfdf+ ljleGg ldltdf ljleGg s/bftfx?sf ] sf/fjf/sf] ] ;DjGwdf ul/Psf ] 5fgjLgaf6 s/ lgwf{/0f ul/Psf] . 106806 19811 126617 # cGtM zNs' 101 0 101 $ cfos/ 33822 18978 52800 /fh:j rxfj6' 36 0 36 % ljbzL] ljlgdosf ] caw} sf/faf/] tyf ckrng ;DaGwdf ePsf ] 5fgjLgaf6 ;DalGwt cbfntdf d4f' bfo/ ul/Psf] 0 23020 23020 ^ cGo 02 2 ah]6 tyf sfo{qmd dxfzfvf ! lgsf; kult| -?= s/f8df_] rfn ' -;fjfF ;dt_] 794=80 5234=50 klhut" 266=22 1293=06 @vr { kult| -?= s/f8df_] rfn ' vr { -;fjfF ;dt_] 816=55 4562=14 klhut" vr{ 285.22 1028.34 sfg'g dxfzfvf ! l/6 lgjbg] X @ lnlvt hjfkm 626 #;rgf" ;Dkfbg 735 $;rgf" ksfzg| 929 % /fo 41 304 ^ lgod X 3 & cWofbz] XX * ljwos] 47
60 v= kl/df0f v'nfpg g;lsg] sfdsf] ljj/0f cfGtl/s /fh:j ljefu ! cf=/f=sf= gkfnu~h] / w/fgsf ] cgudg' ul/Psf ] . @7nf" ] s/bftf sfofno,{ cf=/f=sf= gkfnu~h] / cf=/f=sf= w/fgdf nfu ' ePsf ] sfo;Dkfbgdf{ cfwfl/t kf| T;fxg] k0ffnLsf| ] ;rs" / ef/k-ffnL| kl/dfhg{ ul/Psf ] . #= aSoftf} / a?h] ' km5of\ 6{} ;ldlt u7g eO { sfo { kf/De| ePsf ] . $= zlIfs} ;jf] kbfg| ug {] sG;N6G;L] ;jfx?sf] ] cgudg' cg;Gwfg' u/L d=c=s/" tkm{ btf { u/fpg ] sfo { sf ] cfjZos cg';Gwfg eO{/x]sf] . eG;f/ ljefu !s6g' lts} tyf dx;n" 56df' hfrkf;F ePsf ;jf/L ;fwgsf ] kgM' dx;n" c;n" ug { $ yfg ;jf/L ;fwgsf ] dx;n" c;"n ug{ n]lv k7fPsf] . @dNo' kg/fjnf' sgsf] nflu kfKt| lgjbgx?] kltlqmofsf| ] nflu ;DalGwt eG;f/ sfofnodf{ k7fOPsf ] . # lj/f6gu/ eG;f/ sfofnodf{ ASYCUDA + + 1.18d df Upgrade ul/Psf] . $ ef/tLo ;/sf/af6 kfKt| ljnx?sf ] Reconcile sfo{ ul/Psf] . % tftfkfgL] tyf dlr] eG;f/+ sfofnodf{ Closed Circuit Television h8fg ul/Psf] . ^ :jtM a9jf' ;DalGw sf=;=d=' ;DaGlw tyf kl/r/ :t/ al4[ nfuot blgs}} kzf;lgs| sfox?{ ePsf ] . & sfo { ;Dkfbg dNof" °g kl/;rs" ;sng+ / glthf tof/ ul/ ;Dk0f" { dn" e;f/+ sfofnox?nfO{ { hfgsf/L u/fOPsf] . sd{rf/L k|zf;g dxfzfvf !sdrf/Lx?sf{ ] ;?jf, kb:yfkgf tyf sfh ;DjGwL sfo { u/sf] ] ;fy } :jtM a9jf' ;DalGw, sfo;Dkfbg{ dNof" sg+ kmf/fd ;DaGwL sfo { eO/xsf] ] . cfly{s sfo{ ljifos tyf gLlt ljZn]if0f dxfzfvf != ;/' Gb] | dl0f lqkf7LnfO { gkfn] ;/sf/sf ] lg0fo{ cg;f/' /fli6o« ljdf ;:yfgsf+ ] ;rfns+ ;ldltsf ] cWoIfdf lgoQmL ul/Psf] . @= /fhz/fh] sl0fsf/nfO{ { /fli6o« ljdf ;:yfgsf+ ] kzf;s| kbdf lgoQmL' ul/Psf ] . #= ljbzdf] cnkq k/sf] gkfnLnfO] { ljbzaf6] lkmtf { lemsfpg ljbzL] db' f| ;6xL ;ljwf' lbPsf ] -g=?=] @^,#))._ $= ds' Gb' k;fb| cHofnnfO{ { @ aifsf{ ] nflu slif[ ljsf; jssf+} ] ;rfns+ ;ldltsf ] ;b:odf dgfgog] ul/Psf ] -lg0fo{ )^$.(.!& dGql:t/_ %= ? !))).– -Psxhf/_ sf ] gf6] lgisfzg ug { sf=d=" ueg/n{ ] x:tfIf/ ug { :jstL[ . ^= lwtfkq] af8] sf{ ] ;rfns+ ;ldltsf ] ;b:odf o; dGqfnosf ;x ;lrj >L zf/bf k;fb| lqtfnnfO { dgfgog] ul/Psf] . 7= gful/s nufgLsfifsf] ] cWoIfdf >L dfwj k;fb| kf8} nnfO] { gkfn] ;/sf/ -d=k_+ sf ] ldlt )^$.(.#) sf] lg0fofg{ ;f/' lgoQmL' ul/Psf ] . 8= sdrf/L{ ;rosf+ ifsf] ] cWoIfdf >L bLk a:GoftnfO { gkfn] ;/sf/ -d=k_+ sf ] ldlt )^$.(.#) sf ] lg0fofg{ ;f/' lgo'QmL ul/Psf] . 9= kjf" Grn{ ufld0f| ljsf; jssf+} ] ;rfns+ ;ldltsf ] ;b:odf ;lw/' sdf/' cofnnfO{ { lgoQmL' ul/Psf ] .
61 ;+:yfg ;dGjo dxfzfvf ! ;/sf/L ;:yfg+ / ;ldltx?af6 dfu eO { cfP cg;f/' a9jf' tyf vnfaf6' kbklt" { ug { ljleGg ;:yfg÷;ldltx?nfO+ { cflrTo} x/L] ;xdlt lbg ] ul/Psf ] . @ ;fjhlgs{ ;:yfgx?af6+ ;ljwf' al4[ ug { ;xdlt dfu e } cfPcg?k' cflrTo} x/L] ;xdtL lbg ] ul/Psf ] . # pRr:t/Lo ;fjhlgs{ ;:yfg+ ;wf/' ;emfj' ;ldlt, @)^# n ] kz] u/sf] ] kltj| bg] sfofGjogsfnflu{ gLltut lg0fo{ ug{] k|s[ofdf /x]sf] . $= gkfn] b/' ;rf/+ sDkgLsf ] % kltzt| zo/] sdrf/Lx?nfO{ { ljqmL ug { pQm sDkgLnfO { :jLstL[ lbO;ssf] ] / !) kltzt| zo/] ;j;fwf/0fnfO{ { ljqmL ugsf{ nfuL gful/s nufgL sfifnfO] { ljqmL kjGws| lgoQmL' u/L ljqmLsf ] nflu b/vf:t dfu ePsf] . %= slif[ cfhf/} sf/vfgf ln=sf ] v/Lbstf;{ uF ePsf ] ljjfb ;dfwfgsf ] nflu dWo:ytf 6fOj« gnaf6' ePsf ] lg0fo{ lglhs/0f ;ldltdf kz] eO { pQm ;ldltsf ] l;kmfl/; cg;f/' slif[ cfhf/} sf/vfgf vf/h] ug {] lg0fo{ ePsf ] . ^= gkfn] lrof ljsf; lgudsf ] ^% kltzt| zo/] v/Lbstf;{ usfF ] ljBdfg ;d:of ;dfwfg xt] ' lghLs/0f ;ldltaf6 ldlt @)^#.*.@( df /fli6o« ofhgf] cfofusf] df= ;b:o 8f= kfif/fh] kf08Ho] sf" ] ;of+ hsTjdf] ul7t sfobnaf6{ kltj| bg] k:t| t' ePsf ] / lghLs/0f ;ldltsf ] lg0fofg{ ;f/' d=k=df+ kz] eO { d=k=sf ] lg0fofg{ ;f/' vl/b stf;{ u+ k/s' ;Demftfug{} {] tof/Ldf /xsf] ] . &slif[ rg' pBfu] ln=sf ] ;DktL Joj:yfkg bfloTj km/kmf/s / vf/hLsf] nflu] d=k=af6+ ePsf ] lg0fo{ sfofGog{ cl3 a9fOPsf] . *= ;/sf/L ;:yfgx?sf+ ] kf| kmfOn] tof/ ug {] sfo { kultdf| /xsf] ] / cGo blgs} sfox?{ ;Dkfbg ul/b } cfPsf ] . j}b]lzs ;xfotf tyf ;dGjo dxfzfvf != ldlt @)^$÷(÷% df hgjfbL u0ftGq lrg ;/sf/n ] gkfnnfO] { ?= $% s/f8] *% nfv cgbfg' ;xfotf pknJw u/fpg ] ;DaGwL cflys{ tyf kfljlws| ;xfotf ;DaGwL ;Demftf] kqdf gkfn] ;/sf/ / hgjfbL u0ftGq lrg ;/sf/aLr ;Demftf} ;DkGg eof ] . @= ldlt @)^$÷(÷@% df :jLh/Nof08n ] Sustainable Management Of Agriculture Soil in the Mid -Hills of Nepal Project Phase III sfofGjogsf{ ] nflu gkfn] ;/sf/nfO { ?= @) s/f8] a/fa/sf ] cgbfg' ;xfotf pknJw u/fpg ] ;DaGwdf gkfn] ;/sf/ / :jLh/Nof08 ;/sf/aLr ;Demftf} ;DkGg eof ] . #= ldlt @)^$.(.#) df Pl;ofnL ljsf; asn+} ] gkfnnfO] { Rural Reconstruction and Rehabilitaion Sector Development Program sfofGjg{ ug { ? ^ ca { @( s/f8] cgbfg' ;xfotf pknAw u/fpg ] ;DaGwL ;Demftf} kqdf P=l8=aL= / gkfn] ;/sf/aLr ;Demftf} ;DkGg eof ] . /fh:j dxfzfvf ! cflys{ aif { @)^$÷)^% sf ] 57f} +} dlxgf kfif} d;fGt;Dddf ? ^% ca { @& s/f8] %^ nfv lgsf;f ePsf ] dWo ] o; cjlwdf rfn ' vr { tkm { ? $$ ca { %* s/f8] $( nfv / khLutF" tkm { ? !@ ca { (# s/f8] )^ nfv tyf ;fjf F eStfgL' tkm { ? & cj { &^ s/f8] )! nfv lgsf;f ePsf ] 5 . hg' ut jifsf{ ] ;fxL] cjlwsf ] tngfdf' @*=@ kltztn| ] a9L 5 . lgsf;fdWo ] o; cjlw;Dddf rfn ' vrtkm{ { ?= #* ca { @$ s/f8] )^ nfv vr { ePsf ] 5 eg ] khLutF" tkm { ? !) cj{ @* s/f8] #$ nfv tyf ;faf F eQmfgL' tkm { ? & cj { #* s/f8] )* nfv u/L pQm cjlwdf sn" vr { ?= %% ca { () s/f8] $* nfv ePsf ] 5 . hg' ut jifsf{ ] ;fxL] cjlwsf ] tngfdf' #!=! kltztn| ] al9 5 . gkfn] /fi6 « assf+} cg;f/' cflys{ aif { @)^$÷^% sf ] kfif} d;fGt;Dddf ? $& ca { #* s/f8] (% nfv /fhZj ;sng+ eO { ut cflys{ aif { @)^#÷^$ sf ] ;fxL] cjlwsf ] tngfdf' @%=$ kltztn| ] a4L[ ePsf ] 5 .
62 ah]6 tyf sfo{qmd dxfzfvf ! rfn' cf=a @)^$ k'; d;fGt;Dddf gubtk{m rfn' vr{df $$ ca{ %* s/f]8 $( nfv, k"FhLut vr{df !@ ca{ (# s/f]8 )^ nfv / ;fFjf eQmfgLdf & ca{ &^ s/f]8 )! nfv u/L hDdf ^% ca{ @& s/f]8 %^ nfv lgsf;f ePsf] 5 . To;}u/L ; f]xL cjlwdf gubtk{m rfn' vr{ ?= #* ca{ @$ s/f]8 )^ nfv, k"FhLut vr{ ?= !) ca{ @* s/f]8 #$ nfv / ;fFjf eQmfgLdf & ca{ #* s/f]8 )* nfv u/L hDdf ?= %% ca{ () s/f]8 $* nfv vr{ ePsf] 5 . h'g ut jif{sf] ;f]xL cjlwsf] s'n lgsf;f tyf s'n vr{sf] s|dz @*=@ k|ltzt tyf #!=! k|ltztn] al9 /x]sf]5 . @ @)^$ k;' d;fGt;Dddf gub kjfxsf| ] l:ylt & ca { )& s/f8] #$ nfv CgfTds /xsf] ] 5. of ] /sd ut cf=a= sf ] tngfdf' @%=& kltztn| ] 36L /xsf] ] 5 . # /fh:j c;nL" $& ca { #* s/f8] (% nfv ku' sf] ] 5 . ht' ut jifsf{ ] t;gfdf' @%=$ kltztn| ] a9L 5 . $ rfn ' cf=a= @)^$ k;' d;fGt;Dddf * ca { @) s/f8] cfGtl/s C0f p7fOPsf ] 5 . cg'udg tyf d"Nof+sg dxfzfvf !bzsf] ] cflys{ ultljwL ;j;fwf/0fnfO{ { hfgsf/L u/fpgsf nflu æcflys{ gkfnÆ] gfds sfoqmd{ ;fKtflxs ?kdf ;+rfng eO/x]sf] . @ /fh:j r'xfj6 lgoGq0fsf ;DaGwdf kg{ cfPsf ph'/Lx? ;DalGwt lgsfodf cfjZos sf/jfxLsf] nflu k7fOPsf] . # cf=j @)^$.)^% sf ] ah6] jStJosf ] abfF' g=+ !&# cg;f/sf' ] dGqfno :t/Lo kult| ;dLIff a7s} ldlt @)^$.(.$ ut ] / ådfl;s} ;lrj:t/Lo kult| ;dLIff a7s} @)^$.(.% ut ] dfggLo cydGqLsf{ ] cWoIftfdf ;DkGg ePsf ] . ;fy } cydGqfno{ / cGtutsf{ clt kfyldstf| kfKt| (P1) cfofhgfx?sf] ] rfn ' cf=j= @)^$.)^% sf ] kyd| rfdfl;s} kult| ;dLIff a7s} Pj + dGqfno :t/Lo ;d:of ;dfwfg ;ldltsf ] j7s} ;dt] ldlt @)^$.(.@& ut ] ;DkGg ePsf] . /fh:j k/fdz{ ;ldlt ! rfn ' cf=j= @)^$.^% sf ] k/s" ah6sf] ] ;DaGwdf 5nkmn ug { /fh:j k/fdz { ;ldltsf ] a7s} @ k6s a;sf] ] . @= dNo" clejl4s/sf[ ] axb/' cWoog ugsf{ ] nflu pQm ;ldltsf ] a7s} $ k6s eO { kf/lDes| kltj| bg] nvg] sfo { ;?' ul/Psf] . #gkfn] pBfu] jfl0fHo dxf;34f/f+ lj/f6gu/df cfoflht] pNnlvt] dNo" clejl4[ s/sf ] axb/' ufi7Ldf] /fh:j k/fdz { ;ldltsf ] tkmaf6{ ;xeflutf ePsf ] . sfo{;Dkfbgsf l;nl;nfdf cg'e"t ul/Psf d'Vo—d'Vo ;d:of÷d'2fx? ;d:of ;dfwfg ug{ ul/Psf pNn]vgLo k|of;x?M eG;f/ ljefu
! eG;f/ dNof" sgsfnflu+ Internet af6 ;rgf" ;sng+ ul/g ] ul/Psf ] . @ Jofkf/ tyf lgsf;L kj4| g{ sGb] af6| kfKt| ;rgf" PsLst[ ul/Psf ] .
63 cflys{ jif { @)^$.^% sf ] lwtfkq] ahf/ / ljQLo Ifq] ;wf/' sfoqmd{ / kult| ljj/0f (kyd| kfrF dlxgfsf ] tYof°df cfwfl/t_
! lwtf]]kq]]] ahf/ !=! @)^$ c;f/ d;fGtdf ^*#=(% ljGb' /xsf] ] gK;] ] kl/;rs" @)^$ kif' d;fGtdf (%*=(! ljGb'df k'u]sf] 5 . !=@ @)^$ k;' d;fGtdf ahf/ khLs/0f+" ?= #)! ca{ *^ s/f]8 k'u]sf] 5 . kl/0ffd:j?k @)^$ k;' d;fGtdf ahf/ khLs/0fsf+" ] sn' ufx:Yo{ pTkfbg;usf+ ] cgkft' #* kltzt| ku' sf] ] 5 . @)^$ c;f/ d;fGtdf o:tf] cg'kft @%=( k|ltzt /x]sf] lyof] . ;"rLs[t sDkgLx?sf ] jhf/ khLs/0fdf+" ljutdfem +} as+} tyf lwtf]kq ljlgdo jhf/ lnld6]8df df ;/sf/L ljQLo ;:yfx?n+ ] ;aeGbf} 7nf" ] lx:;f cfu6] sf] 5g \ . C0fkqsf ] bf;] f| ] jhf/ sf/faf/] ePg . !=# @)^$ k;' d;fGtdf gkfn] lwtfkq] ljlgdo jhf/ z]o/ ahf/ lj:tf/ lnld68df] ;rLs" t[ ePsf sDkgLx?sf ] ;Vof+ !$% @)^# azfvdf} ;DkGg /fhgLlts kl/atg{ kl5 psfnf] ku' sf] ] 5 . @)^$ c;f/ d;fGtdf of ] ;Vof+ !#% /xsf] ] nfUg yfnsf] ] gkfnsf] ] zo/] ahf/ laut Ps aif { eGbf a9L lyof ] . xfn ;rLs" t[ sDkgLx?dWo ] !!) j6f ljQLo ;do blvg] } Bullish Trend af6 cufl8 a9sf] ] 5 . dn' sdf' ;:yf,+ @! j6f pTkfbg / kzf| wg] ug {] pBfu,] $ j6f ;DkGg /fhgLlts kl/atg{ kZrft \ bLuf ] zflGt sfod xg' ] xf6n,] % j6f Jofkfl/s ;:yf,+ # j6f hn ljBt' ckIffdf] nufgLstfx?{ pT;fxL xg' ,' as+} tyf laQLo ;:yfx?n+ ] sDkgL / @ j6f cGo ;dxsf" /xsf] 5g \ . afg;] tyf xskb| zo/] hf/L ug,'[{ gkfn] /fi6 asn+} ] khLF" !=$ kfylds| lgisfzgtkm,{ cflys{ jif { @)^$.^% sf ] klxnf] al4[ ;DaGwL lgbzg{] hf/L ug,'[{ aslNks} nufgLsf cj;/x? ^ dlxgfdf gkfn] lwtfkq] jf8] n{ ] & j6f sDkgLx?nfO{ sd xg' ,' Aofhb/ Gog" xg' ' / cGt/fli6{ o« zo/] ahf/df klg ? @& s/f8] $$ nfv a/fj/sf ] ;fwf/0f zo/] / cGo pefF nfUg] ] ka| lQ[ sfod xg' ' cflb sf/0fn ] cflys{ aif { @)^#/^$ !@ j6f sDkgLx?nfO { ? @ cj { $# s/f8] &% nfv gkfnsf] ] zo/] ahf/sf nflu la:tf/sf/L /Xof ] . t/ j/fj/sf ] xskb| zo/] lgisfzgsf ] nflu :jLslt[ kbfg| rfn ' cflys{ aifsf{ ] kyd| % dlxgfdf eg ] gkfnsf] ] zo/] u/]sf] 5 . ahf/ cgklIft9] un+ ] la:tf/ xg' kUof' ] . gK;] ] kl/;rs" !==% gkfn] lwtfkq] ljlgdo jhf/ lnld68df] @)^$ c;f/ @)^$ c;f/ d;fGtsf ] tngfdf' %) kltztn| ] a9/] @)^$ d;fGt;Dddf ? & ca { )% s/f8] a/fa/sf ] ;/sf/L d;L/+ d;fGtdf !)@%=( laGbdf' kUof' ] . o; calwdf as+} C0fkqx? ;rLs" t[ ePsfdf] rfn' cflys{ jifsf{ ] klxnf] tyf ljQLo ;:yfx?af6+ dflhg{ nl08·df] kaflxt| shfsf{ ^ dlxgfdf yk ? # ca { !) s/f8] a/fa/sf ;/sf/L sf/0f ;dtn] ] gK;] df] c:jfeflas la:tf/ xg' ku' sf] n] ] pQm C0fkqx? ;rLs" t[ ePsf 5g \ . o; cjlwdf gkfn] shfnfO{ { Jojl:yt ug {] p2Zon] ] @)^$ c;fh] @) ut ] gkfn]
64 /fi6 « asn+} ] zo/sf] ] laut () lbgsf ] clGtd ahf/ dNosf" ]] cfPsf]df @)^$ >fj0f #) ut]b]lv lwtf]kqsf] cf;t} dfnsf] ] %) kltzt;Dd| dflhg{ nl08·] ug { kfpg] sDKo6/Ls' t[ sf/fjf/] k4lt ;rfngdf+ cfPsf ] 5 . lgbzg{] hf/L u/kl5] sxL] ;dosf nflu gK;] ] al4[ l:y/ xg' o;nfO { ;/rgfut+ lasf; tkmsf{ ] dxTjk0f" { v'8lsnf] k'u]sf] lyof] . dfGg ;lsG5 . t/ bz+-} ltxf/sf ] nfdf ] ljbfkl5 zo/] jhf/ emg \ tLjtfsf| !=& gkfn] lwtfkq] af8] n{ ] gkfn] lwtfkq] af8] { ;DaGwL ;fy pefF ] nfUg ] qmd hf/L /xof\ ] . gf6sLo 9un+ ] eO/xsf] ] lgodfanL @)^$, lwtfkq] Aoa;foL -lwtfkq] bnfn, zo/] jhf/sf ] lj:tf/nfO { dn' sdf' ljBdfg cflys{ Pj+ lwtfkq] Aofkf/L tyf ahf/ lgdftf_{ lgodfanL @)^$ /fhgLlts cfwf/x?n] k'li6 ug{ g;s]sf] / sltko / lwtfkq] ahf/ ;rfng+ lgodfanL @)^$ ;fahlgs{ sDkgLx?sf ] gsf/fTds g6] jy { xbfxF' bF' } klg ltgsf ] ahf/ u/sf] ] 5 . oL lgodfanLn ] ahf/nfO { cem a9L ultzLn dNo" clst+ dNoeGbf" lgSs } dfly /xsf] ] ;dt] kfOof ] . / kf/bzL { agfO { khLF" ahf/sf ] lasf;df yk ofubfg] ;fy, } ;rLs' t[ sDkgLx?sf ] ;du | cfwf/et" Pj + kfljlws| k'¥ofpg] ck]Iff ul/Psf] 5 . ljZnif0f] ;dt] geO { zo/] jhf/df nufgL eO/xsf] ] / as+} !=* gkfn] lwtfkq] ljlgdo jhf/ lnld68df] xfn @# j6f tyf ljQLo ;:yfx?af6+ kjfx| ePsf ] dflhg{ nl08·sf] bnfnx? /x]sf]df bf]>f] jhf/ sf/f]jf/nfO{ ;xh sf/0f tL ;:yfx?+ :jo + / cGttM lgIfkstf] { g } hflvddf] tNofpg' @& j6f bnfnx?sf ] ;Vof+ yk u/L %) k/' ofpg\ ] kg { ;Sg ] ;DefjgfnfO { bli6ut[ ub {} dflhg{ nl08·nfO] { yk nIo cg?k' ##$ j6f cfjbgx?] kfKt| ePsf 5g \ . Aoal:yt ug { cfjZos uxsfo[ { ugkg'[{ {] dxz;' u/L gkfn] k|fKt cfj]bgx? dWo]af6 lwtf]kq ljlgdo jhf/ /fi6 « asn+} ] @)^$ kfif} !# ut ] ! dlxgfsf nflu dflhg{ lnld68n] ] cfjZos 5gf6sf} ] kls| of| cufl8 a9fPsf] nl08·] /fSsf] ug {] lgbzg{] hf/L u/of\ ] . @)^$ kfif} @) 5 . ut;Dd] gkfn] /fi6 « asaf6+} Ohfhtk{ fKt| as+} tyf laQLo @ ljQLo Ifq]]]]] ;wf/''''' sfoqmd{{{{{ ;:yfx?n+ ] zo/sf] ] lwtfdf] ? !) ca { %$ s/f8] nufgL u/sf] ] kfOof ] . gkfn] /fi6 « asn+} ] lgbzg{] hf/L u/ ] kZrft\ ljQLo Ifq] ;wf/' sfoqmd{ ljZj as,+} l8=Pkm=cfO=8L= / sxL] ;do -@)^$ kfif} !% blv] @) ;Dd_ gkfn] lwtfkq]] gkfn] ;/sf/sf ] C0f tyf cgbfg' ;xofudf] ;rfng+ eO/xsf] ] lalgdo ahf/ lnld68df] sg' } sf/faf/] ePg / To;kl5 5 . ljQLo Ifq] ;wf/' sfoqmd{ cGtut{ gkfn] as+} lnld68] vn' sf] ] ahf/n ] la:tf/ } ;lRrg ] ult lnPsf ] 5 . dflhg{ / /fli6o« jfl0fHo assf+} ] kg/;' /rgf,+ gkfn] /fi6 « assf+} ] nl08·nfO] { Jojl:yt ug {] p2Zon] ] @)^$ df3 * ut ] gkfn] Reengineering / ljQLo Ifqsf] ] ;Ifdtf clejl4[ sfoqmdx?{ /fi6 « asaf6+} kl5Nnf ] !*) sfo { lbgsf ] clGtd dNosf" ] cfift} ;+rfng ul/Psf 5g\ . dNosf" ] cfwf/df a9Ldf %) kltzt| jf zo/sf] ] krlnt| g]kfn /fi6« a}+ssf] ;'b[9Ls/0f sfo{ jhf/ dNosf" ] %) kltztdWo| ] hg' sd xG5' ;f ] /sd;Dd dfq shf { lbg ;lsg,] Psk6s kjfx| ul/;ssf] ] o:tf] als·+} Ifqdf] kj| z] u/sf] gof F gof F kljlwsf| ] ljsf;;uF } shfnfO{ { ;/If0fdf' /xsf] ] zo/sf] ] kgd" Nof{" °g u/L ;fsf] ] :jR5 / klt:kwf| Tds{ lsl;dn ] o; Ifqsf] ] ljsf;df 6jf] cfwf/df yk shf { ;Ldf sfod ug { jf yk shf { kbfg| ug{ k¥ofpg' gkfn] /fi6 « assf+} ] lgodg Pj + ;kl/j' If0f] Ifdtfdf gkfOg,] ljutdf %) kltztsf| ] ;LdfeGbf a9L xg' ] u/L shf{ clejl4[ ug {] ;Gbedf{ ljbzL] k/fdzbftfsf{ ] ljut @ jif;Dd{ kbfg| ul/Psf ] ePdf @)^% c;f/ d;fGt jf eQmfgL' cjlw ;xofu] ;dt] lnO { cGt/fli6{ o:t/sf« ] lgodg Joj:yf thdf{' dWo ] hg' cufl8 xG5' ;fxL] ;dofjlwleq lgoldt ugkg{' {] ug {] sfo { ul/;lsPsf ] 5 . o;sf cltl/Qm assf+} ] lg/LIf0f nufotsf kfawfg| /fvL lgbzg{] hf/Lu/kZrft] \ dflhg{ tyf ;k/Lj' If0f] Ifdtfdf clejl4[ ug { cGt/fli6{ o:t/sf« ] nl08·] Aoal:yt eO { zo/] ahf/sf ] bLuf ] lasf;df ;dt] :ynut lg/LIf0f tyf ;k/Lj' If0f] lgblzsf{] ;dt] tof/ cgs' n" kefj| kg {] cgdfg' ul/Psf ] 5 . u/L nfu " ul/Psf ] 5 . ljQLo Ifq] ;wf/' sfoqmdsf{ ] kyd| / bf;] f| ] r/0f cGtut{ gkfn] /fi6 « assf+} ] Re-engineering !=^ vnf' jfnsjf] n] kyf| (Open outcry System) cGtut{ ;DaGwL sfox?{ ;rfngdf+ /xsf] 5g \ . xfn;Dd gkfn] @)%) ;fn k;' @( utb] lv] gkfn] lwtfkq] ljlgdo /fi6 « as+} Re-Engineering ;DaGwdf lgDg adflhdsf] jhf/ lnld68df] lwtfkqsf] ] bf>f] ] jhf/ sf/fjf/] xb' } k|ult ePsf 5g\ .
65 • gkfn] /fi6 « assf+} ] ;u7gfTds+ ;/rgfdf+ sfdsf ] ks| lt[ ug{ k/fdz{bftfnfO{ elgPsf]df ;f] x'g ;s]sf] 5}g . cg;f/' ;dfofhg] u/L gof F ;u7gfTds+ ;/rgf+ nfu" g]kfn /fi6« a}+sdf /x]sf] k':tsfnonfO{ cfw'lgs ul/Psf] 5 . • k:tsfnosf' ] ?kdf ljsl;t u/fpg Pshgf ljbzL] • a}+sn] sd{rf/L s6f}tL ug]{ p2]Zon] tLg r/0fdf Librarian Expert lgoQm' ug {] sfoqmd{ /xsf] ] 5 . :jlR5s] cjsf; ofhgf] nfu " u/sf] df] ;f ] ofhgf] cGt/ut %&! / clgjfo { cjsfz ofhgf] cGtut{ !! • ljQLo If]q ;'wf/ (Phase II) cGtu{t NRB hgf sdrf/Ln{ ] cjsf; lnO { ;ssf] 5g \ . Engineering sf nflu Bank Examination Expert $ hgf, @ hgf lg/LIf0f tyf ;k/Lj' If0f] sfodf{ bIftf tyf szntf' Non Bank Examination Expert • tyf Off site Supervisor ! hgf lgoQm' ug ]{ l;nl;nfdf clej[l4sf nflu #) hgf sd{rf/Lx?nfO{ 5gf6} ePsf ] ;:yf+ k/fdzbftfx?af6{ tyf sfo{ M/S INC in association with On-the-Job Training KPMG, Sri Lanka ;u+ gkfn] /fi6 « as+} tyf ljZj ;Dkfbg ;Ifdtfsf ;fy ;DkGg ug { d2t kuf' ;] \ eGg] assf+} ] :jLslt[ kZrft kma] c/L|' ^, @))^ df @ jifsf{ clek|fon] s/Lj $^ hgf afXo n]vfk/LIfsnfO{ nflu o; as+} / nvfk/LIf0f] tflnd kbfg| ul/Psf ] 5 . Consulting Firm M/s IEF Inc. in Association with KPMG, Srilanka aLr ;Demftf} • u/:ynut} lg/LIf0f sfo { lgblzsf{] tof/ u/L nfu" ;DkGg eO { lgh k/fdzbftfx?af6{ ldlt @)^@÷!@÷!# ul/Psf] 5 . ut ] tbg\ ;f/' dfr { @^, @))^ blv] sfo { z?' ul/Psfdf] pQm • ljQLo Ifq] ;wf/' sfoqmdsf{ ] kydr/0f| cGtut{ NRB M/S INC in association with KPMG, Sri Lanka n ] ;Demftf} cg;f/sf' ] sfo { ug { g;ssf] n] ] Re-engineering sfosf{ ] nflu lgoQm' k/fdzbft{ [ ;:yfsf+ ] ;Demftf} cjlw ;dfKt eO;ssf] ] / ljQLo ljZj assf+} ] ;xdlt lnO { gkfn] /fi6 « as+} / Consulting Firm M/s IEF Inc. in Association with KPMG, Ifq] ;wf/' sfoqmdsf{ ] bf;] f| ] r/0f cGtut{ NRB Re- Srilanka aLrsf ] ;Demftf} /2 ul/Psf ] 5 . engineering sfosf{ ] nflu gof F k/fdzbftfx?{ lgoQm' u/L sfo{ z'? eO;s]sf] 5 . ljQLo If]qsf] Ifdtf clej[l4 • ljQLo If]q ;'wf/ jf/] ;+rflnt ultljlwx?sf] ;du | ljQLo Ifqsf] ] Ifdtf clejl4[ ug {] p2Zon] ] shf{ hgdfg;df ;xL ;rgf" kjfx| ug {] p2Zon] ] gkfn] /fi6« ;rgf" sGb] nfO| { ;b' 9Ls/0f[ ug,{] ;DklQ Joj:yfkg lgudsf] asdf+} sfo/t{ \ /xg ] u/L Pshgf hg;Dks { clwst[ :yfkgf ug,{] as+} tyf ljQLo ;:yfx?sf+ ] hgzlQmnfO { tflnd (Public Relation Officer) sf ] lgolQm' ul/Psf ] 5 . kbfg| u/L lghx?sf ] Ifdtf clejl4[ ugsf{ ] nflu Pp6f xfn lghsf ] kbfjlw hg" #), @))* ;Ddsf nflu yk tflnd sGb] sf| ] :yfkgf ug {] h:tf dxTjk0f" { sfox?sf{ ] ;dt] ul/Psf] 5 . z'?jft ul/Psf] 5 . • g]kfn /fi6« a}+ssf] ;"rgfnfO{ cfw'lgsLs/0f ug{sf] To;u/L} als·+} Ifqdf] kj| z] u/sf] gof F kljlwsf| ] ljsf;;uF } nflu NRB IT Plateform :yfkgf u/L ;f] sfo{ :jR5 / klt:kwf| Tds{ lsl;dn ] o; Ifqsf] ] ljsf;df 6jf] ;DkGg ug { Pshgf ljbzL] IT Consultant sf ] lgolQm' k¥ofpg' gkfn] /fi6 « assf+} ] lgodg Ifdtfdf clejl4[ ug{] ul/Psf] 5 . a}+ssf] ;"rgf k|ljlwsf] ljsfz ug{ IT ;Gbedf{ ljbzL] k/fdzbftfsf{ ] ljut # jif;Dd{ ;xofu] Consultant sf] ;'emfj cg';f/ @ hgf Prototype ;dt] lnO { cGt/fli6{ o« :t/sf ] lgodg hf/L ul/Psf ] 5 . Developer tyf ! hgf IT Trainer lgoQm' u/L sfo{ h; cGtut{ as+} tyf laQLo ;:yfx?n+ ] sfod /fVg ' kg{] ;DkGg eO;s]sf] 5 . xfn IT Consultant sf] Gogtd" khLF" sfif,] shf { alus/0f{ tyf shf { gfS;fgL] ;Demf}tf Slot Basis df sfo{ ug{ yk ul/Psf] / Aoa:yf, klt| ufxs| shf { ;Ldf ;DaGwL Aoa:yf, as+} tyf ;Demf}tf adf]lhd Consultant n] klxnf] r/0fdf laQLo ;:yfx?n+ ] kfngf ugkg{' {] nvf] gLlt tyf laQLo Bid Specification tof/ u/L gkfn] /fi6 « asdf+} kz] laa/0fsf ] 9frfF ;DaGwL Aoa:yf,hflvd] GogLs/0f' ;DaGwL eO{ ;s]sf]df pQm Bid Specification ljZj a}+ssf] Aoa:yf,;:yfut+ ;zf;g' ;DaGwL Aoa:yf, zfvfx? ;aGwL+ Standard Format df tof/ gul/Psf] x'Fbf ;f] sfo{ Joj:yf, ;xljQLos/0f shf,{ ljQLo >ftsf] ] ;sng,+ ljZj a}+ssf] Standard Format df tof/ u/L k]z clgjfo { gub dfHbft} nufotsf ljifox?nfO { ;dfjz] ul/Psf
66 5g \ . o;sf cltl/Qm assf+} ] lg/LIf0f tyf ;k/Lj' If0f] cWofbz] sfofGjogdf{ cfO;s{ sf] ] 5 . To;sf ;fy } bfdf;fxL Ifdtfdf clejl4[ ug { cGt/fli6{ o« :t/sf ] :ynut tyf uX–} Pg] klg sfofGjogdf{ cfO;ssf] ] 5 . alsª+} Ifqsf] ] j9bf\ ] :ynut lg/LIf0f Pj + ;kl/j' If0f] lgblzsf{] ;dt] tof/ u/L v/fj shfsf{ ] ;d:ofnfO { ;dfwfg ug { ;3fp k–ofpg' ] nfu" ul/Psf] 5 . ;a} jfl0fHo a}+sx?sf] Corporate p2]Zon] C0f c;'nL P]g th'{df eO{ C0f c;'nL Level df jifsf{ ] ! k6s lg/LIf0f ug { yflnPsf ] 5 . To:t} Gofolws/0fsf ] :yfkgf ;dt] eO { ;ssf] ] 5 . gkfn] /fi6« ljQLo ;:yfx?sf+ ] lg/LIf0f ul/g ] ;Vofdf+ jl4[ u/L lg/LIf0f as+} Pg] @)%* df Joj:Yff eP jdflhd] shf { ;rgf" sGb] sf| ] ug {] sfonfO{ { ;b' 9[ ul/b+ } nluPsf ] 5 . ljlgodfjnL tof/ eO { sfofGjog{ ;dt] eO;ssf] ] 5 . o;ksf/| sxL] Pgx?] cfO;ssf] 5g eg ] sxL] Pgsf] d:ofbf} Pg,] ;DkQL Joj:yfkg STI (Second Tire Institution) tof/ eO;ssf] tyf sxL] tof/ xg' ] qmddf /xsf] 5g \ . lgud Pg,] db' f| zl4s/0f' lgoGq0f h:tf Pgsf] d:ofbf} tof/ eO { gkfn] ;/sf/ ;dIf kz] eO;ssf] ] 5 . ufleg] as+} tyf ljQLo ;:yf+ ;DjGwL ljleGg Pgx?nfO] { vf/h] u/L jf kfKt| ug {] Pg] (Merger & Acquision Act) lgdf0f{ Pp6 } as+} tyf ljQLo ;:yf+ ;DjGwL cWofbz,] @)^) nfu" geP;Dd o; ;DaGwL sfo { ;Grfng xg' ;sf;] \ eGg ] p2Zon] ] ul/Psfdf] pQm cWofbzdf] ePsf sdL sdhf/L] / bvf] as+} tyf ljQLo ;:yf+ cWofbzdf] klg sxL] kfjwfgx?| k/sf] ;d:ofx?nfO { ;dofgs' n" vf/h,] kl/dfhg÷;{ zf+ wg] /flvPsf 5g \ . t/ o; ;DaGwL 5§' } Pg] thdf{' ug {] nIo / yk u/L as+} tyf ljQLo ;:yf+ ;DaGwL Pg,] @)^# ;;baf6+ klg ljQLo Ifq] ;wf/' sfoqmdn{ ] lnPsf ] 5 . gkfndf] kfl/t eO { /fhkqdf ksflzt| eO;ssf] ]] 5 . as+} tyf ljQLo 3/hUuf jfxs] cGo rn ;DkQLx? klg /lhi68 { xg' ] / lwtf] ;:yf+ ufEg ] tyf ufleg ] (Merger & Acquisition) ;DaGwL /fVg ;lsg ] Joj:yfnfO { Jojl:yt ug { ;/lIft' sf/fjf/] dfu { lgbzg{] hf/L ug {] qmddf /xsf] ] 5 . •
67 World Bank / Asian Development Bank ;u“ ePsf ] ;Demftf} ;DaGwL Press Release Press Release
The International Development Association (IDA), will be carried out to identify black spots in the SRN. a soft lending window of the World Bank, has agreed Under the Institutional Strengthening and Policy to provide a grant assistance of US$ 252.60 million Reform Component, the project will provide support (equivalent to Rs. 15.926 billion) to the Government to the Department of Roads, the Roads Board of of Nepal for the implementation of four different Nepal, and the Ministry of Physical Planning and Programs / Projects. The agreements to this effect Works. were signed at the Ministry of Finance in Kathmandu, today. This is by far the largest single package of Under the Irrigation and Water Resources grant assistance commitment by the World Bank Management Project, the assistance will be utilized Group to Nepal since its operations began in Nepal. for developing and improving irrigation infrastructure and streamlining and managing irrigation management Of the total grant assistance, US$ 100 million transfers to the user groups and beneficiaries. The (equivalent to Rs. 6.30 billion) has been provided to project will also provide institutional and policy the Poverty Alleviation Fund, US$. 42.60 million support for improved water management, and (equivalent to Rs.2.69 billion) to Road Sector integrated crop and water management of all districts Development Project, US$ 50 million (equivalent to of Far-Western, Mid-Western, and Western Rs. 3.15 billion) to Irrigation and Water Resources Development Regions along with Parsa, Bara, Management Project and US$60 million (equivalent Rautahat, Saptari, Sunsari, Morang, and Jhapa to Rs.3.78 billion) to Education for All (EFA) districts covering of Hill, Mountain, and Terai projects. Regions. The additional contribution to the Poverty Alleviation The assistance provided to the Education for All (EFA) Fund (PAF) provided by the IDA will be used for program will be used for the implementation of various financing the implementation of community level programs envisaged under this project. The IDA has income generation, capacity development and small been extending grant assistance for the implementation infrastructure scheme under (PAF). It may be recalled of EFA since 2004. that the International Development Association has been contributing to the PAF by extending grant The agreements were signed by Mr. Vidyadhar Mallik, assistance since 2004. Secretary in the Ministry of Finance, and Ms. Susan Goldmark, Country Director of the World Bank in Similarly, under the Road Sector Development Nepal on behalf of the Government of Nepal and the Project, the grant assistance will be used for residents International Development Association respectively. of the beneficiary districts to have all-season road The signing ceremony was also attended by access, thereby reducing travel time and improving Honorable Finance Minister Dr. Ram Sharan Mahat, access to economic centers and social services. This and Mr. Praful Patel, Vice President,of the World project comprises of two components: (a) Road Bank . Development Component (RDC) and (b) Institutional Strengthening and Policy Reform Component. Under The Government of Nepal has expressed its sincere the RDC, up-gradation of about 297 km of existing appreciation to the International Development dry-season roads and tracks to all-season standard Association for this grant assistance and also for its with sealed gravel pavements will be carried out. continued support in the socio-economic These roads will improve the connectivity to six development of Nepal. districts, namely, Darchula, Baitadi, Kalikot, Dailekh, 17 Magh 2064 Surkhet and Bajhang. Similarly, periodic maintenance 31 January 2008 of about 297 km of Strategic Road Network (SRN) Ministry of Finance Kathmandu. will also be carried out. Besides, road safety audits • 68 Press Release
The Asian Development Bank (ADB) has agreed to The Project grant of RRRSDP will focus Nepal's 20 provide grant assistance of US$ 100 Million districts not yet covered by major donor-funded rural (equivalent to Rs.6290 Million) to the Government road infrastructure projects such as the World Bank- of Nepal (GoN) for the implementation of the Rural funded Rural Access Improvement and Reconstruction and Rehabilitation Sector Decentralization Project (RAIDP). The Project will Development Program (RRRSDP). additionally provide complementary support to the existing 18 districts under ADB-funded Decentralized Two separate agreements to this effect were signed RuralInfrastructure and Livelihood Project (DRILP) between the Government of Nepal and the ADB at for rural Water Supply and Sanitation. In 20 non- the Ministry of Finance today. The first agreement is DRILP districts, RRRSDP will improve or upgrade for program part under which the ADB will provide about 560 km of rural roads. a grant assistance of US$ 50 million. The second agreement is for the project part under which ADB The OPEC Fund for International Development will provide a grant assistance of the same amount, i. (OFID) has also committed to providing a soft loan e. US$ 50 million. RRRSDP will be implemented for of US$ 10 million for the RRRSDP as a co-financer a period of four years starting from 2008. with ADB, for which an agreement is expected to be concluded soon. Upon the request of GoN, the UK’s The principal objective of the Program is to support Department for International Development (DFID) reconstruction and rehabilitation of the rural sector in has also shown its interest to co-finance the RRRSDP. Nepal through enhanced poverty reduction and Likewise, Swiss Agency for Development and inclusive development, improved and inclusive Cooperation (SDC) has also principally agreed to governance and decentralization, and strengthened provide Technical Assistance for district roads and support for rural infrastructure development. trail bridge in the implementation of the RRRSDP. The program part will support the Government of Mr. Vidyadhar Mallik, Secretary, Ministry of Finance Nepal (GoN)’s initiative for poverty reduction and and Mr. Paul J. Heytens, Country Director, Asian sustained economic growth in rural areas through Development Bank, Nepal Resident Mission signed implementing the policies and programs focused on the agreements on behalf of GON and ADB, immediate post-conflict recovery, promoting respectively. inclusiveness, and enhancing effective implementation of projects in the rural infrastructure sector. This grant The Government of Nepal has expressed its sincere will be released as a single-tranche disbursement to appreciation to the ADB for its assistance and GoN immediately upon the effectiveness of the continued support in Nepal’s socio-economic Agreement. development endeavors. The project part will improve connectivity of rural communities, enhance their economic and Ministry of Finance employment opportunities, and increase access to Singhdurbar, Kathmandu market and social services. The major component of January 14, 2008 the project investment cost is Rural Transport (Poush 30, 2064) followed by Supplementary Infrastructure. •
69 cflys{ aif { @)^#.^$ sf ] ah6] sfofGjog{ kult–ljj/0f| [kltj| bgsf] dVo' abfx?F' (Major Findings)] cflys{{{{{ aif {{{{{ @)^#.^$ sf ]]]]] ah6]]]]] tyf sfoqmdsf{{{{{ ]]]]] • ko6gaf6{ kfKt| /sd ut cf=j=sf ] tngfdf' ^ kltztn| ] pknAwL a9]/ ?=!)=! ca{ k'u]sf] 5 . ljkif0faf6]| kfKt| /sd ?=!)) ca { gf£g uPsf ] 5 . != ;dli6ut cfly{{s{{ l:ylt M • • @)^$ cfiff9 d;fGtdf ljbzL] ljlgdo ;l~rlt+ ?= !^% • /fhZj kl/rfngdf xfl;n ePsf ] pNnVo] ;kmntfsf ca{ /x]sf] 5 . sf/0f cf=j= @)^#÷^$ sf ] cGTodf ?=# cjeGbf{ a9Lsf] • s7Lg kl/l:yltdf klg ;dli6ut cflys{ :yfloTj tyf gub art sfod xg' ;ssf] ] 5 . ;/rgfTds+ ;wf/sf' sfox?nfO{ { kltj4tfsf| ;fy cufl8 • slif[ Ifqsf] ] jl4b/[ )=& kltzt| / u/–s} lif[ Ifqsf] ] jl4[ a9fpg gkfn] ;/sf/n ] u/sf] ] kxnnfO { cGt/fli6{ o« b/ #=^ kltzt| /xL sn' ufx:Yo{ pTkfbgsf ] jl4b/[ @=% ;dbfon' ] ;xfxgf| u/sf] ] 5 . k|ltzt /x]sf] cg'dfg 5 . • ;/sf/L Ifqtk] m{ kjflxt| as+} shfsf{ ] jl4b/[ ut cf=j=s} @ ah]6] jStJo )^#.^$ df pNn]lvt] j'+'bfx?+ xf/fxf/Ldf /xg,' lghL Ifqtk] m{ kjflxt| shfsf{ ] jl4[ b/ @ ah]]6] jStJo )^#.^$ df pNn]]lvt] j''+'+bfx?+ a9g\ ,' ljbzL] ljlgdo ;lrlt+ ut cf=j=s } xf/fxf/Ldf tkm{sf{{ ] ]] k|d|| 'v'' pknJwL /xL !)=# dlxgf a/fa/sf ] j:t ' cfoft wfGg ;Sg] cflys{ jif { @)^#.^$ sf ] ah6] jStJodf pNnv] ul/Psf gLlt :t/df /xg ' tyf dNo" jl4b/[ ut cf=j=sf ] tngfdf' tyf sfoqmdx?sf{ ] dGqfno÷ cfofu÷] ;lrj:t/÷ sfofnout{ 36g\ hfg ' cflb ki7e[ lddf" ;dli6ut cflys{ :yfloTj pknAwLx? tkl;ndf pNnv] u/ ] cg;f/' ePsf ] 5 M sfod ug{ ;lsPsf] 5 . • sdhf]/ Pj+ blnt ju{sf k|fylds txsf blnt • cf=j= @)^#÷^$ df sn' ufx:Yo{ pTkfbgsf ] cgkftdf' 5fqf5fqx?n ] ?=#%).– 5fqjlQ[ kfKt| u/sf] 5g \ . pkefu] ()=^ kltzt| /xsf] ] 5 . • blnt, åGblkl8t Pj + zxLbsf 5f/f] 5f/Lx?nfO] { 5fqjlQ[ • sn' ufx:Yo{ jrt cgkft' @)^@÷^# sf ] &=( kltztaf6| pknJw u/fpg lgblzsf{] tof/ e } sfoGjog{ txdf cf=j= @)^#÷^$ df (=$ kltzt| ku' sf] ] 5 . k'u]sf] 5 . • ah6n] ] ?=*%=$ ca { /fhZj kl/rfng ug {] nIo /fvsf] df] • ;'g;/L, jf/f / l;/fxfdf O{nd k|lzIf0f s]Gb|x? nIo eGbf a9L /fhZj kl/rfng eO { ?=*&=& ca{ ;/rgfsf+ ] tof/Ldf /xsf] 5g \ . k'u]sf] 5 . • s0ffnL{ crnsf+ sIff !) ;Ddsf 5fqfx?nfO { 5fqjlQ[ • sn' ufx:Yo{ pTkfbgsf ] cgkftdf' /fhZj cgkft' !@=@ / lgDg dfWolds txsf 5fqfnfO { lbjf vfhf-rLgL k|ltzt k'u]sf] 5 . ldl>t lk7f ] / ag:klt £o_" pknJw u/fOPsf ] 5 . • rfn ' vr { !(=( kltztn| ] a9sf] df] khLutF" vrdf{ @@=( • $! j6f lhNnfx?sf ] ;fjhlgs{ ljBfnox?sf ] lzIfs kltztsf| ] pRr jl4[ xfl;n ePsf ] 5 . laBfyL { cgkftsf' ] ljj/0f tof/ ePsf ] 5 . • cf=j= @)^#÷^$ df Gog" ljQ (Fiscal Deficit) sf] • laBfno kf7o\ k:ts' 5kfO { tyf ljt/0f lgblzsf,{] lj:tf/ cf=j= @)^@÷^# sf ] tngfdf' 36g\ uPsf ] 5 . @)^# :jLst[ eO { sfofGjogdf{ cfPsf ] 5 . • cf=j= @)^@÷^# sf] t'ngfdf cf=j= @)^#÷^$ df • lzIfsx?sf ] Ifdtf jl4[ ug { kf=lj=sf| !$%)),lg=df=lj=/ gkfn] ;/sf/sf ] ;du | C0f bfloTj 36g\ uPsf ] 5 . df=lj=sf !^))) lzIfsn ] tflnd kfKt| u/sf] 5g \ . • ;s+ lrt' tyf lj:tt[ db' f| kbfosf| ] jl4b/[ lgolGqt • blnt tyf lk58LPsf ;d"xaf6 @!) hgf cj:yfdf /x]sf] 5 . P;=Pn=;L=plQ0f { JolQmx?n ] kj" { ;jfsflng] kfylds| • Jofkf/ 3f6fsf ] jl4b/[ ut cf=j=sf ] tngfdf' 36g\ uO{ lzIfs tflndsf ] nflu 5fqjlQ[ kfKt| u/L tflnd lnPsf !%=# k|ltzt /x]sf] 5 . 5g\ .
70 • ljBfnosf ] eflts} ;wf/' cGtut{ !() j6f :snsf" ] • pBfux?nfO] { lbOg{ ] ;ljwf'' Pp6 } ynfaf6] pknJw u/fpg] $@)) sf7f] lgdf0f{ ePsf ] 5 . sfonfO{ { kefjsf/L| tNofOPsf' ] 5 . • !% cf +} PlzofnL vns] bdf' ;xefuLtf /xsf] ] 5 . • blnt Pj + l;dfGtst[ slif[ dhb/x?sf' ] ljzif] ;ljwf' • hDnf' / sfnLsf6] ;b/dsfd;Dd' df6/] jf6f ] ku' sf] ] sfoqmd{ cGtut{ ^#! hgfnfO { tflnd / @%)^ hgfnfO{ 5 . pGgt ljp ljt/0f ul/Psf ] 5 . • åGbjf6 Ifltu:t| s0ffnLsf{ ( j6f cfofhgfsf] ] lgdf0f{ • blnt / dQm' sdofnfO} { kToIf| kmfObf{ kUg' ] u/L #)% j6f sfo{ ePsf] 5 . ;dx" lgdf0f { e } $)* j6f jfsf,^$*&] jfvf| ljt/0f • xnfsL' /fhdfu { nufot t/fOsf{ ;xfos /fhdfux?sf{ ] ul/gsf' ;fy } %& j6f ljdf sfif] :yfkgf ePsf ] 5 . :t/fGgltsf] ] nflu gkfn] / ef/t ;/sf/ aLr DPR • bze/sf] %^) gful/stf 6fnL] u7g e } @^!*^)# tof/ ePsf] 5 . gful/stf ljt/0f ePsf] 5 . • @@%=!^ lsnf ] ld6/ ;8ssf ] :t/fGglt] ePsf ] 5 . • (*%( j6f 3/n] ' ;fo} { ljBt' k0ffnL| h8fg ul/Psf] • kd| v' /fhdfu { / ;xfos dfux?df{ lgdf0fflwg{ @& kn' 5 . dWo ] % j6f ;DkGg e } afsL+ rfn ' /xsf] ] 5 . • ljleGg n3'hnljB't cfof]hgfx?af6 $!@=!% • !%( j6f vfgkfgL] cfofhgf] ;DkGg ePsf 5g \ . ls=jf=ljB't pTkfbg ePsf] 5 . • #& lhNnfdf !#& j6f ;/sf/L ejgsf ] lgdf0f { ePsf • @@^@ j6f ufj/Uof] ;+ KnfG6 h8fg ul/Psf ] 5 . 5g\ . • @&( j6f ;fnf/] 8fo/÷ss/' ljt/0f ul/Psf ] 5 . • dlxnfsf ] cfªv:g ] /fusf] ] pkrf/sf ] nflu !@& lzlj/ • #@^ j6f ;wfl/Psf' ] kfgL 3§ h8fg ePsf ] 5 . ;rfng+ u/L !),@&) hgfnfO { ;jf] pknJw u/fOPsf{ ] • !#^&) j6f ;wfl/Psf' ] rNxf' ] h8fg ePsf ] 5 . 5 . • ;fo} { 6sL' ljt/0fsf ] nflu ( lhNnfdf !.! hgf OlGhlgo/{ • k;| tL' kf| T;fxg] sfoqmd{ cGtut{ @#!%!^ hgfnfO { ?=* 5gf6} u/L tflnd ;dt] lbO { lhNnfdf sfo/t{ /xsf] s/f8] !( nfv &) xhf/ ljt/0f ul/Psf ] 5 . 5g\ . • !% jif { dlgsf' #^& jfn xbo/f[ uLsf] ] lgzNs' zNolqmof • IT kfsdf{ gb/Nof08sf] ] hfdf| sDkgLn ] pBfu] :yfkgf ;DkGg ePsf] 5 . u/L ;+rfng u/]sf] 5 . • &% j6 } lhNnfdf BCG @)#@!(, DPT !*@!$!, kflnof] ] • PsLst[ lghfdtL ;jf] cGtut{ txut k0ffnL| nfu ' ug{ !**!$!, xkf6fOl6;] la !*)$(#, Measles !^(%*$ cfofhgfn] ] sfo { ul//xsf] ] 5 . hgfnfO { vfk] ;jf] kbfg| ul/Psf ] 5 . • sjlnolt' jgsf ] ^$ j6f Cluster Ifq] klxrfg ul/Psf] • cfiflw} v/Lb lgblzsf{] tof/ e } &% j6 } lhNnfdf nfu" 5 . ul/Psf] 5 . • #!@ j6f ;dx" u7g ePsf ] 5 . • nfkf] Gd] v' blntsf ] klxrfgsf ] nflu ljleGg !) hftLsf] • jg sfo { ofhgf] tof/ u/L #^ j6f jg x:tfGt/0f kl/ro kl:tsf' tof/ ePsf ] 5 . ePsf] 5 . • s0ffnL{ crnsf+ ] ;du | ljsf; sfoqmddf{ ;dGjo ug{] • **@ j6f tflnd ufli7] ePsf ] 5 . lhDdjf/L] ;lxt pRr txsf ] clwstnfO[ { Focal person • h}ljs ;'/Iff gLlt :jLs[ltsf] nflu dlGqkl/ifb\df tf]lsPsf] 5 . k7fOPsf] 5 . • s0ffnL{ crnsf+ /fhuf/L] eQf pknJw u/fpg % j6} • 3/n] ' sfdbf/sf ] ?kdf jb} lzs] /fhuf/Ldf] hfg rfxg] lhNnfdf nut ;sng+ ul/Psf ] 5 . dlxnfsf ] nflu nufOPsf ] jGbh] x6fOPsf ] 5 . • s0ffnL{ crn+ / To;;uF hfl8Psf] lhNnfdf ^) xhf/ • !@)@ hgfnfO { ljleGg ;Lkdns" tyf Joj;flos tflnd zfo} { 6sL' ljt/0f ug {] sfo { ;rfngdf+ NofOPsf ] 5 . k|bfg ul/Psf] 5 . • ;fdbflos' eldut" l;rfO+ { cGtut{ !^)) j6f :ofnf] • gof F >d gLlt @)^# cfO { ;ssf] ] 5 . 6o\ jj" n] h8fg e } %^)) xS6/df] l;rfO+ { ;ljwf' ku' sf] ] • ** j6f 6ldgnaf6{ ljleGg uf=lj=;= / lglh ;:yfdf+ 5 . !(^ nfOg{ le:of6 6nLkmf] g] h8fg ul/Psf ] 5 . • ;fdbflos' ufdL0f| ljBtLs/0f' cGtut{ !#& j6f ;:yf+ • • CDMA kljlwaf6| ljleGg uf=lj=;= / g=kf=df !!!)*) nfO { ljt/0f k0ffnL| x:tfGt/0f ePsf ] 5 . nfOg{ 6nLkmf] g] ljt/0f ePsf ] 5 .
71 • @! lhNnfsf ljleGg :yfgsf ^&!!# Nof08 nfOg{ 6lnkmf] g] • kjf" wf/{ cfofhgf] & /xsf] ] 5 . h8fg ePsf] 5 . • cfofhgfaf6] nfeflGjt uf=lj=;=!!) ;rfngdf+ /xsf] ] • nl·s+} ;dfgtf / cflys{ zzlQms/0fsf yk sfoqmd{ 5 . ;rfng+ ug { P=l8=lj=;u+ ePsf ] C0f ;Demftf} gfe] Da/] • eld" ;DaGwL PsLst[ Pg] thdf{' ugsf{ ] nflu gLlt @*,@))^ blv] kefjsf/L| ePsfn ] sfd ;?' ePsf ] 5 . cWoog z'? ul/Psf] 5 . • !) j6f lhNnfdf jfn Gofo k0ffnL| kf/De| ePsf ] 5 . • dlxnfsf kIfdf ePsf pRr:t/Lo kltj4tf| sfofGjog{ • åGbaf6 kefljt| jfnjflnsfx?sf ;d:of ;dfwfg ug{ cgudg' ;ldlt u7g ePsf ] 5 . #) lhNnfdf jfn ;/If0f+ sfoqmd{ ;rfng+ ePsf ] 5 . • $*!^ l;dfGt ls;fgnfO { l;rfO,{ ljp ljhg / slif[ • åGb lkl8t !@@ jfnjflnsfnfO { dfl;s ?=!@)).–sf shfdf{ ? $ s/f8] &^ nfv nufgL ePsf ] 5 . b/n ] /sd lgsf;f lbOPsf ] 5 . • lrof vtL,] kik' Joj;fo, bUw' lr:ofg sGb] | / skmL tyf • kfr+ } ljsf; Ifqdf] CTEVT ;u+ ;of+ hg] u/L ;Lkdns" cnrL+} vtLsf] nflu kbfg| ul/Psf ] C0fsf ] Jofh jfkt tflnd ;+rfng ul/Psf] 5 . ?=#) nfv cgbfg' ljt/0f ul/Psf ] 5 . • bli6ljlxg[ ckf·x?sf ] cfodf cfo s/ gnfUg ] ;Ldf • /fli6o« afl0fHo asaf6+} (&& hgf C0fLx?nfO { ?=* %)% j9fOPsf] 5 . s/f8] %) nfv a/fa/sf ] Jofh ldgfxf tyf slif[ lasf; • :yfgLo lgsfonfO { hfg ] cgbfgaf6' x/s] uf=lj=;=n] asaf6+} ?=& s/f8] !* nfv j/fj/sf ] Jofh ldgfxf slDtdf @%))).–ckf·x?sf ] lxtdf vr { ug {] Joj:yf lbOPsf] 5 . ldnfO{Psf] 5 . • unrf+} lgsf;Ldf sfod /xsf] ] Gogtd' dNo" Joj:yf • $& lhNnfdf hi7] gful/s pkrf/ sfoqmd{ nfu ' ul/Psf] x6fOPsf] 5 . 5 . • as+} tyf ljlQo ;:yfaf6+ shf { lnO { gltg {] ;d:ofu:t| • ;DklQdf dlxnfsf ] :jfldTj clejl4[ ug { /lhi6zg]« *) hgfsf ] /fxbfgL hkmt ug { / rn crn ;DklQ b:t/df' @)% 56' lbg ] gLlt nfO { lg/Gt/tf lbOPsf ] 5 . /fSsf] /fVg sf/jfxL ePsf ] 5 . • bfª, afsF ,] albof,{ snfnL} / srgk+ /' lhNnfdf lhNnf • n3ljQ' ;DaGwL 5ftf Pg] thdf{' ug { sfobn{ u7g eO{ ljsf; ;ldltsf ] ;efkltsf ] cWoIftfdf -xfn :yf= lj=c=_ sfobnn{ ] kltj| bg] kz] u/sf] ] 5 . dQm' sdof} kg:yfkg' lhNnf ;ldlt u7g e } sfo { z?' • lnlSj8zg] klqmofnfO| { cufl8 a9fpg ] qmddf x6f] 8f+} ePsf] 5 . sk8f pBfu,] eQmk/' O6f{ sf/vfgf, slif[ rg' pBfu] / • hldg dflysf ] bfxf] /f] ] :jfldTj cGTo ug {] l;nl;nfdf gzgn] l8lnª« sDkgLnfO { vf/hLdf] nhfg} lnSjL86/] dfxL] / hUuf wgLsf ] lx:;f 56fpg' ] lj:tt[ sfoof{ hgf] lgoQm' eO { sfo { e } /xsf] ] 5 . tof/ u/L dGqL:t/Lo lg0foåf/f{ :jLst[ u/fO { nfu' • nlDagL' lrgL sf/vfgfsf ] rn ;DklQ lasL,| crn ul/Psf] 5 . ;DklQ lnhdf lbg ] u/L lghLs/0f eO { lghL Ifqaf6] • Gofosf ] nflu ;xh kxr+' sfoqmd{ cGtut{ jf/fdf &# / ;+rfng ePsf] 5 . ;Kt/Ldf (@ yfg 4w} :jfldTj ;DaGwL d2fsf' ] lsgf/f • ljlQo kf/blztf{ sfggsf" ] d:ofbf} tof/ ePsf ] 5 . ul/Psf] 5 . • ;fjhlgs{ vl/b ;DaGwL sfgg" nfu ' ePsf ] 5 . • ul/aL lgjf/0f sfifaf6] ;rflnt+ sfoqmdtk{ m{ lgDgfg;f/' • /fhZj k/fdz{ ;ldltsf] ;+/rgfnfO{ k'g{u7g u/L kult| ePsf ] 5 M kefjsf/L| agfpg /fhZj af8] sf{ ] u7g sfo { cufl8 • cfodns' sfoqmd{ tkm{ nIosf ] tngfdf' &)=(!% kult| a9fOPsf] 5 . ePsf] 5 . • /fhZj rxfj6' lgoGq0fnfO { kefjsf/L| agfpg Flying • kjf" wf/{ ljsf; tkm{ @)=*$% k|ult ePsf] 5 . Squad v6fpg] sfo{ ePsf] 5 . • gljgtd cfofhgf] tkm{ !$@=$@% k|ult ePsf] 5 . • /fhZj kzf;gdf| sfo/t{ hgzlQmsf ] sfo { pTk/0ff]| • nfeflGjt uf=lj=;=tkm{ $(=##% k|ult ePsf] 5 . clejl4[ ug { 7nf" s/bftf sfofno{ / ;Vvf' jGb/ufxf • cfofhgfaf6] nfeflGjt 3/w/L' tkm{ !)@$%& /xsf] ] 5 . eG;f/ sfofnodf{ sfo { ;Dkfbgdf cfwfl/t kf| T;fxg] • cfodns' cfofhgf] @! /xsf] ] 5 . k4lt nfu' ul/Psf] 5 . •
72 ggkfn]]kfn]]] ;/sf/;/sf/ cycy {{ {{{ dGqfnodGqfno cgcgudg''udg''' dxfzfvfsfdxfzfvfsf ]] ]]] ;;rgf""rgf""" bzsf] ] cflys{ lqmofsnfk ultljlwx? ;;' lrt" u/fpg ] p2Zon] ] gkfn] ;/sf/ cy { dGqfno / /l8of] ] k;f/| ;jf] ljsf; ;ldlt /l8of] ] gkfnsf] aLr ldlt @)^$.^.!& utb] lv] /l8of] ] gkfnsf] ] sGb] Lo| k;f/0faf6| æcflys{ gkfnÆ] gfds /l8of] ] sfoqmd{ kflIfs ¿kdf ;rfng+ eOcfPsfdf] pQm sfoqmd{ ldlt @)^$÷(÷@* utb] lv] ;fKtflxs ¿kdf zlgaf/ laxfg &M#) ah ]]]]] -;dfrf/ k;f/0fkl5_| ;~rfng eO/xsf] ] Joxf/f] ;d:t >ftfju] df{ hfgsf/L u/fOG5 . ;f ] sfoqmdaf/{ ] sg' } lh1f;f, ;emfj' / kltlqmofx¿| eP lgDg 7ufgfdf] pknAw u/fOlbgxg' ;dt] cg/f' w] ul/G5 . kmfg] g=M $@!!#*#÷$@!!#*) kmofS;\ M $@!!&&) OdnM] [email protected]
73 Success Story Free From the Gridlock of Poverty
Bhum Bahadur Nepali, now 62, used to lead a life of Bhum Bahadur’s shop takes order for stitching ‘an annual contract labor’ (practiced under Balighare dresses for all age groups of both the sexes. He has system). also kept the cost of his service at a slightly cheaper rate compared to other tailors. That has helped him For four decades, he used his skills of cutting, stitching to attract more clients and secure more business. "It and tailoring to serve Bistas, so called higher caste comes to around Rs 6,000 a month," said Bhum community and elites of Bijuvar VDC-1 of the remote Bahadur, recalling how he used to reel under crisis in Pyuthan district. the absence of sufficient income and independent His hard work and service round the year used to be earning opportunities. returned with a meager amount of foods, which were simply not enough to meet the food requirement of his family. As he was forced to sell his labor cheaply, there was no signs and hope he would manage to earn a decent income and living. But all that has become a past story for Bhum Bahadur. Two years ago, his long cherished dream to open and own a tailor of his own materialized with a support of Poverty Alleviation Fund (PAF). First Tikuri community Freedom from Balighare system has enabled Bhum organization extended him an interest free loan of Rs Bahadur to think big and plan for his future and other 5,000, then PAF-funded Munal community family members. He is happy and excited when he organization provided him with an additional fund of says he has already worked out a plan to expand his Rs 9,000 in loans. With it he bought an interlock business, and a local NGO, Jana Jyoti Community machine. Development Center has come to his help to materialize it. With the skills, today he has many customers and earns a decent income. PAF’s support and his own Bhum Bahadur is just one of hundreds of Dalits, who commitment and labor embarked him in a journey to have managed to come out of their depravity and freedom. Today he lives a free and self-sustained life. win free life through PAF-run poverty reduction initiatives. His example has also encouraged many "…….I had no skills other than tailoring. With PAF’s others to organize and work for win decent living. support, my skill is fetching me a good income these There are more than 52,000 dalits in Pyuthan district, days," Bhum Bahadur told Jeevika at his shop, which according to Census 2001. he has opened in Ward no 4 of Bijura VDC. • Source:http://www.pafnepal.org.np 74 Nepal : Access to Financial Services (Executive Summary)
March 19, 2007 - Access to financial services remains limited for most people in Nepal and has declined in recent years. Family and friends are by far the largest retail institutions, and lowered market entry informal providers of loans to households—and, requirements to foster the development of different contrary to common belief, family and friends often types of financial institutions. charge interest Despite government efforts, access to formal financial Facts services is declining. - Only 26% of Nepalese households have a bank Financial intermediation is stagnating, the number of account. bank deposit and loan accounts per inhabitant is - Access to financial services remains limited for falling, and lending targets for low-income households most people in Nepal and has declined in recent have generated excess liquidity among microfinance years. institutions without significantly increasing their - Family and friends are by far the largest informal outreach. And despite 40 years of government providers of loans to households. mandates to lend to small businesses, banks have - 69% of foreign remittances come through informal been withdrawing from this segment as these channels. requirements have been lowered. Access to bank infrastructure has also decreased. Moreover, as a - Banks’ procedures are perceived as being the result of the government’s efforts to increase access, most cumbersome among financial institutions. the central bank (Nepal Rastra Bank) now has to Over the past 20 years Nepal’s financial sector has supervise 180 institutions. become deeper and the numbered type of financial intermediaries have grown rapidly. In addition, recent Even the large foreign remittances received by reforms have made banks more stable. Still, access Nepalese households—mostly from migrant to financial services remains limited form any people workers—seem to be a missed opportunity for in many parts of Nepal and in recent years has been increasing access to formal financial services. Despite declining. This report examines the country’s supply the entrance of money transfer operators and the of and demand for financial services and the growth in formal remittance flows they have generated, constraints to increasing access to them, and offers the bulk of remittances enter the country informally. recommendations for making the financial sector The Demand for Financial Services work for all of Nepal’s people, especially the poor. The findings of the 2006 Access to Financial Services The Supply of Financial Services Survey—conducted by the World Bank and Total For much of the past 50 years Nepal’s government Management Services in cooperation with Solutions has tried to increase access to formal financial services Consultant as background for this report—confirm for small businesses and low-income households. that use of banks is limited, financial NGOs and (This report defines low-income households as those cooperatives play a large role in providing both in the three bottom spending quintiles.) The deposit accounts and loans, and informal borrowing government has introduced directed lending programs far exceeds formal borrowing. for small businesses and low-income households, required banks to open branches outside the Only 26 percent of Nepalese households have a bank Kathmandu valley, created specialized wholesale and account, and banks’ procedures are perceived as
75 being the most cumbersome among financial come through informal channels—usually family and institutions. Accordingly, clients prefer not to save in friends—even among households with a bank them. Banks dominated in urban areas and among account. Just 6 percent of remittances are saved in the wealthiest. financial institutions. The bulk of foreign remittances are used for consumption and to repay loans—loans Financial NGOs and cooperatives run a close second most likely incurred by workers to migrate to other as largest provider of deposit accounts, serving 18 countries. In sum, both supply and demand indicators percent of households. These institutions are the show that, despite government efforts, formal financial preferred provider for low-income households, but institutions do not serve the needs of most of the are close to banks even for wealthier households. Nepalese population. And while access to and use Microfinance and regional rural development banks of formal financial services are limited in general, the are a distant third provider of deposit accounts, serving problem is more acute for small businesses and low- only 4 percent of households— mainly poor, rural income households. Indeed, both access and use are ones. closely correlated with business loan size and household income. About 38 percent of Nepalese households have an outstanding loan exclusively from the informal sector, Why Have Government Efforts to 16 percent from both the informal and formal sector, Increase Access Failed? and 15 percent from only the formal sector (that is, a bank, finance company, financial NGO or Government efforts to increase access to formal cooperative, or microfinance or rural regional financial services have not achieved their goals development bank). Family and friends are by far because they have focused on the symptoms of limited access—not the root causes. For example, the largest informal providers of loans to the priority sector lending program, requiring banks households—and, contrary to common belief, family to make loans to small businesses, has not addressed and friends often charge interest. Most households the sustainability of such lending. Similarly, the who borrow from informal providers do not bother deprived sector lending program for low-income trying to borrow from financial institutions, mainly households has not addressed the microfinance because formal institutions cannot meet their financial sector’s capacity to extend large volumes of loans. needs on time. Informal providers also require less Increasing financial access for small businesses and physical collateral. Even among the wealthiest low-income households requires that financial households, half of those with a bank account prefer institutions be able to serve these segments in a informal lenders because of their rapid delivery. financially sustainable manner. Lending profitably to Similarly, informal lenders are the preferred providers small businesses requires a high level of efficiency, of working capital for small businesses, again because while operating microfinance institutions with large they are faster at sanctioning loans than are formal outreach requires high levels of professionalism and financial institutions. technical skills. Nepal’s financial institutions have Of households that borrow from the formal sector, struggled to meet these requirements. financial NGOs and cooperatives are the largest Why Don’t Banks Scale up Lending to provider of loans (except for the wealthiest Small Businesses? households). They dominate the market for loans under NRs 50,000, even for households with a bank Small businesses have very different features from account. Banks are the second largest provider— large corporations—the traditional clients of mainly in urban areas and for loans larger than NRs Nepalese banks. To serve small businesses profitably, 50,000. Microfinance and regional rural development banks need to minimize transaction costs and generate banks are the third largest providers, serving mainly large numbers of high-quality loans. But for many in rural areas and in the Terai. Finance companies reasons, Nepal’s banks find it difficult to serve small are the least preferred formal lenders, and operate businesses profitably: mainly in the Kathmandu valley. • Bank procedures for small business loans are Nepal’s payment system is virtually unused for retail too complex, making such lending unnecessarily domestic transactions and little used for international long and expensive for both the businesses and ones. An estimated 69 percent of foreign remittances the banks.
76 • The most popular bank product, overdrafts (lines households. Yet many potential clients of microfinance of credit), is inappropriate for many small institutions prefer to save with and borrow from businesses, which do not deposit their revenues informal sources. The microfinance sector’s limited in banks. ability to serve low-income households is reflected in its narrow outreach, sluggish growth, high liquidity, The interest rates that banks charge on loans to • and low profitability. small businesses do not adequately reflect the costs of serving them. Several factors explain the disappointing state of • Banks require high levels of immovable collateral, Nepal’s microfinance sector, including: while small businesses tend to have only movable • A complicated geo-political environment. assets. • Weak technical capacity in key areas, such as • Although Nepalese banks have sophisticated accounting and auditing, strategic planning, management information systems, they generally financial analysis, and human resource do not use them to measure staff and loan management. performance—which is crucial for profitable • Lack of commercial orientation and slow small business lending. professionalization—mainly because Although the legal and regulatory framework is not a microfinance is often considered a charitable binding constraint on bank lending to small businesses, activity. it could be improved to facilitate such loans. Obstacles • Distortions arising from the government’s include: deprived sector lending program that generate • The absence of a registry to record liens on high liquidity among many microfinance movable assets, which makes such assets almost institutions, as these institutions are encouraged unusable as collateral. to borrow beyond their needs and invest these • The credit bureau only covers loans larger than low-cost funds in other financial institutions. NRs 1 million, and does not provide accurate Although often cited as an obstacle, Nepal’s legal and timely information. and regulatory framework is not a binding constraint • Loan loss provisioning rules—especially for on the growth of the microfinance sector. Still, the short-term loans—are too lax and do not provide framework for microfinance is convoluted and the right incentives for stringent monitoring of confusing. Although this framework is not hampering small business loans. At the same time, microfinance growth per se, supervision of the sector provisioning requirements for loans secured only is problematic. with unregistered movable collateral and personal guarantees are too stringent, Small institutions that pose no systemic risk are discriminating against small businesses that supervised, while larger ones are not—and cannot offer immovable assets as collateral. supervisory capacity is weak. As a result microfinance consumers can be misled, and supervisors cannot • The method used to calculate fines for not meeting ensure the sector’s stability. priority and deprived lending targets discourages banks from charging appropriate interest rates Why Do Informal Channels for small business loans. (Fines are calculated by multiplying the shortfall amount against the Dominate the Remittance Market? highest interest rate that the bank charges its Since 2001, when money transfer operators were clients.) allowed to enter Nepal’s remittance market, formal Why Haven’t Microfinance Institutions remittance payments have increased and improved considerably— with formal remittances being Provided More delivered in a day or two at relatively low cost, even Services to Low-income Households? in remote areas. Thus it seems that the widespread use of informal channels is due to limited familiarity Nepal’s formal microfinance institutions could play a with the formal financial sector and a perception that key role in delivering financial services to low-income family and friends are a safer delivery mechanism,
77 rather than to a lack of alternatives. Moreover, India Initiative 3: is the largest source of migrant remittances and, given its proximity and ease of entry, migrants tend to move Promote the microfinance industry by upgrading quite often between it and Nepal. Finally, there appear technical skills, reenergizing the sector, and to be legal and regulatory constraints in the India- reforming state-owned providers. Efforts should Nepal corridor for money transfer operators. include: • Articulating a vision for the sector. How Can the Government Increase • Encouraging professionalization of the sector by Access for Small Businesses and Low- supporting a technical assistance fund to upgrade income Households? capacity in key technical areas. Although there is little theoretical knowledge of what • Attracting a demonstration institution—that is, a expands access, several approaches have worked commercially oriented microfinance player—to in practice, based on two principles. First, expedite change. government should not require financial institutions • Restructuring state-owned microfinance to lend to specific sectors or open branches in providers and apex institutions. specific areas. Rather, it should support financial institutions with potential to increase access Initiative 4: sustainably, by helping providers profitably reach their Create a legal and regulatory environment that desired market segments. Second, government must protects microfinance consumers and promotes develop an enabling environment—for example, by stability. Efforts should include: promoting institutions that reduce information Reviewing the legal and regulatory framework asymmetries between borrowers and lenders. • for microfinance, with aview to simplifying it. To help banks increase small business lending, the • Determining which institutions should be government could undertake two initiatives: supervised, to target onlythose that could threaten the microfinance sector’s stability. Initiative 1: • Developing a business plan for a stronger Create a technical assistance fund to help banks microfinance supervisor. with potential develop appropriate products and • Drafting new legislation or amending existing procedures for profitable lending to small legislation. businesses. To make remittances more effective, the government Initiative 2: could undertake two initiatives: Develop an enabling environment that makes Initiative 5: small business lending safer, cheaper, and faster. Efforts should include: Enhance the financial literacy of migrants and tackle legal and regulatory obstacles in the • Creating a registry for secured transactions. India-Nepal corridor to increase formal • Increasing loan loss provisioning requirements remittances. overall while reducing them for small loans without registered movable collateral. Initiative 6: • Strengthening Nepal’s credit bureau. Promote a viable loan scheme for migrants— one that reduces the share of remittances used To help microfinance institutions serve a large number to repay loans. of low-income households, the government could undertake two initiatives: (www.worldbank.org) •
78 Local Donors' Meeting Statement by Hon'ble Finance Minister Dr. Ram Sharan Mahat MOF, 16 January 2008.
Excellencies, we need to quickly find amicable solution to the Heads and Representatives of Development Partners, genuine problems that Terai people are raising Colleagues from the Political Parties, through dialogue and negotiation. I am hopeful Vice-Chairman of the National Planning Commission, that we will succeed in this endeavor. However, Chief Secretary, there are some issues of fundamental nature that Secretaries, require much deliberation and debate. The Officials of the Ministry of Finance, Constituent Assembly is appropriate body to Ladies and Gentlemen! deliberate and decide on them. 1. Let me first extend a warm welcome to you all 5. Today, I would basically like to explain to you in this meeting. I am delighted and thankful for the fiscal implications arising from the 23-point your kind presence and participation Agreement. I must mention in the beginning that notwithstanding our short-notice request. government cannot compromise in any way on the emerging expenditure needs that lead up to 2. Despite some delay in reaching consensus on the CA elections and smooth handling of the some contentious issues related to the peace peace process. We shall exercise every care in process, the stalemate was broken following the avoiding wasteful expenditures and apply all the signing of the 23-point agreement by the seven prudence in our conduct, but hard-earned political parties. The accord has now cleared the political consensus is of paramount importance confusion and uncertainty about holding of to us. elections to constituent assembly, which remains a core component of peace process. The date 6. As you may be aware, the recently concluded for the elections has been set for April 10 this Agreement commits to addressing the promises year. made during the signing of the Comprehensive Peace Accord over two years ago. The issues 3. We have reached this agreement after a series that currently warrant immediate attention, of ceaseless dialogues and negotiations to move among others, are the payment to the verified the peace process forward and for creating combatants and their reintegration and conducive climate for the CA elections. It now readjustment, repatriation of discharged becomes our duty to put all our efforts and energy combatants, rehabilitation of internally displaced to implement this accord effectively. We are persons (IDPs), managing the cantonments, relief mindful that the run up to the CA elections is not and rehabilitation of the victims of the conflict, all smooth. There are problems and we need to and rebuilding of infrastructure. Added to that, address them. formation of the commissions and committees 4. New political forces have emerged in Terai- as committed in the Agreement will also create Madhes with new demands. Security situation further financial burden. The Election in that region, although improving lately, still Commission has come up with an expenditure remains fragile. This is further aggravated by the estimate that is far above what was budgeted activities of armed groups espousing political earlier this fiscal year. It appears that there is cause in Terai. While we need to further hardly any room for applying austerity measure strengthen security situation, it is necessary that in proposed election expenditures if we intend 79 to be holding free and fair elections, which we, rates upward and we hope there will be a new of course, certainly do. Allied to the election is equilibrium. But this clearly signals to us that this reinforcing of the security measures. We cannot is not the right time for government to think about contemplate any compromises on election additional borrowing from the market for security as this only can ensure free and fair government spending. To be precise, there is very election and this is the only one opportunity that limited scope for government to raise the Nepali people will ever be getting to participate domestic borrowing limit this year without further in CA election. aggravating macroeconomic stability. 7. As you know, we have created Nepal Peace 10. Nepal perhaps never felt the greater need for Trust Fund (NPTF) to mobilize international external financial assistance than what is being resources for facilitating the peace process. This felt, at present. And, I think, this is perhaps the operates under the implementation mechanism most important time that our development jointly agreed with the donors and is being further partners can come forward with generous improved and strengthened in consultation with support. the concerned donors. However, the Fund, at 11. On our part, we will remain vigilant and put all present, has far too limited resources to meet our effort in achieving even higher revenue growth. our current and imminent requirements, which We will apply austerity measures in all sectors as per the current estimates stand at about 5.04 so that no wasteful expenditures are incurred. In billion Nepalese Rupees (equivalent to USD the process we will surely ensure that resources 81.3 million). NPTF currently has external committed to priority development programs and commitments available to the tune of USD 17.4 projects are fully protected. Capital expenditures million. The shortfall, therefore, after that benefit public at large and accelerate growth government’s own commitment is about 47.8 will not be compromised. USD million. 12. Let me also highlight some other aspects of 8. In the meantime, as we are trying to grapple with recent macroeconomic situation. The overall the fiscal mismatch arising from reasons economic growth rate is expected to improve explained above, the obligation to settle Nepal this year as the agricultural GDP has been Oil Corporation dues to Indian supplier has fallen projected to attain higher growth, after years of on government. It has become imperative so as dismal performance due to unfavorable weather to ensure unhindered supply of petroleum condition. The shortfall in export and the products in the country, while adjusting the oil consequent rise in the trade deficit has remained prices in accordance with market development. one of the major problem areas. The balance of payments position for the past few months has 9. In view of the above, we have already turned negative, indicating weak investment announced our intention to presenting a environment in the country. The inflationary supplementary budget to the Parliament. expectation remains somewhat high, mainly due However, our options are limited. Revenue to the effects of the petroleum price adjustments growth has been satisfactory thus far, in keeping and the price rise in the food items. Despite our with our expectations, but hardly sufficient to efforts to make the fiscal situation sound and meet mounting expenditures, specially the new sustainable, the treasury position portrays mixed additional needs. It would not be fair to think of signals on account of sudden jumps in the any additional taxes at this juncture when fledgling recurrent expenditures arising from the additional manufacturing, export and tourism sectors are liability in the management of country’s political struggling hard to find a recovery. There is one transition, among others. more phenomenon that is worrying us—which, of course, may be temporary and we wish it be 13. I would also like to remind you that the so—is the emerging liquidity crunch that banking government is organizing a Nepal Donor sector is lately reporting. It will push the interest Consultation Meeting in Kathmandu on
80 February 21 and 22, 2008. As we have shared 14. Leading to the main event, we are also holding with you from time to time, the main objective of Pre-Consultation Meetings between February 1 this meeting is to strengthen the process of and 8, 2008 in Kathmandu to secure maximum Communication, Dialogue and Confidence- engagement and support of the domestic building among the Government, Development stakeholders in the Meeting's theme and agenda. Partners and the domestic stakeholders including Invitation letters to this effect are being extended civil society and the political parties. The broader to all of you both at headquarters and the country theme of the meeting would thus be to interlink level for both the events. I trust that with your 'Peace and Development' with the specific support and good offices, high level participation objectives such as sharing current status of the from the headquarters and also that from the peace process and evolving political scenario in country level will be ensured for the meetings. Nepal, disseminating the country's development needs and priorities and stock-taking of required 15. I encourage you to share your feelings and resources centered around the Three-Year suggestions. Interim Development Plan, seeking 16. I thank you for your attention. programmatic commitment from development partners about long-term support to Nepal's Thank you. development, and so on. •
81 Speech by Hon. Dr. Ram Sharan Mahat Minister of Finance, Nepal And Governor of the World Bank for Nepal At the 2007 Annual Meetings of the Boards of Governors of the Bank and the International Monetary Fund (Oct. 20-22, 2007, Washington, DC, USA)
Mr. Chairman 4. We noted with appreciation the theme of the President Mr. Zoellick World Development Report 2008 - Managing Director Mr. de Rato Agriculture for Development. The report Fellow Governors covers the major features underlying the Delegates and Participants economic structure and performance as well as Ladies and Gentlemen! the development prospects and priorities 1. I congratulate President Mr. Zoellick and offer best wishes for your success. Your observation In the developing economies. Agriculture and the at the National Press Club in Washington, DC agriculture-linked industry account for a on October 10, 2007 that poverty breeds significant share of GDP in majority of these instability is quite appropriate. I would like to economies. It is disheartening to note that such express my heart-felt thanks to the Managing an important sector of the economy in these Director Mr. de Rato for leading the Fund with countries is still suffering from a very low level of great competence. I appreciate your program productivity. In my country Nepal, the dominant of reform to ensure that the IMF remained role of this sector is reflected in its contribution attuned to the needs of its members in a to GDP, employment, livelihoods and globalized economy. I also congratulate and interlinkages with the other sectors. However, welcome Mr. Dominique Strauss-Kahn who is its productivity is very low and the country has taking over as the Managing Director on November 1, 2007. I take this opportunity to turned to a net food-importing country from its offer Mr. Strauss-Kahn best wishes for his past position of a food-exporting country. We success. strongly support the Report's conclusion that the agriculture has a special role in reducing poverty 2. My sincere appreciation goes to the government and that GDP growth originating from agriculture and the people of the United States for the warm would have a far greater income impact than the hospitality extended to us. growth generated outside the agriculture. Mr. Chairman, 5. We have also taken note of the World Bank 3. Despite the recent volatilities, uncertainties and Group's Report entitled Doing Business 2008. defaults that marked the functioning of the financial The Report mentions that, in South Asia, the cost markets, it is heartening to note that the immediate of employing and laying off workers, registering impact of the market turbulence would be property, getting credit, trading across borders, modest and the world economic growth would and closing a business is high. These problems remain solid, buoyed by strong growth in need to be addressed for making the individual emerging market and developing countries. country systems less burdensome, less time- However, we need to be constantly vigilant about the occasional dangers and risks inherent in the consuming and less costly. We would, therefore, financial markets and make utmost efforts toward like to urge the Bank, especially the IFC, to strengthening the international financial substantially enhance its efforts to help countries infrastructure and addressing the weaknesses in like Nepal in creating a favorable investment the global financial and economic system. climate and reducing the cost of doing business.
82 6. Achieving Millennium Development Goals 11. We have observed that much of the rise in aid has remains a continued challenge for many of us. been for debt relief. We are supportive of debt Nepal is making sincere efforts toward meeting relief measures as a financing instrument, but we these goals, especially halving the number of firmly believe that this should be treated as a people below the poverty line by 2015. supplement rather than a substitute to the ODA. However, goals on primary education and Mr. Chairman, HIV/AIDS would be hard to achieve primarily because of the resource constraint. I would, 12. Now, allow me to briefly mention Nepal’s current therefore, like to urge the development partners situation. The country is in the midst of political to enhance their support level as per the agreed transition after more-than-a-decade-long commitments. insurgency. Our imminent task is to hold free and fair elections for the Constituent Assembly that 7. Focus on clean energy by the Bank is a welcome would pave the way for building a truly step. Nepal has huge potential of hydropower democratic and inclusive Nepal. Though the which is a prime source of clean, renewable election slated for November 22 this year has energy. This resource could be harnessed for the been postponed because of some new political benefit not only of Nepal but also of the developments, we are holding consultations with neighboring countries. I encourage and welcome the concerned parties for a new date. The march both, the official development assistance and the toward sustained peace, democracy and private investments, and domestic and foreign, development is not without hiccups and for tapping this potential. challenges, but we are clear about the direction 8. As mentioned in the communiqués of both the to take and the goal to achieve. Our commitment DC and the IMFC in their 2006 Annual to the evolving peace process remains unequivocal and unfaltering, and we are Meetings, Nepal would like to see a successful particularly grateful to the international conclusion of the Doha Round after its community for their support at our difficult times. unfortunate suspension last year. We continue to encourage the Bank to engage in Aid for Trade 13. Nepal's development efforts in recent years have with the focus on trade-related infrastructure been severely constrained due to violent development so as to help developing countries insurgency. This is reflected particularly in the in a meaningful way in the expanding global trade. slower rate of economic growth which averaged 2.8 percent a year during the last three years. 9. I support the Bank's initiative in the field of Global Nepal's merchandise exports/GDP ratio also fell Public Goods through policy support, advocacy, from 10 percent in FY 2004/05 to 8.4 percent financing, and technical assistance. Countries are in FY 2006/07. Nepal's macroeconomic facing a severe risk of climate change, flooding, management has remained under control. The pandemics, conflicts, civil strife, etc. These risks government revenue increased by 20.8 percent need urgent and collective global action with in FY 2006/07, which pushed the revenue/GDP particular focus on risk mitigating strategies at ratio to 12.1 percent from 11.2 percent in the the regional and national level. preceding year. The government has also been 10. I also support the country-based scaling up of able to maintain the fiscal deficit/GDP ratio below efforts by the Bank and acknowledge the 4 percent. The monetary expansion has been contained at the targeted levels and the treasury progress made so far. Certainly, scaling up should operations resulted in the surplus situation. The be based on the country performance. However, rate of inflation has come down to 6 percent. special consideration needs to be given to the specific country contexts where, despite 14. The fourth PRGF Review Report on Nepal persistent efforts, the performance level has not mentions that economic outcomes have been in been met for reasons of natural calamities, line with the program, macroeconomic policies conflicts, and so on. have remained sound, the PRGF-supported
83 program is broadly on track, and Nepal's utmost urgency. International community has economic prospects have improved despite some been supportive, but additional and timely risks. According to the Report, the authorities' support is crucial. efforts and achievements as reflected in the continued macroeconomic stability and further 16. Before I close, I would like to reaffirm our progress in structural reforms under trying commitment to consolidating gains achieved to circumstances merit international support. I date in stabilizing political and economic situation assure that the government would not at any cost in the country. Our journey to peace, democracy let the reform measures be weakened. I request and development will continue until we reach the the international community to adequately goal of building a just, prosperous and support Nepal in these endeavors in this period democratic Nepal. of difficult transition. 17. Finally, I would like to thank the Bank and the 15. Nepal needs immediate resources for Fund for their continued support for Nepal's reconstruction, rehabilitation and reform. People overall development in the past and hope for the displaced due to the conflict need immediate enhanced support in the future. support to return home and lead a normal life. Problems of hunger, deprivation, disease and I wish the Annual Meetings a grand success! unemployment, which provided fertile ground for violent insurgency, need to be addressed with Thank you! •
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