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Cautious Optimism

January 25, 2017

The IMF Mission announced a 5.5% growth for Nepal, one of the highest in a decade after the country recovers from earthquake, supply-quake and continuous tremors caused by unstable political leadership.

1. GDP is not necessarily the best indicator for Nepal, the activities outside GDP are. Capital transactions like land and remittances have also increased. Construction and automobiles have seen unprecedented growth. Other sector growth are visible too. So if we do not mess it up, the GDP growth should be closer to 6 or 6.5%.

2. There is feelGood factor after power cuts have been managed. The change in the CEO of Nepal Reconstruction Authority also gives people hope things will move. There are laws being passed and tabled in parliament. Perceptions are important and drive investment decisions.

3. Nepal suffers from a unique problem of positive balance of payments. With $ 10 billion reserves, it has the problem spending money. If this is sorted even 50%, it will generate lots of money into the system and create jobs.

4. The verdict of the Supreme Court on former CIAA Chief who ran a parallel government takes away fear from bureaucracy. Shaking hands syndrome while signing should go away.

5. The local elections will happen and the opportunity to make money will decentralize putting pressure off Kathmandu infrastructure. Chaperoning leaders in Kathmandu in search of crumbs generated by political contacts hopefully will go.

There is a sense of cautious optimism. Yet another 'open moment' has been created, hope we will not squander it like in the past.