Submit your Article

The government has begun preparations for the budget of the fiscal year 2024-25. The National Planning Commission (NPC) has set a budget ceiling of Rs 1.8trn for the upcoming fiscal. Minister for Finance Prakash Sharan Mahat outlined the principles and priorities of the new budget in parliament three months ahead of the budget day. The government was presenting policies and priorities of the Appropriation Bill in parliament mere two weeks before the budget day so far. This allows lawmakers more time for deliberation on the principles and priorities of the budget. The government has made significant changes in the budget process to prepare a more realistic budget.

Many economists have described the budget for the current fiscal year as ambitious, stating that the government’s success depends on its ability to manage expenditures in line with estimated resources. However, the government fell short on this front. During the first half of 2023-24, the government could mobilize only 40 percent of its revenue target, with capital expenditure progressing at a dismal 21 percent and recurrent expenditure at 44 percent. Consequently, the government was compelled to downsize the budget by 13 percent, or Rs 221bn, through the midterm review in the second week of February. This adjustment reduced recurrent expenditure to Rs 1,007.45m and downsized capital expenditure to Rs 254.13bn. During the mid-term review, Mahat acknowledged the government’s failure to achieve significant improvements despite earnest efforts to increase revenue and control expenditures.

Realizing the demographic dividend must be a priority for the government to ensure the success and efficacy of the budget for the next fiscal year. At the same time, public expenditure must be directed toward priority projects that support production growth. The government should prioritize projects ready for implementation with assured resources. On its part, the finance ministry must resist pressure to include populist programs from political leaders. The budget should aim to maintain a balance between government income and expenditure to alleviate mounting pressure on public finances. Moreover, it should strive to achieve high economic growth and job creation, and bring policies and programs to create demand in the market to give a new impetus to the economy.

The government criminalized loan sharking in July last year following a series of protests launched by usury victims. The majority of loan shark victims were poor people leading subsistence living. They had taken loans from unscrupulous lenders for various reasons, from paying medical expenses to sending their sons abroad for foreign employment and paying for their daughters’ weddings. In exchange, they offered what little land they owned as collateral or agreed to pay the interest rates dictated by the lenders.

Little did they know that they had agreed on an impossible deal, that they would forever be indebted to their lenders or lose their collateral. It was as if they had been held hostage by their lenders.         

With the passing of the law that came into effect following the amendment to the National Criminal Procedure (Code) Act 2017, it was expected that the loan sharking victims would finally be free of their financial troubles. Convicted loan sharks could face jail terms of up to seven years with fines up to Rs 70,000. In case of those loan sharks found guilty of confiscating cash or property from borrowers, the law prescribed that they return the equivalent cash or property.

The government also formed a commission to investigate and resolve usury-related cases. The commission recorded thousands of complaints in the initial weeks and many loan shark victims were finally unburdened from their seemingly unending debt cycle. But not everyone got justice. Many loan shark victims still do not seem to have recourse to legal channels. They are still resorting to protests and demonstrations to make themselves heard. 

Usury victims from various parts of the country are still walking all the way to Kathmandu to demand justice. This is a cause for concern; clearly the law has not deterred loan sharks from exploiting the poor. Many victims say that their lenders are too powerful and politically connected. The government should make sure that the concerned authorities prosecute those loan sharks, no matter how powerful or politically linked they are. No one is above the law. 

The macroeconomic report for the first half of the current fiscal year and the mid-term review of the monetary policy for fiscal year 2023-24, recently released by the Nepal Rastra Bank, shows positive developments in the external sector of the economy. The economy has experienced strong performance in sectors such as mining, construction, tourism and financial services. The resurgence of tourism after Covid has been remarkable, with a substantial increase in tourist arrivals contributing to economic activities and income generation. Infrastructure development, particularly in the energy sector, is expected to enhance production potential. Foreign exchange reserves have reached an impressive Rs 1,816.57bn by mid-January. This achievement is primarily fueled by a notable 25.3 percent increase in remittances amounting to Rs 733.33bn, which undoubtedly paints a positive picture of Nepal's external sector.

Prudent policy adjustments such as maintaining interest rate stability and implementing targeted measures like lowering interest rates for institutional fixed deposits in the mid-term review of monetary policy demonstrate a proactive approach to mitigating risks and stimulating economic activity. The Nepal Rastra Bank's decision to maintain the interest rate corridor while implementing measures to enhance its effectiveness shows its commitment to balanced monetary policies. Moreover, the focus on supporting agriculture and small to medium enterprises through regulatory retail portfolio arrangements reflects a dedication to growth and economic resilience.

While a healthy foreign exchange reserve is essential for economic stability, it is not a solution to all of our economic problems. The decline in exports, slow import growth, manufacturing slowdown, low demand for bank loans from the private sector and the lack of investment despite favorable conditions highlight the underlying issues plaguing our economy. The government has been consistently missing revenue targets. It is crucial to accurately assess economic indicators and devise appropriate policies. Worryingly, both the government and the central bank seem to be falling short in this regard. It is high time for the government and the central bank to shift their focus from highlighting nominal successes to implementing meaningful changes.

Nepal has long been an important contributor to global peace and stability through its involvement in UN peacekeeping missions. Nepali peacekeepers deployed in various conflict zones have consistently earned praise for their exceptional performance, professionalism, and integrity. 

Now, Nepal has achieved a significant milestone by becoming the largest contributor of troops to these missions. According to the United Nations, Nepal is currently contributing 6,247 peacekeepers, ahead of  Bangladesh (6,197), India (6,073), and Rwanda (5,919).

The Nepali Army has been contributing to world peace for more than six decades. During the period, it has served in more than 44 UN missions sending 149,980 personnel. The army’s association in the peacekeeping missions dates back to 1958 when Nepal first deployed five military observers to Lebanon. 

Over the years, Nepal has risen to prominence in global peacekeeping efforts. While this contribution has earned recognition from the international community, Nepal has not been able to enhance its image in the international arena by utilizing it as a soft power tool.

Although politicians and officials often discuss the potential of leveraging Nepal’s peacekeeping capabilities to bolster the country’s influence on the international stage, it has not yet become a central component of Nepal’s foreign policy. While Nepal’s Foreign Policy, introduced in 2019, briefly touches on this issue, it falls short of outlining a concrete plan and policy for projecting this soft power in the international arena.  The policy states that Nepal’s ‘commitment and contribution to world peace shall be continued and the country shall be projected as a peace-loving country.’ 

In a world grappling with multiple crises and conflicts, Nepal has the opportunity to send a powerful message advocating for peace and harmony. To capitalize on this opportunity, Nepal must elevate its position within the UN system. Despite being the leading contributor to peace missions, Nepal’s representation in leadership and decision-making roles within the UN is notably lacking. It is high time Nepal asserted its claim for top positions within the UN to play a more significant role on the international stage. Achieving this goal requires concerted efforts not only from the Nepali Army but also from the Ministry of Foreign Affairs, and the Office of the Prime Minister and the Council of Ministers. These institutions must actively engage in international platforms, meetings, and negotiations to elevate Nepal’s presence and influence.

Once Nepal secures prominent positions within the UN, it can leverage its soft power effectively. The recognition of Nepal as the largest troop-contributing country presents a significant opportunity that must be seized without delay. Therefore, the foreign ministry, in collaboration with the army, should formulate a comprehensive plan outlining how to project the country’s image through soft power and how to secure top positions in peacekeeping operations.