EDITORIAL – Worrisome Economics – The Himalayan Times – Nepal’s No.1 English Daily Newspaper
Although Finance Minister Janardan Sharma has dismissed growing rumors that the country’s economy is in bad shape, not all fiscal indicators support his claim. Since his appointment as finance minister five months ago, he has changed one or another of the rules of tax policies to benefit a certain group of entrepreneurs, severely affecting import revenues. More than a dozen decisions taken by the Minister of Finance have helped a certain group of businessmen to make more profit, instead of helping to increase the income of the national funds and to relieve the population in general. Sharma’s obscure decision not to seek out any “legitimate source of investment” has jeopardized the country’s image internationally. This move has encouraged a certain group of people to bring in money from tax haven countries, where money earned from unknown income sources is parked and funneled to other countries using “policy hacking.” Just like what happened in Nepal.
When Sharma presented the alternative budget to parliament shortly after the formation of the coalition government, led by CN chairman Sher Bahadur Deuba, he inserted a clause to “seek no source of income for investment” , a policy that has raised many eyebrows, even among coalition partners.
After the coalition government came to power at the end of July, remittances declined, leading to a decrease in foreign exchange reserves and an increase in the trade deficit.
There is a problem of shortage of liquidity in the market because the government has failed to increase capital spending and increase revenue from imports and excise duties, as the Minister of Finance has offered benefits unjustified to certain groups of companies through decisions at the political level under the pretext of promoting an autonomous economy and job creation in the country. Changes to the import tax on certain goods, such as the import of raw materials for the production of iron bars and zinc sheets, had a negative impact on revenue collection.
After facing much criticism from all walks of life, the finance ministry has now adopted two policies to improve the health of the economy. In its recent letter to the Nepal Rastra Bank and the Comptroller’s Office, the ministry said that banks and financial institutions (BFIs) can keep 80 percent of the unspent budget from local levels in deposits until the next fiscal year. . This provision should add approximately Rs 50 billion to CIBs, which should help cope with the liquidity crisis in the market. Another decision taken by the ministry is to impose a restriction with a 50 to 100 percent margin allowance required on the import of approximately 300 goods aimed at increasing the foreign exchange reserve. The goods include, among others, passenger cars (except electric cars and cars adapted for disabled people), motorcycles, tobacco, wood and furniture, chocolate, chewing gum, cards play, shoes, plywood, money and alcohol. The central bank said a 50 to 100 percent margin requirement has been introduced on these goods to improve the growing balance of payments deficit and declining foreign exchange reserves.
This provision should make it possible to control the importation of goods worth Rs 100 billion.
Ratify the ILO Convention
Stakeholders urged government and lawmakers to ratify the Violence and Harassment Convention (2019) or ILO Convention 190, which obliges the employer to ensure a safe working environment for workers, the government not having to worry about liability issues.
It is a comprehensive United Nations convention that addresses all aspects of violence and workers against workers, especially women, in the formal and informal sectors. Nepal has laws against sexual harassment in place, but stakeholders say ratification of ILO Convention 190 is needed to fill gaps in the laws.
The Ministry of Labor, Employment and Social Security has just started a formal discussion on the issue, and the private sector will certainly have reservations about this as ratification of the convention will bring greater accountability. on his part. According to the agreement, the employer must ensure not only a safe working environment at the workplace, but also during the journey to and from them. With jobs scarce in Nepal and millions of people working in the informal sector, the question of how the government can enforce the convention once ratified is a moot one.
A version of this article appears in the December 22, 2021 print of The Himalayan Times.