Cabinet approves implementation strategy of the ESP

The government, on Wednesday this week, approved the Implementation Strategy of the Economic Stimulus Plan (ESP) and will lend Nu 2.1bn, almost half of the total Nu 5bn ESP to local banks. The government will charge the banks an interest of six percent, which the banks would then provide as loans to clients at their normal interest rates.

While the government has already received Indian rupee (INR) 1bn of the total INR 5bn ESP fund GoI in October, the remaining committed amount is expected to be released by the end of the year.

As required by law, the government will be seeking the approval of Parliament to use ESP fund during the next session of Parliament. The ESP budget would be allocated and used with the consent of the ESP Task Force.

The overall objective of the ESP is to re-invigorate the economy through Special Support Schemes (SSS), easing rupee situation and improving balance of payments, and by restarting loans.

Apart from the Nu 2.1bn which will be loaned out to local banks, the ESP fund shall be injected in various schemes. 20 percent of the fund which accounts to Nu 1bn has been considered for the SSS, under which comes higher education support scheme, senior citizens support scheme, and guaranteed employment support scheme.

Aimed to boost the primary and secondary sector along with rural economy, Nu 1.9bn is being kept as “revolving fund.” The revolving fund-I would be targeting like cottage and small industries, manufacturing and production.

The revolving fund II will be specified for non-formal activities, individuals and cooperatives, and rural enterprises with a fund allocation of Nu 0.4bn.

“The ESP is expected to spur economic growth, which will generate employment, enhance productive capacity and improve balance of payment situation. To maintain the momentum of ESP activities and to ensure long-term sustainability, fiscal and monetary measures and other back stopping support will accompany the ESP,” a news release from the cabinet stated.

The release says that the likely impact of the ESP would be increased economic activity, import substitution and export promotion, employment generation, and return from the fund.

The expected outcomes are reduction in rupee imports, savings in rupee interest payment, new businesses/projects, interest earnings and funds being available for re-deployment.

The Prime Minister in ‘meet the press’ said that they had already received Nu 1 bn of the ESP and are expecting to get an additional Nu 3 bn soon. He said the remaining Nu 1 bn would be given at the rate of Nu 200 mn annually for the next five years. The PM reminded the media that the ESP was not a part of the 100 Days pledges, and so did not have any fixed time period.

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