May 5: Economist Dr Swarnim Wagle has warned that bad governance in the country coupled with whimsical decision-making trends can push the economy towards crisis.
Stating that the Sri Lankan crisis occurred mainly due to bad governance, lack of fiscal discipline and inability to repay the loan, Dr Wagle cautioned Nepal to take timely measures to prevent a similar predicament.
The former vice chairperson of the National Planning Commission made such remarks while addressing an interaction organized by the Society of Economic Journalists-Nepal (SEJON) on the ‘Future Direction of Nepal’s Economy’ on Wednesday.
Wagle, who is also the chief economic advisor to the Asia Pacific chapter of UNDP, also warned that the ruling parties are displaying the nature that is likely to destabilize the country’s economy.
Dr Wagle said that although Nepal’s current situation is much better than that of Sri Lanka, the risk of similar crisis cannot be ruled out as the decision makers of Nepal are following a similar footsteps of Sri Lanka.
The danger of economic crisis is looming large mainly due to policy and economic shortcomings, said Wagle adding that administrative and policy reforms are required in order to maintain fiscal discipline.
Stating that Sri Lanka received loan for infrastructure development after the end of the armed struggle, Dr Wagle said that the South Asian country had to face economic crisis as it received foreign loans for investment without proper study.
He argued that the Sri Lankan crisis occurred due to massive public borrowing and Balance of Payments (BoP) deficit. According to Dr Wagle, Nepal’s status of public borrowing and Balance of Payments (BoP) is not identical to that of Sri Lanka.