News Digest: Economy and Development (14 October – 20 October, 2021)

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Money and Banking

Nepal Rastra Bank (NRB) auctioned its treasury bills worth Nrs. 11.20 billion (USD 93.07 million) through a tender process in a bid to mobilize short-term loans for the federal government. Within the same, NRB issued treasury bills worth Nrs. 200 million (USD 1.66 million) for a period of 91 days, treasury bills worth Nrs. 5 billion (USD 41,553) for a period of 182 days and treasury bill worth Nrs. 6 billion (USD 49,864) for a period of 364 days maturing on 18 January 2022, 19 April 2022 and 18 October 2022, respectively.

Nepal Rastra Bank (NRB) issued a new directive allowing banks and financial institutions (BFIs) across the country to auction collateral assets of borrowers provided their loan amount remains overdue for more than six months. The new directive has also revised the list of businesses highly affected by the Covid-19 pandemic by adding private and residential schools, higher secondary schools, colleges and universities, vocational training institutes, preschool, child care units, land transport, beauty parlors, cosmetic surgery related business, consultancies and health and fitness centers from the previous medium-level affected group to highly affected group.

Trade and Investment-

As per the Department of Industry (DoI), foreign direct investment (FDI) has reduced by 16.4 percent year-on-year in the first quarter of the current fiscal year (FY) 2021/22. Nepal received 99 investment pledges worth Nrs. 16.26 billion (USD 135.13 million) during the first quarter of the current fiscal as compared to a pledge of Nrs. 32.20 billion (USD 267.60 million) in the first quarter of the previous fiscal year (FY) 2020/21. Subsequently, FDI inflows has reduced to below 1 percent of the national GDP.

The government increased its custom duties on import of silver by 25.88 percent to keep a tab on the increasing smuggling of the precious metal, particularly via the Nepal-India border points. With the new revision, import duty on silver has been fixed at Nrs. 107 (USD 0.89) from Nrs. 85 (USD 0.71) per 10 grams.

Nepal’s oil export (refined palm and soybean oil) is anticipated to take a sharp fall owing to the reduction in import duty on crude oil by the Indian government. With the new revision, import duty on crude palm oil has reduced from 10 percent to 2.5 percent and on crude soybean and sunflower oil from 7.5 percent to 2.5 percent. This is expected to boost overseas buying by Indian traders alongside encouraging them to source the raw materials themselves for domestic production.

Department of Customs (DoC) reported a fall in imports of hand sanitizers during the first two months of the current fiscal year (FY) 2021/22. According to the new records, Nepal imported sanitizers worth Nrs. 56.50 million (USD 469,552) in the first two months of the current fiscal as compared to an import of Nrs. 264.82 billion (USD 2.20 billion) during the same review period of the last fiscal year (FY) 2020/21. The fall has been attributed to the large-scale production of the sanitizers domestically by domestic manufacturers.

On 19 October, Foreign Minister Dr. Narayan Khadka urged his Chinese counterpart Wang Yi to make arrangements for re-opening regular border transaction and operation at the Tatopani-Khasa and Rasuwagadhi-Kerung border points. Similarly, issues of air transportation between Nepal and China, status of Nepali-origin students studying in China and railway and roadways connectivity and projects under Belt and Road Initiative were also discussed. Yet around 1,500 metric tons of chemical fertilizers are still stuck at the Tatopani-Khasa border point due to the Chinese reluctance in fully opening the Nepal-China transit points.

Share Market-

Nepal Stock Exchange (NEPSE) has requested clarification from three stockbrokers including Sumeru Securities, Trishakti Securities and Naasa Securities for submitting fake details of their clients within a deadline of seven days.

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