The appointment of Yubaraj Khatiwada as the special economic advisor of Prime Minister KP Sharma is no surprise at all. More surprising is that the government has taken a decision that directly undermines the role and importance of the Ministry of Finance as an institution. The prime minister would have put in some effort to get the right finance minister if he really cared about developing institutions. Alternatively, if Khatiwada was an indispensable asset, PM Oli should have found a way to retain him as finance minister. The ministry will have to pay for PM Oli’s lack of foresight.
The prime minister could have appointed anyone as his special economic advisor, but that decision could have been taken after the appointment of the new finance minister. PM Oli is also wrong if he is considering keeping the finance ministry portfolio himself, running it with Khatiwada by his side. Khatiwada is being equally irresponsible if he has advised the PM to do so. Both are undermining the ministry’s role just to please their egos. Finance minister is not just another position to be filled. His or her leadership is sought every day within the ministry premises in Singha Durbar.
The ministry has two secretaries: revenue secretary and finance secretary. These two secretaries provide leadership to the entire workforce linked to MOF, from the federal to local level. On everyday basis, they also process decisions that demand an input from political position, i.e. finance minister. It is impossible to keep running to Baluwatar every time they need guidance. Vital decisions will be delayed due to this arrangement, which in turn will have economic costs. This thus represents a blatant abuse of power.
Like most others, this columnist also had high hopes from Khatiwada when he took the helm as finance minister. Two and half years down the road, he has exited from the ministry to sheer disappointment of all. The first budget he presented was balanced and could have yielded dividends if implemented well. But then he started to undercut the private sector, undermine the role of a functional capital market, and bear down on small and medium enterprises in the name of revenue collection. People lost hope and the economy came to be supported by the rigid public sector alone. Khatiwada could not clear the path for growth by identifying key growth trajectories. In a nutshell, he missed the opportunity to do something substantive.
After serving as a finance minister, he should not have been part of the process to undermine the importance of the ministry he led. Developing an institution is also helping it get right leadership and then granting it the needed autonomy. In the absence of finance minister who can provide day-to-day leadership from the ministry, not much can be achieved on this front. As a special advisor, Khatiwada may provide excellent piece of wisdom to PM Oli but that will not be reflected in the economy as the ministry as an institution will be directionless. Hence, Khatiwada will end up being a liability to the government and to the country.
As Khatiwada is around, one may ask him and PM Oli about the report on public expenditure prepared by the team of Dilli Raj Khanal. Why hasn’t that report been publicized and its recommendations implemented? Why have vital institutions like the National Natural Resources and Fiscal Commission and the National Planning Commission not been strengthened under this government? The answer is lack of interest in developing these economic institutions. The constitution guarantees inclusive political institutions but if we cannot develop inclusive economic institutions to back them up, the political achievements will also come to a naught. Again, having a special economic advisor in Baluwatar when the finance minister’s cabin in Singha Durbar is vacant is a body blow for the ministry’s institutionalization.