Big investment required to attain double-digit growth: Minister Pun

  Finance Minister Barsaman Pun has said the country requires a high level of capital investment to attain the sought double-digit growth after completing the peace and constitution writing process. Terming the current level of savings and investment ‘far below the requirement’ to attain the sought growth, Pun stressed on the need for enhancing internal capacity to save, cut recurrent expenditure and enhance capital investment in the form of public, private and foreign direct investments.

“For this, the government has established a powerful board of investment under the leadership of the Prime Minister,” said Pun while inaugurating the International Conference on Economics and Finance here on Friday. Organised by the Nepal Rastra Bank (NRB), the two-day conference (April 20-21) brings together economists and financial sector experts from 17 countries and includes sessions on a range of subjects related to macroeconomic management and the financial sector.

Minister Pun said the government has the declared the Nepal Investment Year 2012-13 and formed a high-level task force to review policies, rules and regulation related to investment so as to ensure hassle-free, fair and predictable business environment. He said the government has also formed another task-force to convene an investment forum in Kathmandu at the end of the investment year.

Besides economic growth, Minister Pun stressed on the need for a justifiable distribution of wealth, which is the government’s motto. “The gap between haves and have-nots is growing and this could be a new reason for social conflict,” he said. “The market mechanism is ruthless to the poor, so the government has to ensure social security and safety of the bottom strata.” According to the minister, the Gini coefficient that measures income inequality has been persistently increasingly, with the figure reaching 0.46 in 2008 from 0.34 in 1995.

Pun also expressed concerns about inequality in the availability and cost of financial services. “Financial institutions must earn profits to sustain and provide services to the needy. And, they can sustain only if farmers and small enterprises in the far-flung mountains and hills are served,” he said. NRB Governor Yubaraj Khatiwada said the key challenge for public policymakers has been to find ways to promote a financial system that would sustain growth, while being both efficient and resilient.

Although the financial sector expanded considerably after its liberalisation in mid-1980s, only 27 percent of the rural households have access to financial services within 30 minutes walking distance, he said. As most of the A, B and C class bank and financial institutions are concentrated in urban areas, 89 percent of urban households have access to financial services within 30 minutes walking distance, according to him.

Faisal Ahmed, resident representative of the International Monetary Fund in Cambodia, stressed on the need for divesting the government’s stake in financial institutions, saying the government cannot contribute to growth as effectively as the private sector. “It is difficult to bring reforms in state-owned banks,” he said.

Source: ekantipur