NEA and CBFIN in collaboration with the World Bank organized an interaction meeting on ‘Commodity Prices and Economic Development’ today. The interaction focused on increased inflation fiscal deficits, the rise in global commodities, and its impact in South Asia including Nepal. Moreover, as Nepal’s economy is integrated heavily with the Indian economy, an unpegging approach with Indian rupees has both pros and cons. Export competitiveness getting weak, fiscal deficits are going high, and coping with the emerging challenges for survival is becoming more difficult.
The suggestions from the World Bank were on recognizing the reality to capitalize on the opportunity even during turbulent times. There is a need to enhance domestic production, promote MSMEs by resource mobilization and give informal small firms access to markets and credit using digital technologies, World Bank’s Chief Economist of South Asia Region Dr. Hans Timmer suggested. Mr. Pawan Kumar Golyan President of CBFIN suggested that if the loans/grants being supported by the World Bank to the Nepal government are channelized through BFIs, it will really bring stability to the market in terms of liquidity and stabilize market prices including improving the business environment.
Dr. Posh Raj Pandey, Executive committee member of NEA and former member of NPC chaired the program and explored issues surrounding trade deficit, agriculture sector growth, social safety net, fiscal deficit, etc. World Bank’s Chief Economist Dr. Timmer suggested optimal resources utilization without ignoring the reality of higher commodity prices. While the most vulnerable people are supported with safety nets, price signals should stimulate domestic production of food and energy more profitable and should make the use of these commodities more efficient.
Dr. Timmer suggested that at this critical time, we need to increase resilience at the macroeconomic level and level of business including the household for maintaining our livelihoods. The situation, at present, is not as bad as some other countries in the region as Nepal still holds better access to foreign reserves, said Timmer stressing for revenue mobilization by effectively utilizing the resources available in different layers of government from federal to local without increasing fiscal deficits. With prudent fiscal policy, Nepal will be prepared for future shocks. Dr Gopal Prasad Tiwari, Secretary General of Nepal Economic Association also stressed that for sustainable economic development, there is a need to promote MSMEs that alone contributes 75 per cent employment in the country and it occupies almost 90 per cent of the total enterprises in Nepal. Dr Tiwari suggested for coming up with appropriate development models to sustain MSMEs which can be implemented during economic crisis.
CBFIN President, Mr. Pawan Kumar Golyan, Vice President Mr. Rajesh Upadhyay, Secretary General Mr. Keshav Bahadur Rayamajhi, Secretary Mr. Kush Prasad Mally, executive committee members Mr. Mahendra Kumar Goyal, Mr. Pratap Jung Pandey, Prof Dr. Hirendra Man Pradhan including others attended the event today. Other dignitaries from the World Bank were Ms. Lada Strelkova, Operations Manager of the World Bank for Nepal, Maldives, and Sri Lanka; Dr Taehyun Lee, Lead Country Economist and Program leader for Maldives, Nepal and Sri Lanka, Ms. Alice J Brooks, Senior Economist of the World Bank Nepal Office, and Dr. Nayan Krishna Joshi, Country Economist of the World Bank Nepal Office. A total of 52 participants (economists and CBFIN leadership) took part at the event. Former National Planning Commission members, senior economists, and young economists were also present on the occasion including from the Central Department of Economics, Tribhuvan University.
Even the loans targeted to MSMEs should be channelized through BFIs for sustainable economic development, and to cope-up with emerging crises, suggested Mr. Golyan. When it comes to unpegging the Indian rupee with NC, it will further increase the prices of goods and services which will be more difficult for the consumers. As CBFIN has been conducting research on broad national economic issues and, emerging as the best institution in the country through private sector perspectives on policy issues, its suggestions to the Nepal government for reform are based on evidence and turning into a pragmatic ones. Therefore, collaboration with the World Bank will further support the country like Nepal for sustainable economic growth and job creation by mobilizing the existing scarce resource.
Several speakers, including Dr. Dilli Raj Khanal, a former member of the National Planning Commission; Dr. Ramesh Paudel, an associate professor of Economics at Tribhuvan University’s Central Department of Economist; Prof. Dr. Sanjay Acharya of Saraswati Multiple Campus, Dr. Gopal Prasad Tiwari, Secretary General of NEA and program moderator, and other senior economists expressed their views.