News Digest: Economy & Development (January 20 – 26, 2022)

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Money and Banking

According to Nepal Rastra Bank’s (NRB) six months data on refinancing, the central bank has injected Nrs. 13.61 billion (into the economy) within the first half of the current fiscal year (FY) 2021/22. In the financing injected, Rastriya Banijya Bank (RBB) has been identified as the largest refinancing bank with Nrs. 1.45 billion followed by Bank of Kathmandu (BoK) and Nepal Credit and Commerce Bank (NCCB).

NRB has cautioned the public against making investments in hyper funds and carrying out network marketing via a notice issued on 23 January 2022. Citing the risk of being deceived through e-investments, NRB has requested the public not to make investments in virtual and cryptocurrencies.

According to the Banking and Financial Statistics (BFS), interest rate on deposits and lending has increased by 1.48 percent and 0.81 percent, respectively between mid-August to mid-December 2021. Officials at NRB have supported this rise in interest rate as a measure to avail more liquidity in the economy.

NRB’s introduction of a provision for importers to retain 100 percent cash margin while applying for Letter of Credit (LC) has been successful in reducing import of 20 commodities such as chocolates, cigarettes, wood products, silver etcetera. The provision was issued on 20 December 2021 to help relieve the growing pressure on the country’s foreign exchange reserves.

In response to Nepal Oil Corporation’s (NOC) hike on petrol and diesel prices on 19 January 2022, the Federation of Nepalese National Transport Entrepreneurs (FNNTE) has demanded the government to withdraw the hike in prices of petroleum products, citing their inability to buy petroleum products at the new price.

Trade and Investment

According to the Foreign Trade Statistics (FTS) published by the Department of Customs (DoC), Nepal’s import bill has crossed the Nrs. 1 trillion mark within six months of the current fiscal year (FY) 2021/22. Corresponding to the imports, total exports and current account deficit has been recorded at Nrs. 118.85 billion and Nrs. 880.49 billion, respectively.

Nepal has imported 1,103 units of electric vehicles (EVs) in the first half of the current fiscal. Compared to the first half of the last fiscal, the import of EVs has increased five times from 249 units.

Over 7,591 metric tonnes of chemical fertilizers dumped at the Birgunj Dry Port since one and a half year is yet to be managed. According to the Birgunj Customs Office, repeated requests have been made at the Ministry of Finance (MoF) and Ministry of Agriculture and Livestock Development (MoALD), but they have gone unheard due to sheer incoordination and negligence among the ministries.

According to the Nepal Intermodal Transport Development Board (NITDB), the Timure Dry Port has completed 20 percent of its construction process. Being built under financial assistance from the Chinese government, upon its completion, the dry port is anticipated to fit 250 big containers and 100 small and vehicles.

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