KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
The suspension of the Millennium Challenge Corporation (MCC) project highlights ongoing challenges in Nepal’s infrastructure and political landscape, revealing the deep-rooted issues of governance and financial management.
Despite a decade of heated discussions and eventual parliamentary approval, the suspension of MCC payments signals a setback for foreign investment in Nepal’s development.
In parallel, the government’s slow progress on infrastructure projects further exposes inefficiencies, with only a fraction of planned activities completed in the first half of the fiscal year.
Ministerial failures and the government’s list of 11 reasons for inaction indicate systemic issues that hinder the country’s development ambitions.
These setbacks come amid economic fluctuations, such as rising gold prices, and logistical challenges, like flight disruptions at Tumlingtar Airport, reflecting broader difficulties in Nepal’s governance and infrastructure management.
Top of Form
MCC Project suspended
The implementation of the Millennium Challenge Corporation (MCC) Compact Agreement, valued at nearly one trillion rupees (including both US grant aid and Nepal’s government budget), has been temporarily halted.
According to a letter from MCC headquarters in Washington, the Ministry of Finance of Nepal informed that payments from the MCC fund have been suspended.
After a decade of heated debate, Nepal’s parliament approved the MCC Compact Agreement, along with an explanatory declaration.
Slow Progress in Infrastructure Sector Programs
The government, which has consistently struggled with capital budget spending, has shown particular weakness in the infrastructure sector during the first six months of the current fiscal year.
According to reports, three ministries involved in infrastructure-related activities have made no progress, while five ministries have completed just 13.2 percent of their scheduled tasks.
A total of 347 infrastructure programs were planned for the current fiscal year, including 105 in energy, water resources, and irrigation; 116 in urban development; 43 in communication and IT; 32 in drinking water; and 51 in physical infrastructure and transport.
Government Cites 11 Reasons for Lack of Progress
The government has cited 11 different reasons for its failure to meet the goals it set for the fiscal year.
The Office of the Prime Minister and Council of Ministers explained in its report on the progress of the annual action plan for Poush that several challenges have hindered its ability to make headway on key milestones.
Minister Dahal Fails to Implement Milestones
Minister for Physical Infrastructure and Transport, Devendra Dahal, has been unable to meet the milestones set by his ministry for the current fiscal year up to Poush.
Furthermore, 12 ministries, including Prime Minister Oli’s, have not achieved 50 percent progress on the targets they set for themselves by the Poush deadline.
According to the progress report from the Office of the Prime Minister and Council of Ministers, the Ministry of Physical Infrastructure and Transport has completed only 15.8 percent of its goals for the half-year period.
Of the 19 programs that were scheduled to be completed by Poush, only 3 were finished.
Gold Prices Increase
Gold prices in the local market have risen today. According to the Nepal Gold and Silver Merchants’ Federation, the price of gold has increased by Rs 1,100.
Gold, which was being bought and sold at Rs 169,400 per tola on Tuesday, is now priced at Rs 170,500 per tola.
The price of silver has also increased, with silver now being traded at Rs 1,195 per tola.
Flights Resume at Tumlingtar Airport After Three Weeks
Tumlingtar Airport in the Himalayan district of Sankhuwasabha has resumed operations after a three-week suspension due to poor weather conditions. A 72-seat Buddha Air aircraft took off today.
Flights were disrupted after Magh 14 due to thick fog around the airport. However, services resumed once the fog cleared from the hills surrounding the airport’s runway, according to the airport office.
Comment