Gopal Sharma

KATHMANDU, Reuters – Nepal’s economy will grow by 5.8% during the current fiscal year that ends in mid-July. This is due to a rebound in economic activity after a drop in COVID-19 case numbers, according to the finance minister on Sunday.

As a result of rising food and energy prices, the growth projections were more than 43% year-on year growth. However, they are lower than the earlier forecast of 7% for the current fiscal.

Nepal has lifted nearly all of its pandemic-related restrictions that were put in place to prevent the spread and spread the coronavirus. Additionally, it took many steps to revitalize the country’s economy.

Janardan Sharma, Finance Minister, stated that COVID-19’s impact is negligible and economic and social life are becoming more normal. He presented the budget for the financial year starting in mid-July to the Parliament.

He stated that all economic indicators, except for those related to the external sector were satisfactory.

Ishwari Prasad Bhandari, a director at the government’s Central Bureau of Statistics (CIS) said the good economic growth was due to a rise in hydroelectric power generation, growth in construction as well as the wholesale and retail trade.

The rise in energy and food prices has caused a significant increase in Nepal’s annual retail inflation to 7.3%. There is also a risk of civil unrest, as more imports like oil, fuel, and coal become more expensive.

Sharma said the government would soon reduce fuel prices which were increased by up to 12.5% last week saying global prices had spiked in the wake of Russia’s invasion on Ukraine but gave no details.

According to data from the Nepal Rastra Bank (NRB), luxury imports were banned by the government until mid July due to shrinking forex reserves. These decreased 18.2% to $9.61 Billion on mid April, compared to mid-July.

Officials claimed that there would be no significant economic impact from the pandemic by July, when the current financial years ends.