The new fiscal year has commenced and the Prime Minister KP Sharma Oli led administration is still grappling with multiple issues that it committed to resolve during its formation one and a half years ago. The list of problems is long for the government which has touted economic prosperity, infrastructural development and efficient delivery of services among its key objectives in order to get things back on track and keep the wheels of the economy rolling.
Currently, overcoming the problems in the external sector has become a herculean task for the government, which has exposed our macroeconomic vulnerabilities to a greater extent. The country’s financial details of the 11 months of the last fiscal year that ended in June 15 published recently by the central bank, is a stark reminder that time is running out to manage the components on the external front to ensure the deteriorating situation does not spiral out of control. So far the government has failed to take concrete steps to tame the widening balance of payment (BoP) and current account deficits and depleting forex reserves despite its claim that it has taken sufficient measures.
Similarly, the government has not been able to remove the sluggishness in the construction of National Pride Projects. The physical progress of the projects has been dismal despite the fact that the expenditure in such projects has averaged 89 percent of the total allotted budget of Rs 88.55 billion in the last fiscal year. The construction of most of the 21 National Pride Projects have not gained any meaningful progress in spite of the spending. Melamchi Drinking Water Supply Project, Sikta Irrigation Project and West Seti Hydroelectric Project, for instance, have become projects of ‘national shame’ rather than national pride. The construction of the 750MW West Seti Hydroelectric Project has not even started and its fate is unclear even after 21 years of planning. Ordinary people now take the comments of the government officials, that the government will expedite the construction of the projects, as a joke. It is because the government lacks seriousness to execute the projects in a well-planned and coordinated manner.
Inefficient delivery of services is another problematic area. The delay in the distribution of smart driving licenses is an example in this regard. The distribution which was rolled out in 2015 has become a subject of public scrutiny as the process was resumed and halted multiple times over the last four years with only a few vehicle owners being able to get the new driving license card. Similarly, the much hyped one-stop-service centre at the Department of Industry has not been able to provide hassle free services to foreign and domestic investors as advertised. Likewise, the troublesome implementation of the Permanent Account Number (PAN) for all types of workers along has irked entrepreneurs. So has the Vehicle and Consignment Tracking System (VCTS). The government’s inability to engage in sufficient homework by consulting with the private sector for necessary suggestions while initiating these arrangements is the cause of the backlash. Meanwhile, there have been no radical reforms in budget implementation. Capital expenditure in the last fiscal year was abysmal like the past years. Not even half of the capital budget was spent by June; in the last three days of FY2018/19, the Ministry of Finance disbursed capital funds amounting to Rs 80 billion allotted under different headings to various ministries to meet the expenditure target putting a big question mark over the commitment made by finance minister Dr Yuba Raj Khatiwada to effectively maintain the fiscal discipline.
The new fiscal year has started. It is high time the government goes through a revision of its actions and commitments which will help it chart out a better path for the current and upcoming fiscal years. Otherwise, the big talk about economic prosperity will only be seen as lip service.