Kathmandu. The private sector, which is considered the backbone of Nepal’s economy, is now in the grip of a big crisis. The Zenji agitation of September 23 and 24 and the damage caused by the sluggish private sector has taken a serious toll not only on business but also on the entire investment climate. The destruction of business assets, uncertainty in transactions and weak investor morale have made the economy more complicated.
In such a situation, the central bank has indicated that it will show flexibility in the monetary policy and has started discussions to revive the industrialists and businessmen. Governor Bishwanath Poudel is also actively discussing the need for the private sector to take steps with flexibility in loan management by facilitating banks and financial institutions from the Nepal Rastra Bank.
Entrepreneurs have become optimistic to some extent as the review of monetary policy has shown the possibility of restructuring, rescheduling and facilitating loans. The central bank has indicated that even if there is enough liquidity, it will ease credit flow to stimulate the market. This is expected to provide some relief to the businessmen who are in a state of disrepair.
However, the challenge is not less. Due to the weak capital buffer of the banks, it is not possible to provide easy loans to everyone. Therefore, economists say that the revival of the private sector is not entirely possible if we rely only on monetary policy. They argue that although only the banks have the right to provide loan flexibility, the government should take the main responsibility of creating an investment-friendly environment. Security guarantees, a stable political environment, policies to convince investors and practical implementation — all these things need to be ensured by the government. ’
On the other hand, there are positive signs from the government. The government has introspected that it cannot impose responsibility on the entrepreneurs just by preaching ‘as we stand, let’s stand’. Instead, it is looking for ways to recover businesses through soft loans, tax breaks or other financial assistance by making a realistic assessment of the damage. This has raised the hope of getting support from the state as well.
Despite the huge losses caused by the movement, many have expressed the sentiment that ‘we will rise, we will not lose’. Experts say that if this self-confidence can be further strengthened by institutional policy facilitation and guarantee of government security, there is a situation to turn the crisis into an opportunity.
Analysts have started emphasizing the need to revive the economy by taking different types of policies. For this, works will have to be done by analyzing the immediate, mid-term and long-term impacts. Immediate relief includes rescheduling of loans, restructuring, concessional interest rates and early issuance of insurance claims.
Similarly, for the medium-term recovery, an investment-friendly environment, guarantee of safety, tax incentives and market dynamics should be adopted, experts say. He stresses the need for long-term stability, including political stability, legal clarity, private sector-friendly policies and reforms to strengthen the banking system.
Unless the private sector is revived, neither the banks nor the economy can recover. Therefore, cooperation between the central bank, the government and the private sector is indispensable in the present situation. One of the most important lessons learned from the crisis is that the state should treat entrepreneurs not just as a means to pay taxes, but as the backbone of the economy. For this, all sides should move ahead together.
