Top Economic news for this week- 2nd to 8th Magh

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-Bidhan Acharya, Kathmandu

Magh 9, 2072- This week's main events that provide insight into current Nepalese economic environment have been briefly presented below:

  • The meeting of Asian Infrastructure Investment Bank (AIIB) which was held in Beijing of China has elected Nepal as one of its member in bank’s Board of Directors. The Finance Ministers and representatives from 57 countries attended the meeting and also jointly inaugurated the Bank. According to the statement issued by Jin Liqun, the bank's president in the conference, AIIB will definitely invest in Nepal if the country is able to bring a solid proposal. Nepal is in need of huge financing to normalize after the devastating earthquake. So, AIIB can be one of the major sources of financing.
  • According to Nepal Oil Corporation (NOC), the prices of petroleum products have been revised. As per the new rate, petrol will cost Rs.99 per liter, diesel and kerosene will cost Rs.75 per liter. This slash in price is due to change in petroleum price in international market.
  • Nepal Stock Exchange (Nepse) index has climbed to a new high of 1214.31 points on Monday breaking the previous record set four months ago. Previously the index had reached 1205.84 points on September 15. Nepse reached the new high due to hopes that political parties were close to an agreement to end the Terai turmoil. But at the end of this week, Nepse has decreased to the level of 1212.32.
  • The foundational work for construction of second international airport in Nijgadh of Bara will be completed within three months. After the foundation stone is laid, the construction will start.
  • Experts suggest that Nepal’s trade dependence on India has already reached its peak, so there is a huge need of trade diversification. They say that Nepal needs to engage its neighboring countries and should attract foreign direct investment. Thus, a two-day business forum is organized in Kathmandu January 22 and 23 to promote trade and investment between Nepal and Bangladesh. Ministers, senior government officials, and business leaders of both the countries will participate in the event.
  • The ongoing Terai protest and unofficial blockade of India has led to acute shortage of cooking gas and kerosene across the country. This has resulted in increase in demand for fire woods and has encouraged timber smugglers to engage in the illegal business. Many groups in Parsa, Bara and Rautahat districts have started leaving their jobs and started cutting down trees as commodity gets a good price in Nepal as well as India. Smugglers are taking advantage of fragile security due to Terai protest in India-Nepal border.
  • Bishnu Prasd Neupane, managing director of Jagadamba Cement, stated that construction prices will fall down after the supply becomes normal. Further, he suggested people to defer their plan of building new homes until the supply becomes normal as construction materials will come down by 20% after the supply becomes normal.
  • The NRB's decision to raise paid-up capital of BFIs by around four times has encouraged Merger and Acquisition spree in the banking industry. The merger and acquisition policy introduced by Bank and Financial Institutions Merger By-law, 2011 has led 52 bank and financial institutions disappear from the banking industry in the last four years.
  • The government has launched a five-year multi-billion rupees programme targeting the areas in Terai districts bordering India that has fallen behind in Human Development Index. The targeted region has been lagging behind in life expectancy, literacy and per capita income values compared to other areas of the country. The programme will focus on areas of community infrastructure, environment conservation, energy, schools, sub-health posts, toilets, skill development and social awareness.
  • In order to promote and develop agriculture and skills development, the government of Switzerland has agreed to provide a grant assistance of Rs.3 billion to Nepal. Around Rs.1.9 billion of the total amount will be spent in two complementary agriculture programs i.e. the Nepal Agricultural Services Development Program (NASDP) and the Nepal Agriculture Market Development Program (NAMDP). The remaining Rs.1 billion will be invested to better skilled workforce through Enhanced Skills for Sustainable and Rewarding Employment (ENSSURE). It is hoped that around 60000 people will be benefitted from this program.
  • According to an advisory site MoveHub, Nepalese spends around 171.16 percent of their weekly income to feed a family of four. The country lies in sixth position of most costly countries where people spend over 171 percent of their weekly income on food costs. Uganda is the most expensive country in the world for a weekly shop where over 275 percent of weekly wage is spends on food bills.
  • The National Human Rights Commission has stated that there was involvement of government agencies, security forces and local administration in facilitation of smuggling of petroleum products from India. The NHRC report claimed that huge amount of petroleum products are smuggled through Thori, Nirmalbasti and Subarnapur villages of Parsa district
     whereas, 150,000 liters of petroleum products were found to be smuggled through Thori alone on a daily basis.
  • The exchange rate of US dollar to Nepali Rupee has reached its record level of Rs 109.24 this week. The value of US dollar was in increasing trend and it was around Rs 100 level for around two years. This appreciation in the value of dollar is being seen as the growing confidence of investors toward US economy. Since the exchange rate regime of Nepal is pegged with India, the value of our currency fluctuates as per the exchange rate of India with other currencies. The appreciation in US dollar will boost our Remittances and export industry but will lead to higher import bills.
  • Due to Terai unrest and undeclared trade embargo, construction work has been affected. Departments of Roads targeted to complete 750 bridges in highways and local roads within the current fiscal year. However, the progress of construction is seen half than what was scheduled by Department of Roads.
  • The disruption of trade via Birgunj, one and only dry port connected to Indian railway network, has caused the revenue loss of over Rs.2 billion. Due to the disruption of border enforced by Madhes-based political parties, the dry port has been brought to halt for the past five months.
  • Since last five years, the Asian Development Bank (ADB) has been investing $275 million on annual basis. However, from the year, 2017 the bank has stated to increase its annual lending to Nepal by 60 percent. The director of the bank said they are hopeful that Nepal will be able to tap the opportunity of this increment.

"This summarized news has been written on the basis of news published on The Kathmandu Post and My Republica"