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Nepal’s economy is grappling with the bitter reality of a recession, even if it hasn’t been officially acknowledged by the government. Despite rosy forecasts from global financial heavyweights like the World Bank, International Monetary Fund and Asian Development Bank, the nation’s economy is reeling under a multitude of challenges.

A relentless surge in inflation is delivering a harsh blow to the commoner. Experts say that Nepal’s economy seems trapped in a downward spiral of high inflation and sluggish growth. Pushpa Kamal Dahal’s government is facing intense pressure from opposition parties and various stakeholders to take immediate action to revive the faltering economy.

A report published by Nepal Rastra Bank reveals that consumer price inflation reached a worrisome 8.19 percent in mid-Sept 2023, up from 7.52 percent in the previous month. According to the World Bank, consumer prices are scaling new heights in the current fiscal year.

The numbers are unsettling. Food and beverage inflation has skyrocketed to 9.74 percent, while non-food and service inflation is at 6.99 percent. Economists are sounding the alarm, warning that inflation is poised to rise in the coming months, further increasing the cost of living.

Economist Dilli Raj Khanal says the rising inflation is a glaring example of failed monetary policy. He warns that inflation is likely to grow after the festivals if the government fails to see the problems through new and innovative ways, adding that fresh crises are on the horizon. 

The price index for spices has surged by an astonishing 45.46 percent, sugar and sugar products by 17.86 percent, and vegetables by 14.51 percent. Cereal grains and their products are up by 13.38 percent, milk products and eggs by 12.60 percent, and restaurant and hotel prices have climbed by 10.97 percent. The brunt of this rising inflation is felt most acutely by the people. 

In its recent report, the World Bank underscores the challenges of taming high inflation and the need for a careful balancing of policies to stimulate growth.

The decline in edible oil prices from Feb 2023 onwards, reflecting global price reductions, had an offsetting effect on prices. But the persistence of high inflation impedes policies to stimulate growth. Nepal’s vulnerability to external shocks implies a difficult trade-off between policies that boost growth and those that contain inflation.

The World Bank report also identifies key drivers of food price hikes, including supply side shocks such as India’s export restrictions on wheat and rice, along with domestic policy changes like the removal of VAT exemptions on basic food items. The report further highlights the importance of price support to producers of rice, milk and wheat.

To compound matters, factors like the lumpy skin disease and unpredictable monsoons are impacting agricultural output, while services and industry are being affected by higher-than-expected import prices and export bans from India.

In this tumultuous economic landscape, Nepal’s private sector has voiced its concern, claiming that international financial institutions are exerting undue pressure on Nepal Rastra Bank and the Ministry of Finance. Despite the various challenges the nation faces, Nepal’s external position has strengthened, thanks to prudent fiscal and monetary policies, thriving remittances, and a boost in tourism.

However, the number of Nepali workers taking approval for foreign employment decreased 28.3 percent to 74,466 in September.   

The Nepali remittance sector, according to the NRB report, saw a remarkable 22.1 percent increase to Rs 228.37bn compared to an increase of 19.8 percent in the same period of the previous year. However, the number of Nepali workers seeking approval for foreign employment has seen a significant 28.3 percent decline to 74,466 in September. The economic landscape is complex, with some positive signs like a 3.8 percent increase in gross foreign exchange reserves to Rs 1,598.9bn in mid-September compared to Rs 1,539.36bn in mid-July 2023.

While Finance Minister Prakash Sharan Mahat acknowledges some gradual improvements in the nation’s economic situation, it's evident that not all internal indicators suggest a smooth ride.

Reflecting the current state of affairs, the government’s total expenditure reached Rs 131.14bn in the first two months of the fiscal year 2023/24. Recurrent expenditure, capital expenditure and financial expenditure stood at Rs 87.66bn, Rs 8.16bn, and Rs 35.31bn, respectively, during the review period. Up till mid-Sept, the government’s total revenue collection, including funds transferred to provincial and local governments, reached Rs 141.08bn, with tax revenue accounting for Rs 127.96bn and non-tax revenue at Rs 13.12bn.

The total expenditure stood at Rs. 4.77bn and resource mobilization of provincial governments stood at Rs 21.16bn, respectively. The total resource mobilization of provincial governments include the grants and revenue transferred from government totaling Rs 15.15bn, and revenue and other receipts of provincial governments totaling Rs 6.01bn.

The provincial governments have also been active on the financial front, with total resource mobilization reaching Rs. 21.16bn. This figure includes grants and revenue transferred from the central government, amounting to Rs 15.15bn, as well as provincial governments’ own revenue and receipts, totaling Rs 6.01bn.

Economy at a glance

• Inflation at 8.19 percent
• Exports decrease by 7.8 percent
• Trade deficit decreases by 4.7 percent
• Remittances increase by 22.1 percent
• Balance of payment remains at a surplus of Rs 53.61bn
• Forex stood at Rs 159.90bn
• Government expenditure amounts to Rs 131.14bn
• Revenue collection Rs 141.08bn

The much-talked-about initial public offering (IPO) of companies through the book building mechanism has been completed. Mukti Nath Shrestha, spokesperson at the Securities Board of Nepal (Sebon), said, “This process, following extensive efforts from Sebon and other stakeholders, has achieved a significant breakthrough.” He described the development as “historic”.

Book building is the process by which an underwriter attempts to determine the price at which the IPO of a company is offered. An underwriter, usually an investment bank, builds a book by inviting institutional investors (such as fund managers and others) to submit bids for the number of shares and the price(s) they would be willing to pay for them.

Sarbottam Cement received permission to issue IPOs through book building at a cutoff price of Rs 401 per share on Oct 16. Previously, Sarbottam had set a maximum price of Rs 751.50 per share.

Sebon Chairperson Ramesh Hamal stated, “Book building serves as a means of price discovery, promoting equitable issuance of IPOs with extensive involvement from institutional investors and significant buyers.” He added that it also enables companies going public to secure considerable capital and collect pricing insights from prospective buyers. “Employing the book building approach for IPOs will improve the transparency, governance and accountability of share prices.”

According to Hamal, the commencement of the book building process will encourage many investors and companies, previously hesitant to issue an IPO, to consider doing so. “It will aid in enhancing national revenue contribution and contribute to the overall national economy.”

Preparations have begun to achieve total literacy status for Karnali Province. Federal, provincial, and local governments all are implementing various programs to attain this status in the current fiscal year.

Out of the 79 local units in the province, 27 are yet to be declared total literate. Balbir Sunar, chief of the Education Development Division under the Ministry of Social Development, Karnali Province, expressed confidence that all remaining local units will be declared total literate in the current fiscal year. Plans are in motion to declare both these local units and the entire province total literate in the current fiscal year, he added.

As per the 2021 census, the population of Karnali stands at 1,694,889. However, only 76% of the total population is literate. Notably, eight local units in Kalikot, one in Humla, four in Mugu, eight in Jumla, and six in Dolpa have yet to achieve total literacy status..

Literacy levels are assessed using 12 indicators, such as familiarity with alphabets and numbers, ability to write one's name, reading calendars, performing basic mathematics (addition and subtraction), and articulating opinions at public events. Individuals meeting at least six of these 12 indicators are considered literate.

Local units are declared literate when 95 percent of the people in the 15-59 age group within that unit meet these six indicators. Among the seven provinces in the country, Karnali and Madhesh haven’t achieved total literacy status yet. Once these two provinces attain total literacy status, the federal government plans to declare the entire country fully literate.

The provincial government is implementing various programs to align with the federal government's objectives and achieve full literacy status, according to Minister for Social Development Khadga Bahadur Pokharel.

Likewise, Chief Minister Raj Kumar Sharma has said that the provincial government will spare no effort to attain total literacy status in the current fiscal year. According to Sharma, the provincial government plans to deploy teachers to households with illiterate individuals for several hours or days to promote literacy.

Local unit representatives have likewise pledged to make their respective units fully literate. Dan Bahadur Budha, chairperson of Ghutichaur Rural Municipality in Jumla, said that various programs are being implemented to achieve total literacy in the current fiscal year.

In Karnali Province, there are 399 schools offering classes up to Grade 10, which constitutes 5.8 percent of the total number of schools in the country providing education up to Grade 10. Similarly, 7.55 percent of 4,410 schools nationwide offering classes up to Grade 12 are in Karnali Province.

It is paradoxical that despite the presence of numerous development organizations in Karnali and Madhes provinces, most of the country's illiterate population resides in these regions.

Chudamani Paudel, director general of the Center for Education and Human Resource Development, said that the constitution guarantees free and compulsory basic education for all Nepali citizens. Paudel pointed out that the delay in enacting the Federal Education Act has caused various issues in the education system. “There is a need to create 60,000 teaching positions for different levels up to Grade 12. However, we haven’t received approval from the finance ministry. We are somehow making do with 40,000 temporary positions,” he added.

Dr Bhojraj Kafle, secretary of the Ministry of Social Development, Karnali Province, said the same individuals were participating in adult literacy programs as much as seven times. This lays bare the managerial shortcomings in these programs,” he added.

Honest citizenry refers to a population or community of individuals within a society/nation who uphold and embody the principles of integrity, truthfulness and ethical behavior in their civic and personal lives. Adherence to moral values, respect for the law and a commitment to transparency and accountability in action are some of its characteristics. It signifies a collective dedication to upholding the principle of honesty and integrity in all aspects of public and private life, contributing to the overall moral and fabric and integrity of the society as a whole. 

Nepal, nestled in the heart of the Himalayas, is a nation with a rich cultural heritage, breathtaking natural beauty, natural resources and a diverse population. However, like many other countries, it faces numerous challenges, including political instability, economic disparities and social issues. One crucial aspect that needs immediate attention in Nepal is the need for an honest citizenry. In a society where honesty is a cornerstone of progress and development, fostering a culture of integrity can pave the way for a brighter future.

Honesty is a fundamental virtue that plays a pivotal role in shaping a nation's destiny. It encompasses not only telling the truth but also involves transparency, accountability and ethical behavior. In the context of Nepal, building an honest citizenry is essential for several reasons.

Nepal has been grappling with corruption for several years, hindering progress and development. Corruption has not only siphoned off public funds but also a trust deficit in government institutions. An honest citizenry can serve as a bulwark against corruption by demanding accountability and transparency from elected representatives and government personnel. 

A culture of honesty can stimulate economic growth by creating a conducive environment for businesses and investments. When individuals and businesses can trust that contracts will be honored, property rights protected and transactions conducted fairly, it fosters economic stability and development.

Honesty fosters trust among individuals and communities. In a diverse and multicultural nation like Nepal, trust and mutual respect are essential for social cohesion and harmony. When citizens are honest in their dealings with each other, it helps bridge societal divides and strengthens the social fabric.

A transparent and accountable government is essential for effective governance. Citizens, who demand honesty and integrity from their leaders and government as well as non-government institutions are more likely to hold them accountable for their actions. This, in turn, leads to a better governance, improved public services and a more efficient administration.

While the importance of honesty is undeniable, there are several challenges that Nepal faces in its pursuit of building an honest citizenry. 

Many individuals in Nepal are struggling with poverty and desperation, which can drive them to engage in dishonest activities as a means of survival. Addressing the root causes of poverty and providing economic opportunities is crucial to reduce dishonest behavior.

Nepal’s legal framework lacks teeth when it comes to addressing corruption and dishonesty effectively. There is a need for comprehensive legal reforms to create a strong deterrent against dishonest behavior.

A well-rounded education system that not only imparts academic knowledge but also instills values such as honesty is essential. Many schools in Nepal lack the resources and capacity to provide a holistic education, leaving a gap in character development.

Nepal’s political landscape is often marred by patronage and nepotism. This creates an environment where dishonesty is sometimes rewarded rather than punished. Political reform is crucial to eliminate this aspect of the culture.

To build a more honest citizenry in Nepal, a multi-pronged approach is necessary.

Investing in education and awareness campaigns that promote ethical behavior and values from a young age is essential. This includes not only formal education but also community-based initiatives and awareness programs. Reforming and strengthening Nepal's legal frameworks to make them more effective in combating corruption and dishonesty is crucial. This includes robust enforcement mechanisms and whistleblower protection. Citizens must actively engage in the political processes and hold their elected representatives accountable. Encouraging transparency and scrutinizing the actions of political leaders can help reduce dishonesty in politics. Creating economic opportunities and reducing poverty is vital in reducing the desperation that can lead to dishonest behavior. This involves job creation, vocational training and support for entrepreneurship.

Civil society organizations, including non-government organizations and community groups, can play a significant role in promoting honesty and integrity. They can serve as watchdogs, advocates and educators.

Nepal stands at a crossroads, with the opportunity to build a stronger and more prosperous nation. To achieve this, fostering an honest citizenry is paramount. Honesty is not just a personal virtue; it is a collective responsibility that can transform societies and nations. By addressing the challenges and actively working toward creating a culture of integrity, Nepal can make way for a brighter future where honesty is the norm rather than the exception. With an honest citizenry, Nepal can overcome its obstacles and unlock its true potential as a nation.

Young people can play a pivotal role in shaping the future of an honest and upright citizenry within a nation. Their behaviors, mindsets and ways of living are essential for fostering and attaining the ideals of an honest and responsible populace. It is undeniable that the youth of Nepal are grappling with challenges in foreign lands, courageously shouldering risks in pursuit of their aspirations. Regrettably, they often find themselves unable to realize their dreams within their own homeland, compelling them to invest their efforts, toil and make sacrifices in distant territories.

Development partners and nations globally have extended opportunities for skill development and exposure, yet many of these individuals choose not to return to their motherland. Consequently, they may not actively engage in contributing to the progress of the country, where their skills and knowledge can be instrumental. Unless the youth develop a collective sense of responsibility toward their country’s advancement, the nation cannot make substantial leaps in its development trajectory. Despite this, Nepali citizens residing in the country maintain a profound faith in the potential of the youths to actively participate in national development, hoping for a brighter and more prosperous future.