Yubaraj Khatiwada is the right man to lead the Ministry of Finance. Not just because he has a Phd in monetary economics from the prestigious Delhi School of Economics—although that is no small consideration in a country where this vital portfolio has time and again gone to those with limited economic nous. The new finance minister has a record of helping steady the economy through difficult times, particularly during his previous stint as the central bank governor.
Khatiwada takes over as finance minister when the economy is again hitting turbulence. Over the past one decade, the country’s trade deficit has declined by a yearly average of 21.9 percent. It has notched up over Rs 90 billion of deficit in the first five months of the current fiscal alone.
Foreign remittance, Nepal’s one sure source of steady income, is drying up. In the five months of the current fiscal, remittance is down 0.8 percent compared to the same period last year—the first negative remittance growth rate in over a decade. Recurrent expenditures are shooting up, productive spending is stagnant, and another real estate bubble is building. Even someone with Khatiwada’s stellar credentials could struggle to bring the twisted economy in shape.
But Khatiwada seems to be in a mood to make a good fist of it. In his first declaration as finance minister, he vowed to bring all government transactions online from the upcoming Nepali New Year. This, if can be done, could make a significant dent on bureaucratic corruption and reduce money-laundering, a growing problem. As a representative of the unified left government, Khatiwada added, he is as committed to the left alliance’s electoral commitment of common prosperity. Moreover, he said he was determined to bring Nepal’s economy back on track. But therein also lies the problem.
CPN-UML, the senior partner in the recent merger with CPN (Maoist Center), has long been seen as a party that protects cartels and syndicates. It also has a vast patronage network to look after. This raises a legitimate fear: Will the new finance minister be allowed to work freely? Or will he be used primarily as a smokescreen behind which the various vested interests of the new communist juggernaut can hide?
Having shown the courage to sideline his cronies who were all angling for the finance ministry, Prime Minister KP Sharma Oli would do well to give his chosen one enough room to work in the country’s interest.
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