A toxic cocktail

An alliance between wealth and power is a structural problem that all nations have to handle.

Nepal is headed for an economic crisis that has not been taken seriously by the government. There are three components of this evolving situation. First, the regular expenditure of the government has been rising faster than the increase in revenue, thus leaving smaller space for development expenditure. Second, the efficiency of public investment shows no sign of improvement. One research indicated that Nepal's capital-output ratio may be as high as eight. Corruption and the lack of economic discipline have been rising. There seems to be a general feeling among the politicians in power that fiscal indiscipline is a phenomenon that is part of democratic politics. Naturally, budgetary constraints are regularly ignored; massive corruption in governmental procurement and cost escalation of major projects under the convenient concept of "variation" have been rampant. Those in power never tire of pleading for efficiency and probity in society, but when it comes to spending, the government is liberal and quite at ease in allocating spending on off-budget items of interest to the high and mighty. There is little fear that stealing public money will cause any problem since institutions that have been set up as watchdogs against corruption have been either legally emasculated or staffed by loyalists whose job security required silence and inaction.