 |
| |
VOL. 27, NO. 38, June 06 , 2008 (Jestha 24 2065 B.S.)
|
|
Hitting The Roof
Economic woes have worsened with the rate of inflation surging to 8.9 percent – a clear indication of what lies in store for upcoming government
By SANJAYA DHAKAL
Following the implementation of republic, the country is awaiting the formation of new government.
Even as the major parties are still squabbling over power-sharing causing a delay in the formation of new government, the economic woes have continued to pile up in dangerous proportions.
Once the new government is formed, it is expected to face serious political issues such as the constitution-making, turning of the country into federal state, ensuring inclusion and striking a balance among conflicting interests of various parties and communities.
These are tall orders.
However, for the new government, battling with political issues could turn out to be far easier than battling with the economic issues.
 |
Marketplace : Price is getting hotter |
Experts have warned that economic woes could be the worst enemy for any new government, especially at a time when the skyrocketing market prices have compounded the misery of common people.
In the last few years, parties worked overtime to promise the people with liberation from all kinds of social and economic woes. Fulfilling those sky-high aspirations of the people is not going to be easy for them.
Currently, one of the most serious economic problem facing the country is the soaring rate of inflation, which is eating into the macro-economic stability.
According to the report of Nepal Rastra Bank (NRB) for the first nine months of the current fiscal year, the latest figures show that rate of inflation has reached 8.9 percent – which is higher by three percent compared with targeted inflation rate in the monetary policy.
“The inflation has surged to 8.9 percent in the ninth month of this fiscal year. It stood at 7.2 percent in the eighth month,” said Krishna Bhakta Manandhar, acting governor of the Nepal Rastra Bank (NRB).
The inflation has been pushed by rise in market prices of essential foodstuffs. According to officials, the price rise of foodstuffs stand at 12.6 percent. Till a month ago, this figure stood at 9.4 percent. The price of foodstuffs contribute 53.2 percent to the overall National Urban Consumer Price Index.
“The price of rice has increased, the price of wheat has increased, the price of fuel has increased and all of them have impacted the rate of inflation,” said Manandhar.
He said that there is a very limited scope for NRB to control the inflation at this juncture because the cause of the inflation lies beyond the borders. “This increase in inflation is due to rise of price in international market. It affected Asian markets and Indian market, which, in turn, has affected us,” he said.
Manandhar added that the current level of inflation could easily increase further if the prices of petroleum products are adjusted in the domestic market to match with the price in international market.
Economist Dr. Bishwambher Pyakuryal fears double-digit inflation could not be far-off.
“This is a very serious problem the new government is going to have to face,” he said.
Dr. Pyakural said he was afraid that the situation of inflation combined with stagnant income was laying the ground for more serious situation called stagflation.
“Our income has not increased but our inflation has soared. This is a situation, which we call stagflation,” he said.
As Manandhar admitted, it is the sustained flow of remittance income that has single-handedly averted major crisis in economic stability till now. “Despite inflation, our Balance of Payment is still positive largely due to remittance,” he said.
The surging price of essential food products; unbridled rise of fuel price; disruption in supply system; continued instability; lack of security; lack of investments and absence of industrial peace are the major economic problems that will greet the new government from the very first day it takes over.
