Finance Minister Bishnu Paudel is taking the helm of the Finance Ministry again after a gap of 19 months.
He shoulders the responsibility of uplifting the nation's sluggish economy yet again since he left the ministry in May, 2021.
The government led by KP Sharma Oli, in which Paudel was the finance minister, collapsed with the restoration of twice-dissolved parliament last year.
Subsequently, Janardan Sharma became the finance minister in the Sher Bahadur Deuba-led government formed on July 13, 2021.
Sharma resigned as the Finance Minister after allegations of allowing unauthorized persons access to the Finance Ministry during current fiscal's budget preparation were made against him. However, after the parliamentary committee's investigation failed to prove the allegations, Sharma resumed the command of the Finance Ministry again.
Sharma has been accused of ruining the economy after becoming the finance minister. Most of the indicators are negative with the Finance Ministry during the stint of Sharma.
Leaving the ministry yesterday, Sharma said that the economy had not deteriorated as rumored.
The data of Nepal Rastra Bank (NRB) shows that the current economic indicators are more negative than when Paudel left the Finance Ministry in May, 2021.
Inflation is high, the stock market is bearish, capital expenditure stands minimal and the revenue target is falling behind by Rs 1 trillion.
As Sharma is leaving the Finance Ministry, only 25.53 percent of the total revenue target has been achieved. Only Rs 3 trillion 72 billion has been collected in revenue against the annual target of Rs 14 trillion 3 billion rupees in the past five and a half months.
Capital expenditure exceeds revenue collection. According to the Financial Comptroller General Office (FCGO), Rs 4 trillion 66 billion rupees i.e. 25.99 percent has been spent.
Current expenditure stands at Rs 3 trillion 72 billion as capital expenditure is only Rs 38 billion. While capital expenditure is limited to 10.17 percent, financial management expenditure is 23.99 percent.
The economic situation: Then and now
In May 2021, when Paudel left the ministry, the average inflation rate was only 3.60 percent. But today as Poudel takes charge of the Finance Ministry again, the inflation based on consumer price index is 8.08 percent on an annual point basis.
Remittance inflows has increased during the tenure of Sharma. Of late, remittance increased by 20.4 percent in Nepali rupees and 10.8 percent in US dollars terms. When Paudel had left the ministry in 2021, remittance had increased by 9.8 percent in Nepali rupees and by 8.2 percent in the US dollar terms.
Similarly, when Paudel had left Finance Ministry, import had increased by 28.7 percent and the export by 44.4 percent, but now the import has decreased by 20.7 percent and the export by 34 percent.
In May 2021, when Poudel was leaving the Finance Ministry, the country's balance of payment (BoP) was in a surplus of Rs 1.23 billion. Now, as Sharma is leaving, the BOP situation is in a surplus of Rs 20 billion 30 million.
Foreign exchange reserves are currently about USD 2 billion less. The government had imposed an import ban on 10 items, including vehicles, for the past eight months. But foreign exchange reserves are yet to return to previous levels. Currently, Nepal has a reserve of 9.63 billion US dollars. It was 11.75 billion US dollars at the end of Paudel's term.
In May 2021, the wide money supply of the country had increased by 21.8 percent, but, at present, it is at 1.0 percent.
Deposit collection of banks and financial institutions had increased by 21.4 percent and loans to the private sector had grown by 27.3 percent. Currently, the increment of deposits is limited to 8.6 percent and the growth rate of loans to the private sector is limited to 5.4 percent on an annual basis points.
The stock market did not support Finance Minister Sharma. When Paudel left the ministry in May 2021, the NEPSE index reached 2,883 points and the stock market capitalization was Rs 40 trillion 10 billion.
The NEPSE index, which began to decline after Sharma took over the ministry, has now dropped to 1,924 points.
NEPSE index increased by 56.88 points on Monday with the formation of the new government. Currently, the market capitalization has dropped to Rs 27 trillion 82 billion.
