World Bank predicts 4.5% growth rate; remittance the only basis for economic stability so far

ShareSansar, October 25:

The World Bank has project an economic growth rate of 4 to 4.5 percent for Nepal in the current fiscal year.

 ‘Nepal Development Update’ which the multilateral donor released yesterday has cited the timely budget this time around, inter alias, as a major reason for the predicted growth rate.

The budget has already expanded by 40 percent even though we are just at the beginning of the second quarter, and the National Planning Commission has managed to release the budget to 90 percent of the government projects.

The World Bank’s report has also stated that the investment in both the public and private sector will rise considerably if the Constituent Assembly election becomes a success.

Political stability is the way to solid economic growth, the report added.

The government, however, is more upbeat and aims to achieve 5.5 percent growth rate in the current fiscal year after the disastrous growth of 3.6 percent in the last one.

The World Bank believes that the country’s economy will accelerate this fiscal year after the completion of some development projects shortly, and that good monsoon and smooth supply of fertilizer will boost agriculture, which is crucial for the economy.

Notably, the country witnessed timely paddy harvest in 95 percent of arable land allotted for the purpose — up from merely 64 percent in the last fiscal year.

Though the growth of the productive sector as a whole is yet to be ensured in the current fiscal year, the construction sector will boom, according to the World Bank’s projection.

In regard to remittance, the donor agency believes that it will continue to support the service sector.

As the number of people seeking foreign employment is growing, the World Bank observes, remittance will increase, and that the growth of remittance will come to the tune of 7 percent in terms of the US dollar.

It may be noted here that the number of people who have applied for overseas job has increased by 18 percent in the current fiscal year.

The World Bank has however expressed concern over the huge trade imbalance.

Given the situation, remittance remains the only basis for economic stability of Nepal, it has noted.

It has, nevertheless, raised question about the sustainability of remittance, which has become the mainstay of the economy.

The World Bank has also urged the government to address the imbalance in the financial policy caused by a very low expenditure and high revenue growth in the sector.

Acknowledging that Nepal Rastra Bank’s intervention has helped to improve the real estate and bad debt scenario, the multilateral donor has stressed on the strength and sustainability of the financial sector in the days to come.