Friday, September 14, 2018

CURRENT SITUATION OF NEPAL (2018)





As described under article 4 of the constitution of Nepal, 2015 -

Nepal is an independent, indivisible, sovereign, secular (i.e. religious, cultural freedom including protection of religion, culture handed down from the time immemorial), inclusive, democratic, socialism-oriented, federal democratic state.

This is the blog written to explore the knowledge of current scenario of Nepal through business perspective


Current Overall Scenario of Nepal:


a ) The new constitution of Nepal, 2015 has changed the federal structure of Nepal. There are three level of government. They are:

  • The Federal Government 
  • State Government 
  • Local Government

b ) Nepal is currently divided into :
  • 7 provinces (as defined by schedule 4 of the Constitution of Nepal, 2015)
  • 77 Districts 
  • 753 Local levels 
  • 6 Metro-city 
  • 11 Sub-metro city 
  • 276 Municipalities 
  • 460 Rural municipalities

c ) Dr. Yuba Raj khatiwada, a current finance minister and a well-known economist of Nepal, had announced budget on 29 May 2018 for the year 2018/19. 

The provincial governments had presented their revenue and expenditure estimates in their respective assemblies on 15 June 2018, following the provision of the Intergovernmental Fiscal Arrangement Act, 2017.

Therefore, in the alignment of government budget, studying the global scenario of economic outlook, suggestions from the stakeholders – Nepal Rastra Bank has framed the monetary policy ( for details Road Map of monetary policy (2018/19 ) of Nepal ) to safeguard macroeconomic and financial stability, widen financial inclusion and achieve targeted economic growth.

d ) All the relevant laws are being amended or re-framed as per the new federal structure of Nepal Government.

e ) The frequent change in election process of Nepal has been stable.

f ) Political environment has been found stable as compared to past few years.

g ) The economic indicators were not found in positive direction. The root cause of problem were-

  • Being unable to utilize the allocated budget expenditure of the government. 
  • Non-budgetary expenses were increased up to high level. 
- This has resulted to a great challenge in the area of Public finance.

h) The financial discipline are broken with unhealthy and unfair way. The country has been revolved around the cyclic movement of revenue based upon imports, and remittance based consumption. The government revenue has been condensed due to following factors:

  • Compactness in the volume of national economy 
  • Foreign aid has not been received in full 
  • Received Foreign aid has not been properly mobilized.

i ) Volume of remittance is found quantitatively high but the elasticity of remittance has been found relatively low then earlier years. 

k ) An unbearable unbalanced change in the external environment has pressurized the country’s foreign currency reserve.

l ) Capital mobilization of financial sector has not been able to align with economic growth. Infrastructure and industrial sector has not been grown as per expected. Internal capital market has not been still stable and reliable. The industrial capital has been mostly shifted towards financial and trading sectors.

m ) Creeping Activities for capital formation is found in both private and governmental sectors (majority of projects are not completed within allotted time frame.)

n ) The basic and fundamental facilities provided by the Governmental service is found to be poor. 
The flow of services are neither simple and consistent nor easily available. 

o ) Rather being Production and manufacture oriented, the interest of country people are inclined towards distribution oriented activities. 

p ) The governmental reserves has been reached to the minimum level. This is due to non-compliance of budgetary discipline. 
In the name of project implementation, assurance of source has been given- without proper planning, without proper reliable base and without proper sources. Even after allocating the funds to the local levels, the cost and benefit measurements could not be properly known. 

q ) Since, the country has marched towards new federal structure. One the one hand, the operating expenditure will tremendously get increased, while on the other hand, huge budget is required to develop all the local levels. 


This has led the challenges to all the three levels of government (central government, state government and local government) to - effectively mobilize the resources and implement development activities.


r ) Other current scenarios are mentioned as follows under following link : Current economic scenarios of Nepal.  
















Picture credit :kathmandupost.ekantipur.com

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