News Digest: Economy and Development (February 03 – 09, 2022)

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Money and Banking

Nepal Rastra Bank (NRB) on 04 February 2022 issued a notice to the public regarding the risks involved in carrying financial transactions through electronic means. Through the notice, NRB has urged individuals to stay wary of temptation to cash lottery, misuse of mobile applications, solicitation of passwords and one-time password (OTP) while conducting digital transactions. Similarly, NRB has also asked all commercial banks to provide details of transactions of over Nrs. 700,000 (carried between mid-July 2021 to mid-January 2022) to monitor suspicious cases of money laundering and financing for terrorism.

The central monetary authority (NRB) on 04 February 2022 issued a circular directing all digital service providers to implement interoperability within the next six months of the current fiscal year. The new directive was issued to assist individuals in making e-transactions in a convenient, affordable, fast, secure and seamless manner through a single transaction account. 

A study conducted by the Confederation of Banks and Financial Institutions of Nepal (CBFIN) has identified bank’s improper policies for deposit collection and mobilization as the primary factor for the recent liquidity crunch within the country’s financial system. Likewise, low capital expenditure by the government, decline in remittance earnings received from domestic migrant labors abroad, weak monitoring and surveillance by the central monetary authority were also pointed as the other factors contributing to the cash crisis.

Trade and Investment

According to the Trade and Export Promotion Centre (TEPC), tea shipments in the first six months of the current fiscal year (FY) 2021/22 reduced by 33.28 percent, from 8,780 tons to 6,590 tons. In monetary value, the country exported tea worth Nrs. 1.85 billion, down by Nrs. 0.92 billion. TEPC has cited the Indian government’s decision to cancel import licenses of Indian importers to prevent them from importing cheap Nepali teas into the domestic market as the reason for the recent fall in tea export.

A study done by the Department of Industry (DoI) revealed that foreign direct investment (FDI) soared by 30 percent year-on-year during the first half of the current fiscal. According to DoI, Nepal has received investment pledges worth Nrs. 30.65 billion for 129 projects from foreign investors during the said period. Compared to the last fiscal, FDI pledge has increased by 23 percent from Nrs. 7.09 billion.

As per data from DoI, over 154 foreign and domestic industries have been registered till mid-January of the current fiscal year. Comparing it to the last fiscal, the number of registered industries has increased from 103. Within the new registrations, 17 large, 21 medium and 65 small-scale industries have been registered. Similarly, proposed investment in industries has also increased to reach Nrs. 186 billion in the current fiscal from Nrs. 72.62 billion during the last fiscal.

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