Though the government has committed itself at international forums to taking concrete action against financial crime, this has largely remained rhetorical. The new action plan means setting out the categorical steps that are to be taken to actually implement those commitments. This will surely give out a positive message to the international community. Furthermore, the measure has, we believe, also delighted citizens within the country.
With prolonged political instability and a rise in illicit trade under the aegis of a close political-private nexus, Nepal in recent years witnessed a rapidly expanding informal economy. There is no official study, but in private conversation officials admit that the size of the informal economy has swelled to at least 40 percent of the total economy from 25 percent in the span of the last four years.
Growing corruption, illicit trade and in particular cross-border smuggling, informal currency rackets and huge tax evasion are strong testimony to the ballooning of the informal economy. In view of all this, the international community had tagged Nepal the most vulnerable country in South Asia in terms of money laundering and possible terrorism financing.
International concerns aside, such a situation was also contributing to the creation of a dichotomy in society. People operating in the informal market were reaping huge financial gains overnight, whereas those in the formal market were facing difficulty making ends meet. This fostered criminalization at a fundamental level, thereby eroding state credibility when it comes to protecting the interests of the general public.
The five-year strategy and action plan is undoubtedly a positive step calculated to combat illegal networks and bring stern action against individuals and firms involved in financial crime.
Under this new approach, we urge the government to take urgent steps to check the movement of wealth created through illegal means, or more precisely by embezzling public funds, which is the gravest among all the ills of the economy. However, we would like to state here that merely laying out an action plan will not suffice.
The government must make all necessary effort to put in place efficient software, including human resources, and hardware including technological backup and systems. Only then can we feel assured that the country will be able to control financial crime and deliver justice for all.
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