Kathmandu, Feb 28: Asian Development Bank (ADB) on Friday said the country´s economic growth in fiscal year 2014/15 will remain between 4 to 5 percent.
Making public its macroeconomic update in Nepal based on the first half of the current fiscal year, ADB has attributed subnormal monsoon, political uncertainty, slowdown in remittance flow and low actual flow of the investments behind the suppressed growth.
The government had targeted 6 percent economic growth in its budget announcement. ADB has said that though there was investors´ confidence in the beginning, it was negated by the political uncertainty and low expenditure absorptive capacity.
Government´s capital expenditure dropped to 12.6 percent in the first half of the fiscal year compared to 13.5 percent of the corresponding period of the last fiscal year.
Speaking at a program organized to unveil the report, Economics Officer of ADB Resident Mission in Katmandu Chandan Sapkota said initially the investors were confident with the timely budget and two Project Development Agreements of the hydropower projects and power trade agreement with India. “But failure of the Constituent Assembly (CA) to promulgate new constitution by the January 22 deadline let the investors down,” he added.
The private sector investment commitment as well as actual investments has seen a decline in the review period compared to the corresponding period of the last year, according to the report. ADB has said that inflation will remain between 7 to 8 percent.