Economists and bankers have warned that the Nepali economy could soon feel the heat of global financial crisis and the country could mainly suffer in such areas as foreign investment, overseas employment, debt servicing and tourism if the current gloom continued.
Biswombhar Pyakuryal, an economist, was quoted by Tuesday's The Kathmandu Post daily as saying that sharp depreciation of U.S. dollar -- attributed to the financial crisis -- has already increased government's debt service liability for this fiscal year by 1.09 billion Nepali rupees (some 13.97 million U.S. dollars). To the government, which already has put revenue collections on a higher side, this is going to a big problem, he stated.
For 2008/09, the government has set aside 12.93 billion rupees (some 165.7 million dollars) for debt servicing. While this figure was calculated on the basis of lower exchange rate of budget preparation period, rise in value of dollars by about a quarter has increased the liability. The change will affect loans dealt in dollars.
"Flow of foreign direct investment into Nepal could also witness a set-back given the financial turmoil has landed on the cross-border individual and institutional investors," Pyakuryal told the daily.
Tourism is another sector that could suffer the brunt of the economic slowdown, as most of the tourists coming to Nepal from the United States, Europe, Japan and other key markets are affected by the crisis.
Statistics of the Nepal Tourism Board show that of the total 307,748 tourists, who visited Nepal during the first 10 months of 2008, more than 40 percent were from Europe and America.
"Given the impending recession in the leading bilateral donor countries, grant assistance to Nepal could also be affected," said Pyakuryal.
On the back of nose-diving commodity prices in the international market, experts also warned that Nepal could lose revenue collections at customs -- which is the major generator of resources to the government -- due to lowering imports bills.
However, he said the demand for overseas workers by Gulf countries will not be affected immediately, as ongoing construction works that observe large chunk of blue-collar workers have not been affected by the global slowdown.
Source: Xinhua
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