News Digest: Economy and Development (September 16 – 22, 2021)

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Finance and Banking

Nepal Rastra Bank (NRB) on 16 September injected Nrs. 20 billion into the domestic financial system, in an attempt to ease the increasing shortfall of liquidity in the national banking system. The national baking system is going through immense pressure to manage liquidity, largely due to NRB’s implementation of the new credit-deposit ratio (CD) at a ceiling of 90 percent which had led to a slow rate of deposit collection and surging interest rate. Considering this, NRB decided to injected cash into the country’s financial system.

Nepal Payments Company Limited or Namaste Pay, a joint mobile money service application by Nepal Telecome (NT) and Rastriya Banijya Bank (RBB) has started its operations. The payment gateway which is the largest government operated gateway with a paid-up capital of Nrs. 400 million can be activated by dialing *500# on Android phones.

Money and Budget-

The House of Representatives (HoR) has endorsed the replacement budget bill or the appropriation bill on 20 September amid ongoing agitations and protest by parliamentarians of CPN-UML. Following the endorsement by HoR, the bill has been sent to the upper house (National Assembly) for its endorsement and the Office of the President for its authentication to lift the current government’s financial shutdown.

The federal government has spent Nrs. 58.59 billion in its recurrent expenditure (5.46 percent of its total earmarked budget of Nrs. 1.64 trillion) during the first two months of the current fiscal year (FY) 2021/22. Similarly, Nrs. 2.60 billion was spent in capital expenditure (0.6 percent of the total national budget). In terms of revenue collection, the government has managed to collect Nrs. 148.56 billion (14.56 percent of the targeted revenue of Nrs. 1.15 trillion for fiscal year (FY) 2021/22) from taxes during the same review period.

Price Index and Markets-

Internet Service Providers (ISP) companies have decided to hike prices of internet services as a follow-up action to the increase in price of internet fibers and increase in pole rents by Nepal Electricity Authority (NEA). Following this decision, the price of ISP’s services has increased from Nrs. 150 to Nrs. 300; with price per subscriber reaching Nrs. 300 in urban areas and Nrs. 150 in rural areas.

According to Nepal Vegetable Ghee and Oil Manufacturer’s Association, price of refined oil in the domestic market has increased owing to the increase in price of crude oil in the international market by USD 200 to reach USD 240 per metric tons.

Government subsidized stores (an initiative under the current national budget) has opened at various outlets of Food Management and Trading Company and Salt Trading Corporations across the nation. The stores are anticipated to provide daily essential goods and commodities to customers at subsidized rates and prices including discount of Nrs. 5 per kg on all types of rice, wheat, lentils, beaten rice, flour and so on. Similarly, a discount of Nrs. 5 per litre has been earmarked for mustard and sunflower oils and Nrs. 10 per litre for soybean oil.

Infrastructure, Aviation and Energy-

Tourism Ministry has approved the Civil Aviation Authoritie of Nepal’s (CAAN) proposal of signing a long-term government-to-government deal with India for periodic airport surveillance and radar flight inspections. Similarly, Himalayan Airlines has started automated external defibrillator (AED) service in a bid to save any passengers in case of on-flight heart attack and other health complications in all its aircrafts.

The construction of Hetauda-Dhalkebar-Inaruwa 400 KiloVolt (KV) double circuit transmission line has once again been obstructed due to local’s demand of better contractor performance as well as unclear procedural modalities in usage of forest lands. 

Share Market-

The Nepal Stock Exchange Ltd (NEPSE) has decreased by 114.02 points followed by an increase of 13.83 points and 12 points to reach index points of 2812, 2699 and 2711 respectively during the first three trading days of the week.

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