This article was first published in The Annapurna Express.
Covid-19 has made the world pause. Nepalis stayed home
on the eve of New Year 2077 and started the first morning of the new year with
no idea of when they would get back to normal life. New cases of the novel
coronavirus continue to appear, adding to the widespread fear. Meanwhile, the
government is taking ad hoc measures
instead of coming up with a firm strategy to support the poor and sustain the
national economy.
The Ministry of Finance, which is supposed to come
forward aggressively with plans that can be adjusted each day depending on the
scenario, doesn’t seem to have a clue of what’s happening in the economy, let
alone be bothered of the impending poverty and privation. Finance Minister Dr.
Yubaraj Khatiwada, who seems intent on sidelining private sector and
entrepreneurship, doesn’t know what holds the economy together. If he did, the
situation today would be much different.
His statements before the World Bank Group Nepal
Office representatives exemplified the stupidity, insensitivity, and
recklessness of his leadership at this time of crisis. He talked about vague
issues that had nothing to do with fighting the broad economic impact of the
pandemic.
Likewise, Prime Minister KP Sharma Oli addressed the
nation last week. But he too had no message of hope for the panicked public.
Rather he spent his time explaining why it’s futile to question the procurement
process of health materials from China. Estimates show that globally, around
600 million people will be pushed into poverty and that certainly includes
people from Nepal. Those at the bottom of the income and wealth ladder have
harder days ahead. But the government is silent on what can be done to help
them survive this ‘man-made crisis’.
A
recent World Bank update shows South Asia sub-region’s growth falling to
between 1.8 and 2.8 percent in 2020, down from 6.3 percent projected just six
months ago. Although Nepal’s share in sub-regional GDP is minimal, the
country’s economic growth is expected to significant slow down in 2020.
The
national economy, including the agriculture sector, has come to a halt. There
is no preparation to ensure availability of agriculture inputs as planation
time closes in. In the event of the country’s inability to control the crisis
in agriculture, the economy will be in a free-fall, driving vast numbers of
farmers into absolute poverty. The government doesn’t seem to be paying
attention to this critical issue.
There
will be severe food insecurity in the country due to supply shock. The World
Bank has warned that a rapid spread of the virus could reverse the recent
positive trends in poverty and result in high levels of food insecurity and
widespread malnutrition among children.
Investment,
both domestic and foreign, will fall, leading to lower job creation. A large
fiscal deficit will be added to public debt, directly affecting Nepal’s fiscal
sustainability. Daily wage earners will be hit the hardest. Remittances will
significantly decrease, impacting both forex reserve and the livelihood of
those who rely on it. The informal sector, which makes up nearly 70 percent of
the national economy according to same estimates, has stopped functioning.
Against
this bleak backdrop, the government seems the least concerned and ill prepared
to handle the corona fallout. Worryingly, the Ministry of Finance does not seem
to have a clue about how to move ahead. It is not having necessary dialogues
with development partners, it lacks detailed analysis and insights on what’s
happening, and it has failed to undertake a rapid assessment of the economic
impact of Covid-19.
Dr.
Khatiwada can always argue that even the best of government plans failed in
tackling the virus, just as has happened in far more developed countries. But
this will be a lame excuse even as the economy teeters on the edge. Let’s hope
people won’t have to start dying for the government to come to its senses.