On October 2, Finance Minister Prakash Sharan Mahat left for Marrakech, Morocco for a week to attend the annual meeting of the World Bank. He was not alone; he was accompanied by his entourage. With him were Finance Secretary Dr Krishna Hari Pushkar, Head of the International Development Assistance Coordination Division and Joint Secretary, Shree Krishna Nepal, as well as Under Secretary Narayan Dhakal.
This marked Mahat’s fifth visit to a foreign country in the past five months. During a period when the country is facing economic challenges, Mahat has consistently opted to leave the country for foreign trips. Consequently, the government has fallen behind in achieving its targeted economic growth and has encountered difficulties in implementing the plans outlined in the budget.
Furthermore, the government has been unable to allocate more than 3.86 per cent of the capital expenditure, indicating that the budgets for numerous projects are likely to be put on hold.
So, while the country is reeling economically, how is it that the finance ministry seems so chill? Can a person, who holds such power over the economic state of the country not care about and go on foreign junkets which could be attended joint or under secretary of the ministry?
Economic challenges
While the external sector of the economy seems to be in a relatively stable position, thanks to the rise in remittances and a decrease in imports, the real estate and financial sectors are currently contending with significant challenges.
Stagnation persists in sectors like construction, agriculture, industry, and transportation. As of October 3, the World Bank has reported a meagre economic growth of only 3.1 per cent for this year. Consumers are facing the challenge of a high inflation rate of 7.52 percent.
This economic slowdown is affecting not only household businesses but also capital markets, and it has led to an expansion of debt at a lower rate. The double-digit interest rate has left entrepreneurs and businesspersons disheartened.
In the run-up to Dashain and Tihar, as economic activities slow down, it is a challenging time for small and large investors with their confidence eroded.
Where is the Finance Minister?
A former Finance Secretary says the Ministry of Finance is tasked with overseeing economic and financial discipline. While it endeavours to uphold financial discipline, it also exerts pressure on other ministries and agencies to practice fiscal prudence. Unfortunately, the current situation appears to be quite the opposite.
The Ministry of Finance itself has issued austerity guidelines for the current financial year 2023/24 for all ministries, departments and agencies to reduce current expenditure. The guidance states that due to their strategic importance and international relations, participation in international forums, conferences, and intergovernmental meetings is mandatory.
However, the Ministry of Finance itself is not adhering to the ‘mandatory program’ outlined in the guidance. Instead, ministers and officials from the ministry have been consistently occupied with visits to foreign countries under the pretext of invitations from donor agencies.
Morroco marks the Finance Minister’s fifth foreign visit in just four months, with three of those trips occurring within the past month and a half alone. It is worth noting that when Prime Minister Pushpa Kamal Dahal undertook an official visit to India in May, Finance Minister Mahat was also part of the delegation.
Prakash Sharan Mahat embarked on several international visits in recent months.
In June, he travelled to India to participate in the G20 finance track meeting. He was accompanied by the Head of the International Economic Coordination Division and Joint Secretary, Shree Krishna Nepal, along with his personal secretary, Yuvraj Pandey.
On August 20, he visited Canada to partake in the seventh meeting of the Global Environment Facility. Joining him on this trip were the Joint Secretary at the Budget and Programme Division, Uttar Kumar Khatri; the Joint Secretary at the International Economic Cooperation Coordination Division, Shreekrishna Nepal; Under Secretary of the Forest and Environment Ministry, Gyanendra Kumar Mishra, as well as Under Secretary of the Finance Ministry and his personal secretary, Yuvraj Pandey.
Furthermore, Finance Minister Mahat journeyed to Cairo, Egypt on September 22 to participate in the annual meeting of the Asian Infrastructure Investment Bank (AIIB). He was accompanied by Revenue Secretary, Dr Ram Prasad Ghimire, and Under Secretary of International Economic Assistance Coordination Division, Kanchan Basnet.
Just 11 days following his return from Cairo, Mahat embarked on a trip to Morocco, accompanied by another sizable high-level delegation.
Upon his return from Morocco, he is slated to travel to the UK. Notably, Mahat has received approval to take part in a significant investment conference in London, UK. Although the conference is scheduled to commence on November 23, he secured approval from the Council of Ministers nearly a month and a half ago, confirming his attendance.
Fun and games
Economist Dr Resham Thapa points out that the Prime Minister and the Finance Minister are not taking the economic challenges seriously enough. He argues that the severity of the situation is exacerbated by the consecutive foreign trips of the Finance Minister, which the government has not addressed adequately.
“The root cause of the economic challenges we are facing in the economy is the weak capacity of financial and revenue administration. Financial administration is not effective, efficient, or honest, which is causing a crisis in the economy,” says Thapa.
He says that even the political leadership seems to be more interested in making stunts and having fun rather than fulfilling their roles. He believes that the culture of going on trips and enjoying government positions among government personnel is worsening the state of the economy.
“The culture of enjoying trips has raised questions about the government’s indifference to the economic situation,” he says.
Thapa also suggests that the Finance Minister should focus on addressing pressing issues instead of displaying contrary behaviour.
This story was translated from the original Nepali version and edited for clarity and length.
