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ECONOMY |
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ECONOMY |
NINTH PLAN Poor Performance A recent study says the targets of the periodic plan are unlikely to be met By A CORRESPONDENT Given the performance of the economy over the last three years, the targets set by the Ninth Five Year Plan (1997-2002) are unlikely to be fulfilled, says a latest report. According to the mid-term review of the Ninth Plan ó that is yet to be made public -- conducted by the Nepal Rastra Bank, the growth target set by the plan document is least likely to be achieved.
As against the target of attaining 6 percent growth rate per annum during the plan period, during the first three years (1997-2000) the average growth rate achieved has been only 4.6 percent. It is mainly because of the poor performance of the agriculture sector (2.9 percent of growth rate as against the target of 4.0 percent). (See Box) "Even if the GDP growth rate maintains the current pace of 6 percent per annum for the next two years the average growth during the plan period will be not more than 5 percent ó less than 1 percentage point than the target," says the report. The targets related to consumption, investment and savings are no better. As against the target of attaining a growth of 6.1 percent in investment, the average growth of investment in the first three years has been only 3.4 percent. This is because of the ensuing political instability and slowdown in the economic activities, says the report. The Ninth Plan was formulated during the coalition era (1994-99). Though the second year of the plan saw the formation of a majority Nepali Congress government after general elections in 1999, the growing indiscipline and infighting in the ruling Nepali Congress had had adverse impact upon the performance of the government. Even today, the situation is no better. Despite the governmentís commitment to cut down unnecessary expenditure, downsize the bureaucracy and privatize state-owned enterprises, nothing spectacular has happened during the first three years of the plan period. The government had set a plan of privatizing 30 SOEs during this period but so far only one company, Nepal Tea Development Corporation (NTDC) has been privatized and the privatization of the Butwal Power Company is under way. Over the last three years, the government expenditure has grown by annual rate of 12.4 percent on an average. Increasing debt liabilities of the government and spiraling expenses under internal security headings are mainly responsible for continuous rise in the government expenditure. Similarly, as against the target of spending Rs 189.58 billion in development works, the government has been able to spend only nearly 42.9 percent of the target (Rs 81.29 billion) in the first three years. If the trend continues, the government will not be able to spend more than three-fourth of the targeted amount. The performance of the government on the revenue mobilization front, too, is not satisfactory. Revenue mobilization over the last three years has almost remained stagnant at 11.0 percent per annum over the last three years as against the revenue mobilization of 10.8 percent at the end of the Eighth Plan. Foreign aid mobilization in the first three years, too, is not satisfactory with the aid flow remaining at only 42.6 percent of the targeted amount. The report has also made some recommendations to improve the performance of the government during the rest of the plan period. Referring to the recommendation of the Administrative Reforms Commission in 1991 to reduce the number of posts in the civil service to 70,000 from over 90,000 now, the report says the government should scrap unnecessary grades in the lower rung of the civil service by formulating an organization structure. During this period, the government has reduced the number of ministries to 21 from 26. The report recommends that there still is the need for reducing unnecessary government offices and making local level bodies more effective as per the spirit of decentralization. Saying that development projects are still selected under political pressure -- nearly 700 projects are still in the implementation phase, the report has recommended improvement in the selection process of the projects and back them with adequate budget. In order to mobilize more revenue, the government should check leakage at the customs point, enforce the billing system strongly to implement the Value Added Tax effectively and implement the provision of banking transactions for trade transactions with Tibet Autonomous Region of China, the report said. It has, however, not mentioned anything about the impact of the governmentís move to mobilize army at the customs point to check illegal trade. Regarding privatization, the report says that there is an urgent need to remove the environment of uncertainty related to the state-owned enterprises. If these enterprises were run in a professional way by doing away with political interference, there would be improvement in their performance, the report says. Of course, there are some positive aspects of the economy. The foreign exchange reserves with the banking system in the country reached equivalent to Rs 105.51 billion by mid-December 2000 which is adequate to finance imports for a period of 11 months. Similarly, there have been significant progress in the exports front. The total exports from Nepal rose to US$ 751 million in 1999-2000, up from US$ 399 million at the end of the Eighth Plan.
Interestingly, the report prepared by the central bank remains silent about the progress toward meeting the overriding objective of the Ninth Plan ó to reduce poverty from 42 percent at the end of the Eighth Plan to 32 percent during the plan period. "There is a need of a separate survey to see if the incidence of poverty has come down,î the report said. An independent report commissioned by the NPC has claimed that the incident of poverty has declined marginally to around 39 percent during the first three years of the plan period, mainly due to the influx of remittance to the tune of up to Rs 77 billion per annum. The report is yet to be endorsed by the officials. Since its journey on the path of planned development in 1956, Nepal has made considerable progress in the areas related to infrastructure development and social sector. But as nearly half of the population is destined to live below the poverty line even at the turn of the century, whether the change in figures at the end of the periodic plans will make any positive impact upon the lives of hundreds of thousands of poor Nepalese remains to be seen. Target and Achievement of the GDP
(at factor cost) Note: * stands for annual growth rate targeted by the Ninth Plan. ** stands for average growth rate during the first three years of the Ninth Plan. (Source: Central Bureau of Statistics) |
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