Top Economic news for this week – 1st Jestha to 7th Jestha

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Jestha 8, 2073- This week's main events that provide insight into current Nepalese economic environment have been briefly presented below:

Securities Board of Nepal (Sebon) has scrapped a rule that makes credit rating mandatory for bank and financial institutions (BFIs) to float rights issue. The capital market regulator decided to allow such flexibility on the request of Nepal Rastra Bank (NRB) which increased the minimum paid-up capital requirement for BFIs by many times. Sebon, on Thursday, decided to remove such requirement following complaints from listed companies that the credit rating process was time consuming as there is only one rating agency in the country.

Nepal Airlines Corporation (NAC) managed to increase its market share to 7.9 percent in 2015 compared to 6.7 percent in 2014. Revealing the figures at the 'Agency Award 2016' held in Kathmandu on Friday, Sugat Ratna Kansakar, managing director of NAC, said it became possible of the effective management team.

The government of Ireland has lifted its strict travel warnings to its citizens from visiting Nepal which was put in place following the devastating earthquake on April 25 last year.

Releasing a World Development Report 2016 in Kathmandu on Friday, vice chair of the National Planning Commission (NPC) Dr Yubraj Khatiwada said that Nepal has 103 percent telephony penetration, and 50 percent internet penetration. "However, the access to the technology has failed to boost productivity and contribute to the economic growth.

Nepal Telecom (NT), the state-owned Nepalese telecommunication company, has completed laying optical fibre to Rasuwagadi area at the Nepal-China border from the capital city Kathmandu, with an eye to boosting Nepal-China connectivity. This has paved the way for interconnecting service of the NT with the China Telecom," NT spokesperson Pratibha Vaidya told Xinhua news agency on Saturday.

Nepal China Chamber of Commerce and Industry (NCCCI) and China Council for Promotion of International Trade (CCPIT) Shaanxi have signed a memorandum of understanding to enhance economic and trade relationship between Nepal and Shaanxi province through Silk-Road Business Council.

A joint monitoring team of Department of Food Technology and Quality Control (DoFTQC), District Administration Office (DAO) Kathmandu and Nepal Police on Sunday shuttered Samul Group Industries Pvt Ltd, Cristal Aqua Service Pvt Ltd and Aqua Star Mineral Water Industry after they failed to meet the food and hygiene standards.

The government has set a target of increasing public investment in capital formation by lowering share of private sector in the next three years. In the concept paper for 14th periodic plan, the apex policy making body has targeted to set share of public and private sector investment in capital formation at 41 and 59 percent, respectively. NPC has targeted to increase share of public investment to 41 percent from existing 25 percent. In addition to that, the government is targeting 6.3 percent economic growth in the budget for the next fiscal year.

Nepal Rastra Bank (NRB) Governor Chiranjibi Nepal has warned that the central bank may scrap the license of microfinance institutions who fail to reach rural areas of the country.

Nepal and United States of America (USA) are holding the Trade and Investment Framework Agreement (TIFA) Council Meeting on June 9 and 10, five years after the agreement was signed.

The government has managed to spend only around 50 percent of what it paid as salary to its staffers for development works in the first 10 months of 2015/16 It spent Rs.86 billion to pay salary and other benefits of more than 400,000 employees till mid-May. But spending in development works during the period remained at Rs.46 billion which is 22 percent of the total budget allocated for the purpose.

Nepal's debt-to-GDP ratio at present stands at only 24.5 percent, or about Rs 539 billion. This ratio can be scaled up to about 50 percent, which means Nepal can borrow an additional Rs 550 billion, according to Joint Secretary at the Ministry of Finance Baikuntha Aryal. The amount is enough for at least the three key projects– Kathmandu-Tarai Fast Track, Budhigandaki Hydropower, Second International Airport at Nijgadh.

As a result of unfavorable investment climate in Nepal in Fiscal Year 2015/16 due to earthquake, blockade and unrests, Foreign Direct Investment (FDI) commitments in the first ten months of the current fiscal year have decreased by 84 percent to Rs 10.44 billion, compared to the same period last year.

National Planning Commission (NPC) has converted over 80 small road projects into multi-year projects over the past one and half months. Most of these projects are not categorized as 'strategic road' by the Department of Roads (DoR), according to officials.

Nepal Oil Corporation (NOC) has repaid Rs.3.64 billion loans to the government, bringing down its debt burden to Rs.4 billion. Of its total loans of Rs.36 billion as of fiscal year 2013-14, it owed Rs.12.64 billion to the government and the rest to different banks and financial institutions. The corporation said its oil business has been making profits ever since it adopted the auto-pricing mechanism on September 29, 2014. 

The Swayambhu Management and Conservation General Committee is providing free entry to foreign tourists coming to visit the Swoyambhunath Stupa area on the occasion of the 2560th Buddha Jayanti on May 21.

A total of 202 climbers scaled Mount Everest on Thursday, the highest number of mountaineers on the peak in a single day since the world's highest peak was opened for the summiteers this year.

The growth rate of remittance flowing into Nepal has been dropping for five months straight even though the total amount of funds received has been swelling, Nepal Rastra Bank (NRB) said in its latest macroeconomic report published on Tuesday. The pace of growth started slowing in mid-December 2015, recording a continuous decline from 26 percent to 19.26 percent in mid-January, 15.90 percent in mid-February, 13.91 percent in mid-March and 12.71 percent in mid-April.

In a bid to promote industrialization in the country, the government is preparing to give income tax waiver facility to industries that re-invest at least 40 percent of its profit to increase production. The Ministry of Industry (MoI) is announcing the facility in the upcoming budget for Fiscal Year (FY) 2016/17.

The World Bank (WB) study has revealed that Nepal will be in need for 10,000 megawatts of electricity by 2040.  The three-year study held under the title 'The Benefits of Expanding Cross – Border Electricity Cooperation and Trade in South Asia' has shown that electricity demand in domestic consumption for Nepal after 25 years will touch on 10,000 megawatts.

Nepal Stock Exchange (Nepse) index climbed up 21.94 points this week to close at an all time high of 1,499.32 points on Thursday–the last trading day of the week.

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