News Digest: Economy & Development (November 11 – 17, 2021)

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Money and Banking

Nepal Rastra Bank (NRB) has issued a new directive on interest rate to banks and financial institutions (BFIs) by amending the Integrated Directive, 2020. According to the new directive, BFIs can now only charge a maximum of 10 percent interest rate in average except for call deposit. NRB has also scrapped the provision for BFIs to increase interest rate up to 0.5 percentage point for deposits except for call deposit and institutional fixed deposit.

The state-owned Nepal Oil Corporation (NOC) has hiked the price of petrol, diesel and kerosene by Nrs. 3 (USD 0.025) per litre each. Similarly, the price of cooking gas cylinder has been hiked by Nrs. 75 (USD 0.63). With the new hike, price of petrol, diesel and kerosene and cooking gas cylinder has reached Nrs. 136 (USD 1.14) and Nrs. 119 (USD 1.0) per litre and Nrs. 1575 (USD 13.22) per cylinder. NOC has also hiked the price of aviation to Nrs. 101 (USD 0.85) per litre.

Remittance amount has decreased by 7.6 percent during the first three months of the current fiscal year (FY) 2021/22. According to the Current Macroeconomic and Financial Situation of Nepal released by Nepal Rastra Bank (NRB), remittances has fallen to Nrs. 239.32 billion (USD 2 billion) from Nrs. 258.91 billion (USD 2.17 billion) during the same period as compared to the last fiscal (FY) 2020/21.

Agriculture and Farming

According to Nepal Tea and Coffee Development Board (NTCDB), Nepali coffee has been in demand in the international market despite the pandemic grappling the global economy. As per the records of NTCDB, export earnings from Nepali coffee soared by 66.37 percent to reach Nrs. 96 million (USD 806,055) during the last fiscal year (FY) 2020/21.

Farmers cultivating cardamom in Ramechhap district have been plagued by a disease that has been destroying their plantation. According to the district authorities, a loss of Nrs. 10 million (USD 83,964) has been recorded in places including Chuchure, Bamti, Kubhukasthali, Priti, Bhuji, Gupteshwor and Gumdel within the same district.

Trade and Investment

According to the Annual Report on Public Debt 2020-21, Nepal’s domestic debt has reached Nrs. 802.94 billion (USD 6.74 billion), with external debts amounting to Nrs. 934.14 billion (USD 7.84 billion) and the total outstanding liability standing at Nrs. 1,737.08 billion (USD 14.58 billion). In terms of annual debt repayment, the country has made principal repayment of Nrs. 36.9 billion (USD 309 million) in internal loans and Nrs. 28.46 billion (USD 238 million) in interest payment. Similarly, the country has managed to make principal repayment of Nrs. 23.36 billion (USD 19.61 billion) in external loans and Nrs. 6.17 billion (USD 51.80 million) in interest payment.

Infrastructure development at Birendranagar Industrial Area has been moving rapidly. According to the administrative head of the industrial area, investment of more than Nrs. 10 million (USD 83,964) including construction of four industries- Karnali Cold Chain Logistics, Surkashya Gyabing, PN Foods and MK Nepal are under way. Similarly, Surkhet Dairy Industry, Bhavani Printing and Gangamala wood furniture industries, with an investment of Nrs. 150 million (USD 1.25 million), Nrs. 5 million (USD 41,982) and Nrs. 3 million (USD 25,189) have started their operation within the industrial area.

Finance Minister Janardan Sharma has committed to prioritizing promotion of manufacturing industries to build a productive economy across the country. Speaking at an interactive program organized by the Pokhara Chamber of Commerce and Industry, he committed in providing all the necessary facilities including customs, electricity and tax exemption to industries as and when needed.

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