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KATHMANDU (Reuters) - Nepal said on Monday its economic growth for the fiscal year ending in mid-July was projected to be the highest in 23 years on the back of improved power supplies, agricultural production and higher spending on reconstruction work after earthquakes.
Finance Minister Krishna Bahadur Mahara said the economy would grow by 6.9 percent in the year to July 15, the highest since 1993/94 - also because of the increased capital investment following the end of border disruptions with India in late 2015 and into 2016 which resulted in crippling fuel shortages.
The forecast compares with no growth last year, following earthquakes that killed 9,000 people and destroyed about 1 million homes, roads and other infrastructure in 2015.
"The higher growth projection is due to government policies to revive economic activities by addressing the negative impacts of these adverse factors,” Mahara told parliament while unveiling a $12.4 billion annual budget.
Nepal has virtually ended long power cuts of up to 20 hours through increased electricity imports from India, distribution management and theft control. Shortage of power had hit industries and businesses for several years.
“Fewer strikes have contributed to increased industrial production and private sector investment which in turn helped achieve a higher growth rate despite the political instability,” Deependra Bahadur Kshetry, commentator and a former central bank governor, said.
Nepal, wedged between China and India, is plagued by political instability since it abolished 239-year-old monarchy in 2008.
Reporting by Gopal Sharma; Editing by Sanjeev Miglani and Alison Williams