News Digest Economy & Development (15 – 21 July, 2021)

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Current account in deficit-

According to Nepal Rastra Bank (NRB), current account has remained at a deficit of NPR 293.97 billion during the first 11 months of the current fiscal year (FY) 2020/21 compared to the previous figure of NPR 62.56 billion. Similarly, capital transfer and net foreign direct investment (FDI) was registered at NPR 14.15 billion and NPR 16.20 billion as compared to NPR 13.05 billion and NPR 18.72 billion in the previous fiscal. Likewise, the total foreign exchange reserve has reduced by 2.6 percent to stand over NPR 1,365 billion and the balance of payment (BOP) has recorded a deficit of NPR 140.8 billion against a surplus of NPR 1.50 billion in the previous review period.

60 percent of development budget spent-

According to the Office of Financial Comptroller General, the development expenditure for (FY) 2020/21 has increased to NPR 1,474.64 billion, up by NPR 309 billion from NPR 1,091.13 as compared to the previous (FY). The increase in development expenditure has been attributed to the rise in current expenditure and capital expenditure. Both current expenditure and capital expenditure increased by NPR 784.14 billion to reach NPR 851.4 billion and by NPR 28 billion to reach NPR 227.7 billion respectively in (FY) 2020/21. The expenditure had gone up despite the halt in economic activities due to extensive spending in the last two months of the (FY) to complete development activities.

Increase in merchandise imports and exports-

Nepal’s total export has reached NPR 121.25 billion in the first eleven months of the current (FY) 2020/21, wherein merchandise exports has increased by 37.8 percent. On a destination basis, exports to India and other third countries has increased by 43.3 percent and 25.9 percent whereas exports to China has reduced by 17.4 percent. On a commodity basis, export of goods including soybean oil, cardamom, yarn (polyester and other), jute goods, wool, and carpets has increased whereas exports of palm oil, pulses, zinc sheets, wire and bran has declined. Similarly, total merchandise imports have increased by 25.7 percent and reached NPR 1.383 trillion. On a destination basis, imports from India, China and other countries has increased by 32.2 percent, 24.0 percent and 9.9 percent respectively. On a commodity basis, imports of transport equipment and spare parts, crude soybean oil, MS billets, rice and telecommunication equipment has increased whereas imports of aircraft parts, video and television spare parts, cold rolled seat invoices, silver and other items have reduced.

Consumer price inflation-

Consumer price inflation has been registered at 4.19 percent in the first 11 months of the current fiscal year. The figure has reduced by 0.35 percent as compared to the last fiscal. Similarly, food and beverage inflation was recorded at 6.22 percent and non-food and services inflation at 2.63 percent. The inflation has been higher in the Terai region than Hilly region during the same review period. Inflation in Terai was recorded at 4.47 percent whereas inflation in Hills was recorded at 3.87 percent.

Minimum wage for private workers increases-

The provision for a new minimum wage for private sector workers has come into effect from July 16. According to the provision, private workers except those in tea estate are eligible to draw NPR 15,000 monthly. Meanwhile, the government has fixed minimum wages for tea estate workers at NPR 12,081 per month. 

Share market-

Nepal Stock Exchange (NEPSE) has decreased by 9.01 points on 20 July 2021, recording an index of 2985.57 points. A total of 31.60 million shares of 219 companies was traded resulting in a turnover of NPR 7.89 billion on the same day.

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