News Digest: Economy and Development (September 23 – 29, 2021)

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NRB and macroeconomic indicators

Nepal Rastra Bank (NRB) on September 23 released its ‘Current Macroeconomic and Financial Situation of Nepal’ which revealed that the country’s inflation rate during the mid-July to mid-August period (i.e. first month of the current fiscal year (FY) 2021/22) stood at 0.86 percent more than the price hike during the same review period of the last fiscal year (FY) 2020/21. Similarly, food and beverages inflation was recorded at 3.86 percent and non-food and service inflation was recorded at 4.74 percent. NRB records also showed that the inflation rate has surged by 5.63 percent in the Hilly region; double the amount as compared to the last fiscal.

In terms of trade statistics, NRB has disclosed that the country’s trade deficit has increased by 70.6 percent to reach Nrs. 129.97 billion (USD 1.1 billion) chiefly due to the ever-increasing imports bill which was recorded at Nrs. 150.73 billion (USD 1.27 billion) in the same review period. Consequently, foreign exchange reserves have declined by 3.2 percent to reach Nrs. 1,353.82 billion (USD 11.46 billion). Meanwhile, exports have registered a commendable increase of 115.9 percent to reach Nrs. 20.76 billion (USD 175 million). Re-export of palm and soybean oil to India has been cited as the reason for this increase.

Likewise, remittance earnings received by the economy has decreased by 18.1 percent and has been recorded at Nrs. 75.96 billion (USD 643 million) during the same period as compared to an increase of 23.0 percent during the last fiscal. The country also recorded a negative balance of payments (BoP) figure of Nrs. 38.75 billion (USD 328 million) as compared to a surplus of Nrs. 51.46 billion (USD 435 million) in the last fiscal.

Money and Banking

The Department of Revenue Investigation (IRD) has filed 138 cases against 431 individuals for revenue dodging and foreign currency misuse in the last fiscal year (FY 2020/21) at high courts and district courts. Cases related to revenue dodging has been filed at high courts as per the Revenue Leakage (Investigation and Control) Act and cases related to foreign currency misuse has been filed at district courts as per the Foreign Exchange Regulation Act. According to the department, a total of Nrs. 24.74 billion (USD 209 million) was lost in revenues during the last fiscal due to the use of fake value added tax receipts and foreign currency misappropriation.

Nepal Rastra Bank (NRB) has introduced a new provision ensuring concessional loans for the establishment of electronic vehicles charging station to promote the use of e-vehicles and increase electricity consumption by the general public. At current, 15 charging stations are present across the country. With the new provision, the number for the same is anticipated to increase to 50.

A study conducted by Nepal Rastra Bank (NRB) has revealed that the amount of loans provided by banks and financial institutions (BFIs) has increased to Nrs. 4.219 trillion (USD as of end-August in the current fiscal year. Within the same, Nrs. 840.7 billion (USD 35 billion) has been provided to wholesalers and retailers, which is an increment of 30 percent as compared to the amount of Nrs. 652 billion (USD 5.52 billion) during the last fiscal.

Share Market

The Nepal Stock Exchange Ltd (NEPSE) decreased by 61.72 points, 73.05 points and 70.01 points respectively during the first three trading day of this week. With the decline, the NEPSE index was recorded at 2615.40 points as of the third trading day. A total of 37.99 shares of 233 companies were traded resulting in a turnover of Nrs. 17.36 billion (USD 147 million) during the same review period.

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