Cronyism, protectionism and rampant corruption likely to push Nepal to the brink of economic disaster

On Sunday, Nepal’s Finance Ministry refused to produce CCTV footage of the night before the budget announcement, raising questions about whether the alleged financial crime will ever be investigated.

Ashim Neupane

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Kathmandu: The economy of Nepal is in the throes of turmoil with continuity of economic mismanagement by the incumbent government. 

Although Nepal’s overall economic indicators are worrisome, the politicians in power do not seem to be concerned about the situation.

Even after the controversy of Finance Minister Janardan Sharma involving an outsider to alter tax rates in the budget draft came to light, the government is reluctant to investigate the financial crime by the sitting minister.

As the government has shown no seriousness in maintaining accountability and transparency, and is silently protecting the Finance Minister, observers say that the ruling alliance of five parties–Nepali Congress, CPN Maoist, CPN (Unified Socialist), Janata Samajwadi Party, and Rastriya Janamorcha–are hell-bent on promoting cronyism, protectionism and corruption instead of nipping them.

“Blatant disregard for the rule of law and failure to respect parliamentary process will result in a situation of anarchism,” according to Dr Bipin Adhikari, constitutional expert and political analyst. “The strategic silence and deliberate attempt of the Prime Minister to cover up serious allegations of a financial crime by a cabinet minister is a wrong precedent the Nepali Congress-led government is trying to set.”

[Related: Despite calls for his resignation, Finance Minister Sharma demurs]

As indicators have painted a bleak picture of the economy, economists and experts have already warned that the bad policy and institutionalized cronyism might push Nepal to the brink of economic crisis. But instead of taking measures to correct the course, the government seems to be perpetuating the nexus among politicians, bureaucrats and businesses for the gain of a few elite coteries. 

The latest case in the point is an alleged financial crime committed by Finance Minister Janardan Sharma. 

Destroying the evidence

In June, a Nepali vernacular daily The Annapurna Post published a news report stating that the Finance Minister involved an outsider to change tax provisions in the budget draft just a few hours before the budget was presented in Parliament on May 29.

Ever since the leaders from the opposition parties including Nepali Congress leader Shekhar Koirala have been demanding a fair probe into the incident. As the Finance Minister denied involving an outsider in the budget preparation, there have been demands that the Ministry of Finance should make public the CCTV footage of May 28. 

[Related: Prime Minister Sher Bahadur Deuba’s reluctance to investigate the alleged involvement of an outsider to change tax rates in the fiscal policy by the Finance Minister shows accountability is at stake in Nepal]

Speaking at the meeting of the lower house on June 14, UML Chief Whip Bishal Bhattarai demanded to make public the CCTV footage and form a parliamentary inquiry committee to look into the matter. “The CPN-UML urges the speaker to present the CCTV footage of the Finance Ministry of May 28 before the Parliament,” Bhattarai said.

UML Chairman KP Sharma Oli addressing the meeting of Parliament on Monday.

With supposed protection from the government head and with little pressure from the opposition, the Finance Minister went on defending himself. The Finance Minister maintained on television interviews that he is not supposed to show the CCTV footage to the opposition. 

Then on June 28, Consumer Welfare Protection Forum (CWPF) registered an application at the Ministry of Finance demanding the CCTV footage.

In response, on July 3, the Ministry of Finance, by issuing a statement, expressed its inability to provide the recording. In the statement, it claimed that the hard drive has the capacity to store CCTV footage of only 13 days, and the footage of May 28 is already deleted from the storage. 

The existing law requires public entities to preserve the CCTV footage for at least for three months. According to CCTV/Camera Installation and Operation Procedural (2015), the visuals and images captured by the CCTV should be kept safe for at least three months. 

Dubious intention

For over a month, Finance Minister Sharma has lamely defended the case. The Minister, already involved in financial misconduct in the case of suspending the governor of Nepal Rastra Bank, has dismissed the demands of a fair probe of the incident. 

[Related: How Finance Minister Janardan Sharma is failing Nepal’s economy]

The former Maoist guerrilla has been adamant about providing CCTV footage–probably the most reliable proof to investigate whether he involved outsiders to alter the budget provisions. 

“Who are they to see the CC camera [CCTV footage]? The government can see it if required. Why should we allow UML [the main opposition] to see CC camera [meant to say CCTV footage] just because it demands?” He questioned responding to the question in a television interview.

Economy may collapse: Oli

On Monday, addressing the House Session, former Prime Minister KP Sharma Oli strongly demanded that the alleged financial crime by Sharma should be investigated by the government. “Prime Minister Sher Bahadur Deuba should investigate the issue at the earliest,” he said. “It is not like the ruling alliance can do anything and everything being in the government. There should be a proper investigation.” 

Oli demanded that CCTV footage should be made public while the Finance Ministry has claimed that the footage has been overwritten. “Let’s form a parliamentary probe committee to investigate the issue. Altering taxes provisions in the budget by involving an unauthorized person is unimaginable,” said Oli. “What more could you expect than this drama to collapse the country’s economy?”