Top Economic news for this week- 6th Chaitra to 12th Chaitra

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Chaitra 13, 2072- This week's main events that provide insight into current Nepalese economic environment have been briefly presented below:

  • The Commission for the Investigation of Abuse of Authority (CIAA) has started investigation into alleged charges of corruption and irregularities against Chief Executive Officer (CEO) of National Reconstruction Authority (NRA) Sushil Gyewali. Krishna Hari Puskar, spokesperson of the CIAA, said that the anti-graft body started investigation against Gyewali after the body received numerous complaints alleging him of professional misconducts as CEO of the NRA.
  • The government will sign a $215.96 million loan deal with China EXIM Bank to build a new international airport in Pokhara during Prime Minister KP Sharma Oli’s visit to Beijing that begins on Sunday. A Cabinet meeting on Thursday cleared the way for the Finance Ministry to conclude the deal, almost two years after the Civil Aviation Authority of Nepal (Caan) awarded the construction contract to China CAMC Engineering. The government has already concluded loan negotiations with the bank. The bank has also agreed provide 25 percent of the loan without interest, Finance Ministry officials said. The government will have to pay interest on rest of the loan amount at 2 percent per annum. The loan repayment period has been set 20 years, including seven-year grace period when no interest will be charged.
  • In a latest finding, Kathmandu has been ranked the third most polluted city in the world. According to Pollution Index 2016 published by Serbia-based research website Numbeo.com, Nepal’s capital city sits third with the index of 96.66. Kathmandu, which had occupied the fifth position on the index at the beginning of 2015, slipped two places to third in the middle of last year.
  • Entrepreneurs have started the process to register a collective trademark for Nepali herbal products. Govinda Ghimire, president of Nepal Herbs and Herbal Products Association (NHHPA), said they were preparing to design and register a collective trademark for Nepali herbs and herbal products at the Department of Industry (DoI).
  • Kuwait has deported 714 Nepali migrants in the last three months for non-compliance with the residence and labour laws. Out of them, 461 were housemaids, who were arrested on the charge of working illegally in the desert kingdom.
  • Malaysia has announced new levies for foreign workers, which is expected to affect some 700,000 Nepalis working there. After a round of amendments on the levy fee policy, the Malaysian government has implemented a uniform annual levy of 1,850 ringgit per worker in production, construction and service sectors in Peninsular State, or West Malaysia, according to the Malaysian Home Ministry.
  • Nepal’s external debt swelled by Rs30 billion in the first half of the fiscal year as the Nepali rupee plunged against the US dollar and special drawing rights (SDR), the currencies in which foreign loans are obtained, the Financial Comptroller General’s Office (FCGO) said.
  • A meeting of the Parliamentary Finance Committee on Sunday directed the government to build the 76km Kathmandu-Tarai Fast Track Project on its own. Terming it a “national pride project”, the committee asked the government to use national resources and skills to build the project, which links Kathmandu to Bara’s Nijgadh.
  • Nepal has urged Chinese entrepreneurs to invest in Nepal. Addressing the China-Nepal Investment Forum organized by China Council for the Promotion of International Trade in Beijing on Tuesday, Prime Minister K P Sharma Oli said that Nepal has huge investment opportunities from hydroelectricity to construction sector.
  • Nepal and China have signed a memorandum of understanding (MoU) to extend support on cross border supervision and exchange bank supervisory information between the two countries. Nepal Rastra Bank (NRB) and China Banking Regulatory Commission (CBRC) signed the agreement during the official visit of Prime Minister KP Sharma Oli to China. The agreement, signed by the NRB Governor Chiranjibi Nepal and CBRC Chairman Shang Fulin on Monday, is expected to pave the way for bank and financial institutions (BFIs) of one country to open their branch offices in other country.
  • Nepal and China on Wednesday issued a 15-point joint statement with the Chinese side expressing commitment to strengthen connectively between the two countries by constructing necessary transport infrastructures including a railways network in Nepal. The communiqué comes two days after Nepal and China signed a 10-point agreement including the transit treaty.
  • Despite the government's efforts to encourage lending to agriculture sector, credit flow to the sector grew by only 3.9 percent, or Rs 2.54 billion, in the first seven months of 2015/16. In the same period last year, credit flow of bank and financial institutions (BFIs) to agriculture sector had grown by 14.7 percent or Rs 7.5 billion.
  • Despite pressure from the Janak Shiksha Samagri Kendra (JSSK) and private publishers to hike the rate, the price of textbooks for public schools will remain the same as last year, according to the Department of Education (DoE). Starting in 2012, the Education Ministry has been fixing the book prices after some printers were found to be putting price tags arbitrarily. For this academic year, companies can charge Rs134 for a set of grade one books while it will cost around Rs500 for grade 10 including two books of optional subjects.
  • A day after Nepal and China signed several agreements, including a transit and transportation agreement, India has said Nepal is “free to explore new transit routes”. Responding to journalists during a media briefing on Tuesday, Vikas Swarup, spokesman for India’s Ministry of External Affairs, said, “Nepal as a landlocked country is free to explore any practical option it wants.” Swarup, however, was quick to insist that Nepal-India relations have “own natural logic.” 
  • Nepal Stock Exchange (Nepse) index logged gains of 11.61 points on Thursday to close at 1,357.14 points on the last trading of the week. The market has set a new record, as banking stocks continue to lure investors who expect more stock dividends in the coming fiscal year.
  • Nepal’s wheat harvest in fiscal 2015-16 is expected to hit a seven-year low as the crop acreage has contracted sharply due to a combination of political and climatic factors. Output is forecast to plunge20.5 percent to 1.57 million tons, according to a report produced by Climate Change, Agriculture and Food Security (CCAFS).
  • The Ministry of Population and Environment on Thursday carried out inspection in Kalimati Fruits and Vegetable Market and retail shops in Kalimati area in Kathmandu to check the adherence to the ban on use of plastic bags with thickness below 40 microns.
  • State-run Nepal Bank Limited (NBL) and Agriculture Development Bank Limited (ADBL) have taken initiatives to raise their paid-up capital to the required level. The Nepal Rastra Bank (NRB), through the Monetary Policy for this fiscal year, has directed commercial banks to raise their paid-up capital to Rs8 billion from existing Rs2 billion by mid-July 2017. The NBL board has decided to meet the capital requirement within this fiscal year by issuing 23.74 percent right’s share, while ADBL plans to raise its capital to the prescribed level by the next fiscal year. This year, ADBL will issue 15 percent bonus shares and 2:1 right’s shares as per its board decision.
  • Nepal Oil Corporation (NOC) has been making preparations to implement the automatic pricing mechanism to fix the market price of liquefied petroleum gas (LPG) too. Currently, the system is used to set petrol and diesel prices. Spokesperson for the state-owned oil monopoly Mukunda Ghimire said they had started the paperwork to apply the auto pricing mechanism for LPG. The corporation decided to adopt the auto pricing mechanism bowing to pressure from various government authorities including the parliamentary Industry, Commerce and Consumer Welfare committee, NOC officials said.
  • Economists have said that Nepal's proposal to import only one-third of the country's fuel demand from China is faulty. Stating that any trading partner should have open approach while entering into commercial relationships, they emphasized on the need to end all sorts of bindings and quota systems in order to develop commercial petroleum relationship with China.
  • Even as 11 months have elapsed since the Gorkha Earthquake, little progress has been in signing agreement with donors in accordance with their commitment made during last year’s donor conference for post-quake rebuilding. Donors had pledged $4.1 billion aid at the International Conference on Nepal’s Reconstruction in June to reconstruct the quake-ravaged infrastructure. But of the total pledged amount, the government has so far signed agreements worth only $1.14 billion. 
  • With the recent $101 million Bangladesh Bank heist alarming central banks everywhere, especially in developing countries, officials of Nepal Rastra Bank (NRB) have said its payments system is “secure”. Using the SWIFT messaging network, anonymous hackers on February 4 sent payment instructions from the Bangladeshi central bank to the Federal Reserve Bank of New York to transfer of $1billion. The Federal Reserve executed one payment of $20 million to a bank in Sri Lanka and four payments of $81mm to a bank in Philippines. The incident created panic among the banking industry worldwide over the safety of the international payments system.
  • Sajha Yatayat is adding 30 new public buses to its fleet with an investment of Rs100 million, the cooperative announced on Thursday. Sajha signed an agreement with Indian automobile manufacturer Ashok Leyland on Thursday to procure the buses. Manager of Sajha Yatayat Mahendra Raj Pandeya informed that the disabled-friendly buses have a capacity of 40 seats but can carry upto 100 people at a time, including standing passengers.
  • The Ministry of Supplies has formed a high-level committee to investigate complaints of persistent shortages of liquefied petroleum gas (LPG) despite increased imports. Spokesperson for the ministry Deepak Subedi said that the panel, which was formed last week, would observe where LPG cylinders were being dispatched. The five-member committee is led by Joint Secretary Uttam Nagila and includes representatives from consumer rights groups, Nepal LP Gas Industry Association, Gas Dealers’ Federation Nepal (GDFN) and Nepal Oil Corporation (NOC).
  • Chinese arrivals to Nepal shrank sharply following the 2015 killer earthquake and India’s trade embargo, dampening the enthusiasm of tourism entrepreneurs who had got their hopes up because of the fast rising market. Visitors from the northern neighbor are valued as they have helped to pull up Nepal’s tourism industry after arrivals from the traditional European markets started trailing off due to political instability and a wobbly economy. The earthquake and embargo coming one after the other led to arrivals from China dropping to a four-year low of 66,984 individuals in 2015, down 45.89 percent from the previous year. The free-fall had spread concern among travel traders about a possible sustained downturn in tourism.

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