Life has been tough for the finance minister, especially with his political opponents gunning for him in the midst of an economic crisis the Himalayan nation faces post the COVID-19 pandemic and the fall in inflows of foreign exchange.
Nepal’s economic governance has been in an upheaval since early-April. The backroom politics behind the rising price of fuel, along with a rise in the number of cases of COVID-19 resembles the palace intrigues during the monarchy.
Late in the evening of 8 April, a cabinet meeting called to decide nominees for ambassadorial positions ended with the government announcing the suspension of Maha Prasad Adhikari, the governor of the Nepal Rastra Bank, the country’s central bank.
Questions of accountability of transparency soon cropped up. The grapevine says that Adhikari had disagreements with Finance Minister Janardan Sharma – but that the main reason for the soured relationships was Adhikari’s refusal to approve the release of Nepali Rs 40 crore to a businessman, a crony of the ruling party.
Life has been tough for the finance minister, especially with his political opponents gunning for him in the midst of an economic crisis the Himalayan nation faces post the COVID-19 pandemic and the fall in inflows of foreign exchange. The opposition parties chanced on the opportunity to claim that the country’s economy is set to deteriorate further in the coming days as fuel prices hit the roof and cooking gas became unaffordable for many people.
Nepal is preparing for a string of elections in the coming months.
Like Sri Lanka?
To add fuel to the fire, three former finance ministers Bishnu Paudel, Surendra Pandey and Dr Yubaraj Khatiwada made public a 12-point joint statement on the latest economic scenario of the country on Monday 11 April. The threesome belong to the Communist Party of Nepal (UML) that is set to challenge the present government at the hustings.
There was talk of the economic situation in Sri Lanka and similarities were drawn as the former finance ministers said that Nepal was set to face an economic crisis.
Feeling the heat, Finance Minister Sharma countered that the economic crisis his opponents were speaking of was just a mirage they were creating for political objectives.
“The country has not gone through any big economic crisis based on the evaluation of available details so far,” he claimed while briefing reporters on the country’s economic situation.
But Sharma did not foresee the spring in the feet of his opponents, nor the media. Pat came questions on the decision to suspend Adhikari, the central bank governor.
All an unprepared Sharma could say was that the action was lawful since the Governor had failed to perform his duties. Later in the day, word was put out that the governor was being charged for leaking sensitive information.
Interestingly, governors of Nepal’s central bank have had a chequered fate ever since the country chose the path of democratic reforms. Governor Tilak Rawal was sacked in 2000. Later, central bank governor Bijay Nath Bhattarai was sacked in 2007.
The controversies since the start of the month, however, do not seem to have come to a stop. Finance Minister Sharma, on Saturday said that the Nepali economy needed immediate transformation in agriculture and government mechanism to implement development programs.
Speaking to business reporters on the agriculture sector, the minister said, “The country is lagging in terms of development and growth and currently facing economic challenges because it has failed to manage available resources. There are challenges in utilization of the resources.”
FM Sharma had initiated his budget-related discussions from agriculture, an annual affair – but his detractors said that he was diverting attention from burning issues like the sacking of the central bank governor and the issues around the country’s tanking economy.
The annual bill for “revolutionary changes” to transform the agriculture sector could be up to Nepali Rs 300 billion. Such an investment would help bail the country out of the pressures on its foreign currency reserves. He said that the country is importing foodstuff that could be grown at home.
He went on to add that the economy needed agricultural development to go together with a reduction in the imports of fuel and an increase in the generation and consumption of hydroelectricity. And, for effect, he added that the country’s tourism industry needed revival to rake in more dollars.
Nepal’s GDP was valued at Nepali Rs 4.26 trillion in the last financial year.
Then, the finance minister turned his attention to the bureaucracy, saying that it had trained itself to centralise power, challenging implementation of the rights devolved to the subnational governments. “Reforms are needed to change this scenario,” he said. “The country won’t gain much from the current structure.”
The political slugfest is reaching a crescendo with elections round the corner.