Kathmandu. The World Bank has concluded that remittances play a significant role in reducing poverty in Nepal.
On Monday, the World Bank, while releasing the report Nepal National Economic Outlook: Revealing the Potential for Economic Growth in Nepal, said that Nepal has achieved significant success in reducing poverty by almost eliminating extreme poverty and that remittances play a major role in this.
According to the World Bank, Nepal must take policy steps to open up employment opportunities internally to achieve strong economic growth in the future. According to the World Bank, Nepal’s economic growth lags far behind other countries.
The report states that Nepal’s economy grew by an average annual rate of only 4.2 percent between 1996 and 2023, ranking sixth among eight countries in South Asia. Structural challenges such as declining exports, sluggish industrial sector and low productivity have pushed Nepal’s economy back and job creation in the non-agricultural sector has slowed down.’
The World Bank believes that young workers are being forced to seek foreign employment due to limited domestic employment opportunities in Nepal.
Releasing the report, David Sislen, World Bank Country Director for Maldives, Nepal and Sri Lanka, said that Nepal’s success in poverty reduction is remarkable. According to him, despite the immense potential in the country, Nepal is failing to utilize it.
He said, ‘The economic potential has not yet been fully utilized. Nepal has great potential to achieve strong economic growth through reforms such as increasing the returns from migration, increasing exports, efficiently utilizing hydropower, and promoting digitalization.’
The program was addressed by Professor Dr., Vice Chairman, National Planning Commission. Shivraj Adhikari said that the 16th Plan of the Government of Nepal has presented a vision of good governance, social justice and prosperity and has prioritized productivity and competitiveness development, decent and productive employment, social security, and ensuring smooth upgrading from LDCs.
According to him, the Government of Nepal is also committed to ensuring a conducive policy environment for sustainable economic growth.
What other suggestions has the World Bank made?
Getting more benefits from immigration: A systematic and inclusive institutional migration system Helps to achieve greater benefits from migration. Integrating migration with national development, employment creation and poverty reduction strategies provides a platform for working towards such a system.
Policies should focus on reducing the costs of migration of skilled workers and increasing benefits and security, while taking into account long-term skills development and diversification of labor destinations. The conclusion of additional bilateral agreements and their effective implementation will be important. Entrepreneurship promotion, retraining, and reskilling programs should be implemented to re-integrate returning workers into the domestic labor market.
Improving export capacity: Exports can be increased by improving market competitiveness in key sectors and addressing infrastructure deficiencies. Managing inflationary pressures well addresses exporters’ price competitiveness.
Inflationary pressures can be slowed down by encouraging people to use remittances for investment and business growth. Simplifying the system for businesses to receive tax refunds on imported goods and reducing import taxes will make it easier for exporters to export more.
In addition, the authorities should seek more favorable trade agreements, given the reduction in trade privileges that Nepal enjoys as a least developed country. Potential utilization of hydropower: A clear financial strategy for hydropower development can be developed to attract the necessary investment.
This strategy requires the development of a local bond market and the creation of an effective framework for large public-private partnership (PPP) projects. In addition, the regulatory and legal framework should be strengthened by reducing administrative burdens and simplifying the licensing process. This will improve Nepal’s electricity market structure and attract more investment.
Promoting the digital sector: Amending the Telecommunications Act to bring rapid improvements in Nepal’s digital sector, adopting a digital strategy and developing digital infrastructure will expand the development of this sector. As low digital skills remain a major challenge in Nepal, digital skills should be included in school curricula and training programs should be conducted for different age groups and based on demographic characteristics.
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