KATHMANDU, March 31 (Reuters) – Nepal’s Prime Minister Pushpa Kamal Dahal on Friday named centrist politician and economic expert Prakash Sharan Mahat as finance minister, a presidential statement said, as the country tackles falling revenue collection and high interest rates.
Mahat has previously served in the foreign and energy ministries and is a member of the centrist Nepali Congress party, the biggest group in the nine-party coalition.
He replaces Bishnu Paudel of the Communist Unified Marxist-Leninist (UML) party, which pulled out of the government last month amid differences with the prime minister.
The 64-year-old is considered an expert on the economy.
Nepal has shored up its foreign exchange reserves after the government last April restricted imports of 10 “non-essential” goods.
However, its manufacturing sector has been stymied by power shortages and a lack of investment, while government revenue collection has been poor, crimping growth in the $40 billion economy.
Gross domestic product in the year to mid-July is expected to decline from the 5.8% growth recorded last year, officials told Reuters.
“The biggest challenge of the finance minister is to create a conducive atmosphere for investment and win the confidence of all stake holders including the common people,” Deependra Bahadur Kshetri, a former governor of the central bank, told Reuters.
In addition, businesses are protesting against high lending rates, which now stand at about 13% compared with 12% a year ago, demanding that interest be cut to single digits.
Annual inflation eased to 7.88% in mid-February, but this is still above the central bank target of 7%.
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The spread between the yields of Indian state and central government bonds is likely to widen gradually in the new financial year, as state bond supply is expected to remain elevated, analysts said.
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