At one side Gyanendra stubborness is driving Nepal to bankruptcy.. ‘Govt might be bankrupt by June’ Kantipur Report KATHMANDU, Feb 3 - A leading monetary economist has warned that the economy might face a serious accident if urgent and effective corrective measures are not taken immediately. At a program in the capital on Thursday, Dr Raghab Dhoj Pant, executive director of Institute for Development Studies (IfDS) said that due to high inflation, coupled with low growth of per capita income over the years, the economy is marching towards stagflation. "A detailed integrated analysis of the overall trend of government revenue and expenditure until recently, the current economic situation, the expected negative impact of the supplementary budget on government revenue and the new structure of custom duties show an alarming situation: the government will be financially bankrupt by the end of May/June," Dr Pant said. In his economic report titled, 'The economy and the state: Can it survive?' Dr Pant presented a bleak economic scenario and stressed that the country should not avoid or postpone national problems in the way it is doing right now. "Once the economic problem explodes, we will not have enough time to deal with the people in the name of finding alternative programs and measures like in the area of political issues," he added. He also said that since the current pace of economic deterioration is faster than the deterioration taking pace in politics, it was high time for the government to take the economic issues seriously. The IfDS predicts that the growth rate in per-capita income would be negative or barely positive in the current fiscal year. "As a result, rural migration as well as migration of young people to other countries in search of employment will increase," stated the report. It further forecasts that the national consumption will increase at a faster rate than the growth in income, which will further widen the trade deficit due to the higher imports of consumption goods. Similarly, it expects the rate of inflation due to the domestic conflict will increase at its own pace, but due to open border with India, together with fixed exchange rate, it will not exceed the maximum limit. The forex reserve in the current fiscal year can marginally rise or even decline, indicating emerging problems in the balance of payments. Posted on: 2006-02-02 18:54:51 (Server Time)