Economic Recovery Hinges on Boosting Private Sector Morale: Dhakal
Newly appointed Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel has announced that the government will prioritize building confidence among the general public and the private sector. During a meeting with a delegation from the Federation of Nepalese Chambers of Commerce and Industry on Wednesday, Minister Paudel acknowledged the various economic challenges but emphasized the importance of restoring private sector confidence.
Minister Paudel encouraged business leaders to continue their operations without apprehension, acknowledging the decline in market demand, production, and exports. He assured that solutions are being sought for issues like the dedicated feeder and trunk line problem and the delayed payments to construction contractors.
Chandra Prasad Dhakal, President of the Federation of Nepalese Chambers of Commerce and Industry, highlighted the current economic difficulties and stressed that economic recovery relies heavily on boosting private sector morale. He called for collaboration between the government and the private sector to revive the economy.
Dhakal pointed out the lack of coordination among economic bodies and suggested establishing an economic reform commission with private sector participation. He also urged Minister Paudel to promptly resolve the dedicated feeder and trunk line issue, which has significantly impacted industries and reduced manufacturing capacity.
Dhakal noted that the contraction in the economy has adversely affected employment generation. Although Nepal Rastra Bank data shows a 4.17 percent drop in inflation, he stated that real inflation has been rising at around 7 percent since the COVID-19 pandemic, reducing purchasing power and market demand. Dhakal recommended policies to increase market demand and stimulate economic activity.
Dhakal further informed Minister Paudel that despite lower loan interest rates, industrialists and entrepreneurs are hesitant to invest, resulting in remittance funds accumulating in banks. He emphasized that low interest rates alone are insufficient to incentivize investments and called for policy reforms to create an investment-friendly environment.
Dhakal concluded by expressing that both established businesses and new entrepreneurs are reluctant to invest due to past policy missteps, urging Minister Paudel to foster an environment conducive to investment through policy changes.
