Kathmandu: Janardan Sharma, the then deputy commander of People’s Liberation Army (PLA) during the Moaist insurgency, earned some reputation in 2016 when he became Minister for Energy under the premiership of Pushpa Kamal Dahal.
His performance was appreciated after Kul Man Ghising was appointed the Managing Director of Nepal Electricity Authority (NEA) in September 2016 by a cabinet decision and subsequent end of hours-long loadshedding. That one decision nearly projected him as a ‘competent’ minister.
In 2017, he became the Minister for Home Affairs, but unlike in his previous stint as energy minister, he left no remarkable impression.
In July 2021, he assumed the position of Minister for Finance. This time around, he has been talked about widely but for all the wrong reasons.
It has been five months since he was appointed the finance minister. This period can be characterized as one of considerable ambivalence and continual fluctuations between different, sometimes opposing, working modalities and principles. He appears clueless about the approaches a finance minister needs to adopt to keep the country’s economy well on track.
Analysts say that he is still struggling to inspire confidence in economic sectors. It is less likely that he can ignite hopes and correct the course.
No craft, only words
The economic situation has only worsened since he assumed the position with the country in the midst of a slowdown. Overall indicators, released recently by Nepal Rastra Bank, paint a bleak picture of the country’s economy. The remittance inflow has decreased by 7.8 percent to 2.63 billion in the first four months of the current fiscal year. The current account has seen a deficit of Rs 223.19 billion. The balance of payment, too, is in the deficit of Rs 150.38 billion, against the surplus of Rs 110.65 billion in the same period in the last fiscal year. The foreign exchange reserve is depleting. And the trade deficit has increased by 58.6 percent to Rs 568.6 billion in the four months of the current fiscal year.
Instead of taking measures to correct the course, the finance ministry, allegedly, has shown indifference to the core problems. His public statements smack of immaturity, even ignorance at times.
“The economy has become helpless in front of politics. The government should be realistic while projecting the economy. While the World Bank and the Asian Development Bank have been projecting Nepal’s economy to grow at 2-3 percent, the finance minister has set an ambitious economic growth of 7-8 percent,” said economist Posh Raj Pandey in the meeting of the Finance Committee of the Federal Parliament, adding Nepal is almost in the stage of “policy paralysis”.
“We say remittance has been supporting our economy. However, remittance is the major hindrance. We adopt policies to stop sending capital outside, but Nepal is sending a huge number of young people for foreign employment.”
On August 10, Minister Sharma issued a white paper, wherein he accused his predecessors for wrongdoings. But after being in the ministerial position for more than four months, he has not done any better.
On November 9, Sharma stated that his goal was to collect 200 times more revenue than the set target. He did not elaborate how that target could be met.
He went on to make more unrealistic remarks. On 17 December, he directed all ministries to spend 30 percent of their budget within one month. For analysts, this is easier said than done.
Most of the influential Maoist leaders have earned notoriety for amassing money without source. Even Finance Minister Sharma is, allegedly, staying at a home gifted by a businessman who is also active in Nepali Congress politics.
Sharma appears to be completely disoriented. Neither does he have any plan to gain the confidence of the private sector nor does he seem willing to take corrective measures to bring the economy back on track.
“Nepal needs to focus on five sectors—remittance, trade, tourism, foreign direct investment, and foreign support—to improve the foreign reserve exchange. Among these, the government should identify the potential sectors that might be beneficial to improve the foreign reserve,” said economist Chandra Mani Adhikari.
“The government must focus on reducing recurrent expenditure and electricity charges, and increasing investment in the productive sector at the earliest.”
A cascade of problems
Although Nepal Rastra Bank, the central bank, denies the problem of liquidity crunch, the situation is worsening. Banks and financial institutions, however, are facing difficulty in extending more loans to the enterprises and individuals seeking credits as the banking system is facing liquidity crunch in recent weeks.
Some experts indicate the recent intervention by the central bank to cap the interest rate is the problem, while others say that the government lacks vision and action to resolve the problem.
“It’s not a liquidity problem. It’s management. The ongoing shortage of liquidity is a manifestation of the guerilla working style of the finance minister,” an expert told Nepal Live Today.
Persons with interest in the economy know that the remittance inflow has decreased because of the activation of informal and illicit channels, such as Hundi, said an economist. “But the government does not have any control measures.”
“Maoists often say capitalism is the problem. But the reality is that they are also backing agents of crony capitalism,” he told Nepal Live Today.
“The government should ban the import of certain goods. This will certainly help to improve the external sector,” said Dipendra Bahadur Chhetri, former governor of NRB. “The amount of loan provided by the banking channel is almost equal to the GDP of Nepal. In situations like this, problems like the liquidity crisis arise.”
Ideological ambivalence
Most of the influential Maoist leaders have earned notoriety for amassing money without source. Even Finance Minister Sharma is, allegedly, staying at a home gifted by a businessman who is also active in Nepali Congress politics.
On one hand, they collude with the business community, influential middlemen and others to amash cash. While on the other, they put the blame on capitalism to cover up their failure. The problem, it appears, is also with the party.
For instance, on 12 December 2021, Maoist Supremo Prachanda dubbed the share market “a developed form of imperialism”. He also went after the IMF, the World Bank and Asian Development Bank. “They appear like banks. They are involved in monetary transactions, too. But it is not easy. It is not like this,” he said. He heavily criticized capitalism as a system in which a handful of people hold resources and 80 percent of people are forced to live under extreme poverty.
What he forgot was that the coalition government was reaching an agreement with the IMF on a three-year US$400 million financing package around the same time. And the deal was directly done by Finance Minister Sharma, a minister who represents the Maoist party.
This shows that there is an ideological dilemma inside the party, bereft of a clear vision about the global economic order.
Maoist leaders are cunning enough to shift blame on abstract “isms” instead of making a plan for economic recovery.
Impact on the coalition
Will Sharma’s performance so far compel Prime Minister Sher Bahadur Deuba to reshuffle the cabinet? A leader close to PM Deuba told Nepal Live Today that the inefficiency of the finance minister will have a direct negative impact on Congress’ image in the upcoming elections.
In the short term, people will direct questions toward the finance minister. But in the long run, the Prime Minister will be in a difficult position to defend the worsening economic situation.
This is why, Prime Minister might not want to face an unpleasant backlash by continuing Sharma as the finance minister. “In this case, the Prime Minister is likely to reshuffle the cabinet to ensure economic recovery,” the leader said.
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