High-Level Economic Reforms Commission for interventionist role in improving economy

Kathmandu, April 11: The High-Level Economic Reforms Recommendation Commission has recommended to the government for intervention to stimulate the country’s ‘sluggish’ economy.

In a report it submitted to Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel today, The Commission has identified the problems of the economy and pointed out areas of improvement.

Similarly, the Commission has highlighted the decline in domestic market demand and lack of increase in investment as the main challenges at present.

Presenting the report, Commission Chairman Rameshwor Khanal said, “Consumption and investment have declined due to low credit growth, decline in real estate transactions, savings of hundreds of thousands of people remaining immobilized in cooperatives, non-payment of the due payments by the government, problems in recovery of credit and the construction sector becoming crisis-ridden.”

He also said that the government should immediately make policy intervention in the areas facing such problems and give the right direction to the economy.

The Commission has suggested formulating policies, programmes and the outline of institutional reforms necessary for inclusive, stable, sustainable and equitable economic growth.

The report considers dependence on imports, enduring disruption in productivity, lack of strong role of the private sector, poor discipline in the financial sector, lack of efficiency of public spending, and ineffective structure of the labor market as major problems of the economy.

Policy clarity, institutional responsibility and transparency and development of implementation systems in a coordinated manner are essential for long-term solutions to such structural problems, the report stated.

Chairman Khanal said that the Commission has focused on six different issues while making recommendations for the improvement of the economy.

“The reform proposals have been formulated focusing on increasing the economic growth rate keeping in mind the issues of stimulating the economy, creating economic opportunities, building trust-based systems, sustainable and best use of available natural resources, building a limitations-free economy and maintaining macroeconomic stability,” he said.

Economic good governance, promotion of private sector, strengthening of financial sector, public services and capital expenditure, labour market reforms and effectiveness of social sector have also been suggested.

Stating that the economic reform should begin with good governance, the Commission has also recommended transparent policy formulation, result-oriented planning and programme formulation, formulation of government budget based on cost-benefit analysis and ending unnecessary regulatory interference.

It has also pointed out in the report to the need to increase public responsibility in the budget- making, develop digital systems to streamline the expenditure system and adopt measures to remove duplicity among public bodies.

Considering the private sector as the main ‘engine’ of development, the Commission has emphasized on creating an environment conducive to the private sector. Investment-friendly policy, flexibility in labour act, promotion of labour-capital-technology coordination and clear policy formulation on public-private partnership (PPP) are necessary, it is stated.