The short-term growth for FY 2024/25 is expected to remain modest at around 3-4%, contingent on a good agricultural harvest, sustained tourism growth, stable remittances, and the effectiveness of monetary easing. Inflation is projected to gradually ease but remain elevated. External sector risks persist. In the medium term, Nepal faces significant challenges in accelerating growth to 6-7%+ needed for meaningful development. This requires deep structural reforms: 1. Improving the Investment Climate: Ensuring political stability, policy predictability, reducing red tape, and strengthening contract enforcement. 2. Boosting Exports & Diversification: Enhancing competitiveness, exploring new markets, and promoting value addition. 3. Strengthening Public Financial Management: Improving revenue mobilization, prioritizing efficient capital spending, and managing debt sustainably. 4. Accelerating Hydropower & Infrastructure Development: Unlocking this potential is critical for energy se...

A government budget is a financial plan that outlines the revenues and expenditures of a government for a specific period. It is a crucial tool for managing a country's finances efficiently to achieve economic and social goals like promoting growth, reducing poverty, and providing public services. Monitoring and adjusting the budget as needed is essential for fiscal stability and sustainability.  In Nepal, the tradition of presenting an annual budget dates back to the 1950s, with the first budget presented in 1951 covering the period from March 1951 to February 1952. This change followed the overthrow of the Rana regime in February 1951. During this transitional phase without a legislature, the first budget was presented at the end of the year BS 2007 through Radio Nepal. The budget amount was Rs. 52,529,000, with a tax collection target of Rs. 30,619,000. The then Finance Minister, Subarna Shamsher, presented the budget as part of the council of ministers led by Prime Minister Mat...

A.    The Least Developed Countries Low real per capita income, pervasive poverty, low literacy rates, short life expectancies, resource underutilization, and susceptibility to environmental and economic shocks are characteristics of least developed countries, often known as undeveloped countries. A significant portion of the populace in an underdeveloped economy cannot afford adequate standards of living. The Underdeveloped nations are typically characterized by: Low level of living, economic growth rate, and per capita income High economic inequality or an unequal distribution of wealth and income Significant reliance on the agricultural sector and an antiquated industrial structure The rapid population growth rate, high rates of unemployment, and underemployment Large imports and little exports Lack of funding, technology, and technical expertise A poverty cycle characterized by inadequate social and physical infrast...

A given economic arrangement is efficient if there can be no rearrangement which will leave someone better off without worsening the position of others. One important aspect of overall economic efficiency is productive efficiency. Productive efficiency occurs when an economy cannot produce more on one good without producing less of another good.

Most of the problems of economics emanates from the undeniable truth that human wants are unlimited and means to fulfill those wants are limited and they have alternative uses. So, at the heart of economics is the law of scarcity. If infinite quantities of every good could be produced or if human desires were fully satisfied, what would be the consequences? People would not worry about stretching out their limited incomes because they could have everything they wanted; businesses would not need to fret over the cost of labor; government would not need to struggle over taxes or spending, because nobody would care. In such a case of affluence, there would be no economic goods, that is goods that are scarce or limited in supply. All goods would be free, like sand in the desert or seawater at the beach. But no society has reached a utopia of limitless possibilities. Goods are limited while wants seem limitless. Even in developed countries, production is not high enough to meet everyone’s d...

Economics is the study of how society utilizes its limited resources to produce the most valuable and useful commodities and distribute them among different people. The key points are that resources are limited and human wants are unlimited. If the resources are available in plenty, then there would be no problem. Thus, economics is the choice-making and decision-making behavior of people. Therefore, the essence of economics is to acknowledge the reality of scarcity and then figure out how to organize society in a way that produces the most efficient use of resources. The basic purpose of studying economics is to understand how various economies and their components work, how an economy is organized, and how successfully it achieves its basic objectives. The term economics is derived from two Greek words, ‘oikou’ and ‘nomos’, meaning the rule or law of households. Economics seeks to answer questions relating to the economic behavior of the people, society and the economy. To be brief,...

A positive science only explains ‘what is’ and normative science tells ‘what ought to be’, i . e ., right or wrong of a thing. Positive economics is objective and thus akin to pure science. It explains the phenomenon under study with the help of a theory. It also predicts the impact of change in one economic variable to other interrelated variables. Thus, positive economics is related to the explanation of economic events as what they are. More strictly, positive economics operates by use of economic models, logically deduction, and statistical testing. Hence, positive economics deals with the questions such as: Why do doctors earn more than janitors (gatekeepers)? Does free trade raise or lower wages? What are the effects of higher taxes on cigarette? Normative economics, on the other hand, deals with ethical considerations and value judgments. In other words, normative economics involves ethical precepts (principles) and norms (standards) of fairness. Hence, it deals with the que...

There are various concepts among different economists regarding the nature of economics. Some argued that economics is directly analogous to science while others are of the view that it is an art. Any subject would be a science if it is objective; the subject matters are universally accepted and if there exist a relationship between cause and effect of a fact. In economics, there are various laws, such as, law of demand, law of supply, law of variable proportion etc., which successfully establish cause and effect relationship. In this sense, economics may be classified as a science. Any subject would be an art if it is related to the practical application of knowledge for achieving definite objectives. Economics helps us to prescribe ways and enables us to make policies in order to achieve certain desired goals, such as poverty alleviation, higher economic growth, economic stability, etc. In this view, economics is an art. Economics, on the one hand helps us to collect and analyz...

Money has become so much a part of our day to day activity that we have started to take it for granted. The complex economic system stands on the base of money because money is something which generally accepted as a medium of exchange. Before the existence of money in this world there was barter system; an economic system in which goods and services were directly exchanged with goods and services. Difficulties like; lack of double coincidence of wants, lack of divisibility, lack of store of value, lack of common measure of value, limited specialization etc. in the barter system induced people to find a better way of exchange and ultimately led to invention of money which remove all the shortcomings and made the economic system very fast and productive. The word money refers to that commodity which performs as the medium to exchange of goods and services, measuring value to factors of production, goods/services, common and useful means of credit transaction in business society and ...

The policy of safe guarding the domestic economy from international competition is known as protection policy. In other word, protection is the restriction on the import of goods and services from abroad and encouraging domestic industries to make their product in favorable position by providing subsidies or support prices.  Protection policy uses two types of instruments to protect domestic industries. Tariff barrier Under this, government imposes high custom duties on import of foreign goods. It will make foreign goods relatively expensive than that of domestic products and import declines and increases demand of domestic goods. Non-tariff barrier Under this policy, government control import applying the quota system exchange control, withdraw of subsidy and trade by government itself.

The policy of placing no restriction on the transaction of goods and services between countries is known as free trade policy. Free trade was propounded by classical economist Adam Smith. According to him, “Free trade is used to denote that system of commercial policy which draws no distinction between domestic and foreign commodities and therefore, neither imposes additional burdens on the latter nor grants any special favor to the former. Under free trade, a country imports all those goods that it can buy abroad at relatively low price than the domestic cost of production. And export all those goods that it can produce at relatively low cost than the cost of production abroad.

Bank in a very simple meaning is an institution that conducts financial related activities. It is called a departmental store of financial activities. According to history, banking was developed by goldsmiths. Banks have become a part of civilized society. Their services or functions have reached to each and every state of a modern society. Banking means the business of borrowing and lending money from the public and institution that repayable on demand, withdrawal by cheque, drafts etc Banks are classified according to its nature and function.  1.      Central Bank 2.      Commercial Bank 3.      Saving Bank 4.      Development Bank 5.      Exchange Bank 6.      Industrial Bank 7.      Investment Bank 8.      Rural Development Bank etc.

Money market is  a market for short-term loans in the sense that it provides money for working capital or circulatory capital.  It is  “collective name given to the various firms and institutions that deal in the various grades of near money.” Money market is an institution through which surplus funds move to the deficit areas so that temporary liquidity crisis can be tackled.  A well developed money market is good indicator of  central  banking operations. It enables the central bank to implement its monetary policy efficiently . There are number of tools of money market and the most important short-term instruments  are: inter-bank call money, short-notice deposits, Treasury Bills of ninety  days to a year, commercial  bills, certificate of deposits and commercial  paper.

The market dealing with long term financial transactions is known as capital market. Hence capital market is a market for long term loans.  According to Duddley and Luckett, “A capital market is just a market for capital funds. Strictly speaking, the capital market performs the transactions involving long term debt.” World Bank has defined the capital market as the market in which long term, financial instruments such as equity and bonds are traded. Hence in conclusion, capital market refers to the market having following features; ·   Capital market makes available funds for long term investment. ·   The maturity period of capital market is more than one year. ·   Capital market handles long term finance, deposits and loans. ·   The risks are higher in capital market because the maturity period is long. Anything may happen in the long run. ·   The sources of capital market are debentures, shares and government securities. ·   The capit...

An  exchange-rate regime  is the way an authority manages its currency in relation to other currencies and the foreign exchange market. It is closely related to monetary policy Exchange rate is defined as the price of a nation’s currency in terms of another (foreign) currency. In another word an exchange rate is the unit of domestic currency necessary to give up to get one unit of foreign currency. There are two types of exchange rate: Fixed and Flexible. Flexible Exchange Rate Flexible exchange rate also called as a floating exchange rate is such an exchange rate which is determined by market forces. It is the exchange rate determined by demand for foreign currency and supply of the foreign currency in currency market. Floating rates are the most common exchange rate regime today. For example, the dollar, euro,   yen, and   British pound   all are floating currencies with Nepalese rupee. However, since central banks frequently intervene to a...

The   balance of payments   (BOP) of a country is the record of all economic transactions between the residents of a country and the rest of the world in a particular period (a year). These transactions are made by individuals, firms and government bodies. Thus the balance of payments includes all external visible and non-visible transactions of a country during a given period, usually a year. It represents a summation of country's current demand and supply of the claims on foreign currencies and of foreign claims on its currency. ‘Balance of Payments’ is a term that is used to refer to an accounting record for all the monetary transactions conducted by a country with other countries within a specified period of time, usually one year. Balance of Payments is actually a numerical summary of all international transactions, and is preferably presented in the country’s domestic currency. In a balance of payments document, exports are recorded as positive items, due to the fact tha...

In today’s world, all countries import some goods and services from other countries, and they also export certain other goods and services which are surplus in their country.  A ‘balance of trade (BOT)’ is a relationship between the country’s imports and exports, in monetary value. Hence Balance of Trade (exchange) is the difference between the value of goods and services exported out of a country and the value of goods and services imported into the country. If a country has a balance of trade deficit, it imports more than it exports, and if it has a balance of trade surplus, it exports more than it imports. A country is said to be experiencing positive balance of trade, or surplus, if the value of its exports exceed the value of its imports. Conversely, a country is said to be in deficit, or to be having a negative balance of trade (exchange), if the value of its imports is higher than the value of its exports. Countries always tries to have a positive balance of trade. The balan...

Various economists have suggested different indicators for the measurement of economic development. The major indicators of economic development are as follows Gross National Product (GNP) Some economists have considered GNP as the indicator of economic development. According to this criterion, economic development refers to the increase in the production of an economy over a long period of time. That is, economic development can be measured in terms of an increase in the economy’s real national income over a long period of time. However, the major drawback of this indicator is that it does not take into account the changes in the population growth. It also does not include the equity aspect of development. Per Capita Income (PCI) Per Capita Income is another indicator of economic development. According to this indicator, economic development is the process whereby the real per capita increases over a long period of time. Therefore, for the economic development, growth rate of inco...

The origins of modern development economics are often traced to the need for, and likely problems with the industrialization of eastern Europe in the aftermath of World War II. The key authors are  Paul Rosenstein-Rodan,   Kurt Mandelbaum  and  Ragnar Nurkse . Only after the war did economists turn their concerns towards Asia, Africa and Latin America. At the heart of these studies, by authors such as  Simon Kuznets  and  W. Arthur Lewis  was  an analysis of not only economic growth but also structural transformation.

Development Economics  is a branch of economics which deals with  economic aspects of the development process  in low-income countries. Its focus is not only on methods of promoting economic growth and structural change but also on improving the potential for the mass of the population, for example, through health and education and workplace conditions, whether through public or private channels. Thus, development economics involves  the creation of theories and methods that aid in the determination of types of policies and practices and can be implemented at either the domestic or international level. This may involve restructuring market incentives or using mathematical methods like inter-temporal optimization for project analysis, or it may involve a mixture of quantitative and qualitative methods.Unlike in many other fields of economics, approaches in development economics may  incorporate social and political factors  to devise particular plans.