News Digest: Economy and Development (August 19 – 25, 2021)

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Money and Banking

According to new statistics released by the Nepal Rastra Bank (NRB), Nepali migrant workers sent home NPR 961.05 billion in the last fiscal year (FY) 2020/21, recording an all-time high money transfer to Nepal since domestic laborers started migrating abroad for better employment and economic opportunities. Compared to fiscal year (FY) 2019/20, remittance earning in fiscal year (FY) 2020/21 has increased by 10 percent year-on-year, contributing 22.5 percent to the gross domestic products (GDP) at the current market prices.

Similarly, NRB has launched the national payment switch, taking a step forward towards a cashless economy. The new national payment switch is anticipated to integrate multiple banks, digital payment vendors including IPS, ConnectIPS, quick response (QR) code and other digital ecosystem players into one single system, enabling them to transfer funds. Likewise, the central bank has also introduced its own payment gateway to reduce its dependency on MasterCard or Visa which is expected to transfer individual transaction settlement requests to a central switch, instead of being transmitted to multiple international card schemes.

NRB has also issued an integrated instruction to all commercial banks, development banks and other financial institutions to allow borrowers severely affected by the COVID-19 pandemic with an extended time period to repay the principle and interest liability on their loans. Borrowers were previously being required to make their due payments by mid-December 2021. However, with the new directive in place, borrowers now have time of one more year and can meet their payment via four installments by mid-December 2022.

Likewise, NRB has issued a unified directive making it possible to take loans from banks and financial institutions by pledging land without motor roads. The limit for such loans has been fixated at NPR 2 million, with interest rate to be fixed by adding 2 percent to the base rate while disbursing the loan.

Lastly, all 27 commercial banks across the country have collectively reduced their base rate by 1.61 percent, from 8.50 percent in the last fiscal year (FY) 2020/21 to 6.89 percent for the new fiscal year (FY) 2021/22.

Tourism and Aviation

The flagpole in Nagarkot facing the touristic Kavrepalanchok. Preparations are underway to build a park and sightseeing area under additional tourist structures at Jhandadanda. Photo: RSS

The Office of the Auditor General (AGN) has requested for an investigation into the modification of the Tribhuvan International Airport (TIA) into a boutique airport by the KP Oli led government citing involvement of non-transparent expenditure into its budget of NPR 73.5 million.

Similarly, AGN has also revealed that international airlines (operating flights to and from Nepal) have not paid their tax dues worth NPR 519.8 million to the Government of Nepal (GoN). Generally, international airlines are required to pay 5 percent tax on departure of passengers and 2 percent tax on air transport from Nepal to foreign destinations. Yet 7 international airlines, whose names have not been made public but are registered at the Inland Revenue Office (IRD) have been found evading taxes and not paying their dues.

Share Market

Nepal Stock Exchange (NEPSE) CEO Chandra Singh Saud has resigned from his post. Saud who was being investigated for insider trader over the share issue of Sarbottam Cement submitted his letter of resignation to the Ministry of Finance (MoF) after failing to provide concrete explanation regarding his involvement into the controversy.

Development banks have urged the government to pave way for them to get stock broker licenses by writing to the Securities Board of Nepal (SEBON) and asking for brokerage service via their subsidiary offices.

The Nepal Stock Exchange (NEPSE) decreased by 56.03 points on the third trading day of this week. With the recent fall, the NEPSE index point has come down to 3124.87 points. A total of 25.31 shares of 225 companies was traded which resulted into a turnover of NPR 16.12 billion during the same day.

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