News Digest Economy and Development (May 27-2 June, 2021)

Finance Minister Bishnu Prasad Poudel addressing the Economic Survey of the Fiscal Year 2077/78 BS and Annual Situation Review of Public Enterprises at the Ministry. Photo: RSS

Government presents NPR 1.647 billion budget through an ordinance

Finance Minister Bishnu Poudel presented an annual budget of NPR 1.647 billion for the next fiscal year 2078/79, with a growth target of 6.5 percent. With major emphasis diverted towards the facilitating the health sector and recovering the economy, some sectoral allocation as presented in the budget stands at-

  • NPR 14 billion for Ministry of Labour, Employment and Social Security
  • NPR 45.09 billion for Ministry of Agriculture
  • NPR 180.04 billion for Ministry of Education
  • NPR 1.20 billion for Ministry of Women, Children and Senior Citizens
  • NPR 484.05 billion for General Public Service
  • NPR 442.09 billion for Economic Affairs
  • NPR 189.90 billion for Social Protection
  • NPR 141.55 billion for Health
  • NPR 80.47 billion for Housing and Community Amenities
  • NPR 58.08 billion for Public Order and Safety
  • NPR 52.11 billion for Defense
  • NPR 12.58 billion for Environmental Protection
  • NPR 6.70 billion for Recreation, Culture and Religion

The budget has earmarked NPR 374.26 billion for capital expenditure, NPR 678.61 billion for recurrent expenditure, and NPR 207.97 billion for the financing. Similarly, NPR 386.71 billion has been transferred to the provincial and local governments, with NPR 325.74 billion in equalization grant and NPR 60.97 in conditional grant; alongside setting revenue target at NPR 1,024.90 billion.

Himalayan Reinsurance awarded operating license

Insurance Committee, the regulatory body responsible for the operation of insurance sector has awarded Himalayan Reinsurance with the operating license to conduct business in reinsurance. Four companies- Himalayan, Kathmandu, Annapurna, and Prudential were in the race to get the license, after the insurance committee had announced the need of one more reinsurance company in the country.

HIDCL in preparation to issue rights share

Securities Board of Nepal (SEBON) has permitted Hydroelectricity Investment and Development Company Ltd (HIDCL) to issue rights share worth NPR 11 billion. The company which has set June 11, 2021 for its book closure is currently preparing to issue 110 million units of rights share to the public (who must be enlisted as shareholders on Nepal Stock Exchange (NEPSE) by June 10 to buy the right shares).

IFC to invest in Dolma Impact Fund III

International Finance Corporation has decided to invest USD 10 million in Dolma Impact Fund III to facilitate financing for small and medium sized enterprises (SMEs), particularly in health care, renewable energy, technology, and other sectors that were severely impacted by the COVID-19 pandemic. Currently, only 39 percent of total SMEs across the country have access to finance. Hence, provision of funds via private equity (like Dolma) has been welcomed as a vital source of credit and capital for the recovery of SMEs.

Indian traders seek import quota on Nepali soybean oil

Indian traders have complained to the Indian government regarding the huge influx of Nepali soybean and palm oil in Indian markets; citing a violation of rules of origin under the South Asian Free Trade Area (SAFTA) since Nepal does not produce such oils commercially. Tariff exemptions on Nepali exports to India as honored by the SAFTA agreement has given Nepali oil producers an advantage in Indian markets whereas countries outside South Asia are levied with tariffs worth 54 percent and 45 percent on palm oil and soybean oil, respectively. These exemptions are resulting in India losing a revenue of INR 54,000 (NPR 86,000) per tonne of refined soybean oil and around INR 44,500 (NPR 71,000) per tonne of palm oil on import of oils coming from Nepal; further raising doubts as to whether Nepal is misusing the preferential treatment given by India.

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