Friday, January 15, 2021

Nepal-India Joint Commission discuss a gamut of bilateral issues

 The sixth meeting of the Nepal-India Joint Commission today reviewed the entire spectrum of bilateral relations that included the important areas of Covid-19 vaccine, boundary and border management, connectivity and economic cooperation, trade and transit, power and water resources, and culture and education, among others, according to a press note issued by the Foreign Ministry.

Held in New Delhi today and co-chaired by foreign minister Pradeep Kumar Gyawali and his Indian counterpart Dr S Jaishankar – as leaders of the respective delegations – the meeting of the Joint Commission also appreciated the close coordination between the two sides in facing the challenges posed by the Covid-19 pandemic, the press note reads, adding that the Nepali side thanked the Government of India for its assistance of essential medicines and medical equipment. “On Nepal’s request for the Government of India’s support in availing Covid-19 vaccines, the Indian side assured that the requirements of Nepal would be in priority consideration after the roll-out of vaccines.”

The meeting discussed the boundary matter and expressed the commitment to early completion of the boundary works in the remaining segments. “It also discussed the review of the Peace and Friendship Treaty of 1950, submission of the report of the Eminent Persons Group (EPG), and air entry routes,” the press note adds.

The two ministers expressed satisfaction over the progress achieved in increasing cross-border infrastructure and connectivity, strengthening of development partnership and expeditious implementation of major ongoing projects and initiatives, including the first cross-border petroleum products pipeline, Integrated Check Posts (ICPs) at major border crossing points, railway links, power transmission lines, upgradation of roads and motorable bridges. The meeting also agreed to further speed up the implementation of the ongoing and planned bilateral projects such as the new Integrated Check Posts (ICP), Inland Container Depot (ICD), including at Dodhara-Chadani, remaining cross border railways, roads, and transmission lines, among others, the press note adds.

The Joint Commission deliberated on the progress in the discussions held between the two sides to review the bilateral treaties on trade, transit and rail services. “Both sides agreed for an early conclusion of the review of Treaty of Trade, Treaty of Transit and the amendments to Rail Services Agreement (RSA) with a view to further strengthen cooperation in these fields. They also discussed on progress in operationalisation of connectivity through inland waterways.

The meeting agreed to expedite the work for 400 Kv Butwal-Gorakhpur cross-border transmission line, it reads, adding that reiterating the importance of Pancheshwar Multipurpose Project and taking note of the positive discussion at the recent bilateral meeting of the secretary-level delegations held in New Delhi, the Joint Commission agreed for early finalisation of the project DPR. “The meeting also deliberated on the inundation problems facing people living in border areas especially due to non-tagging of embankments, interlinking of drains, and inadequate drainage provision.”

The Nepal-India Joint Commission was established in 1987 with a view to review and further strengthen all aspects of bilateral relations.

The Nepali delegation to the meeting included Nepali ambassador Nilamber Acharya, foreign secretary Bharat Raj Paudyal, health secretary Laxman Aryal and the officials of various ministries, departments and the Nepali embassy. Likewise, Indian external affairs minister Jaishanker was accompanied by Indian foreign secretary Harsh Vardhan Shringla and India’s ambassador to Nepal Vinay Mohan Kwatra. 

Meanwhile, foreign minister Gyawali today gave a talk at the Indian Council of World Affairs (Sapru House) on ‘Nepal-India Relations’ and interacted with the distinguished audience comprising of former ambassadors, academics, think-tank analysts and media persons. 

The foreign minister reached New Delhi yesterday to participate in the meeting as its co-chair, though back home there is a hearing going at the Supreme Count on either the incumbent government led by KP Sharma Oli is caretaker or not as the prime minister dissolved the House of Representatives on December 20 and declared a mid-term poll, instead of facing no confidence motion in the House. Oli’s House dissolution move has been challenged in the Supreme Court. 

Before today’s Joint Commission meeting, Gyawali and Jaishankar held a one-on-one bilateral talk, sources at the Indian capital said, adding that the minister is also scheduled to hold high-level talks with the Indian authorities.

Friday, January 8, 2021

Private sector suggests postponement graduation from LDC

The private sector has asked the government to postpone the graduation of Nepal to the Developing Country (DC) status from the current Least Developed Country (LDC) status.

Submitting a written recommendation to the Ministry of industry, Commerce and Supplies today, Federation of Nepalese Chambers of Commerce and Industry (FNCCI) president Shekhar Golchha said that Nepal should not hurry to graduate from LDC. If Nepal graduates from LDC, it will not be able to enjoy the benefits including zero tariff and grants from the development partners. The developing country will get loan, and it will also be exempted from zero tariff, provided for LDCs by India, China, US and the EU. “Nepal will also not receive any development grants, if it graduates,” he said,” asking the government not to hurry.

Earlier too, Nepal had postponed its graduation from LDC till 2021, though the country had met two of the three criterion that are necessary to graduate to graduate from LDC. Nepal had fulfilled two criterion – Human Assets Index (HAI) and Economic Vulnerability Index (EVI) – in 2015, which was enough for graduation. The HAI should be 66 or above, EVI 32 and below, and per capita income should be $1,222. Nepal’s HAI and EVI scores stood at 68.7 and 26.8, respectively, which was enough for graduation from LDC, though the per capita income was less. But writing a letter to UNDP, Nepal asked to postpone its graduation as the country wanted to graduate on the basis of per capita income, which is thought to be more sustainable graduation. 

Any country meeting two of the three criterion – HVI, EVI and per capita income – could be graduated from LDC, or a country can graduate, fulfilling only one criteria, if it has $2,444 per capita income.  Nepal’s per capita income currently hovers around $1,000 but in the changed context of coronavirus pandemic, there is a doubt that the per capita income even remains same, as some 6 million Nepalis lost their employment, during the lockdown imposed by the government – from March 24 for 120 days – and subsequent prohibitory orders aimed at containing the spread of Covid-19.

According to the latest UNCTAD report on LDCs too, the world economic crisis brought by the Covid-19 pandemic may affect the previously planned graduation of LDCs that is the exit of some countries from the group of LDCs. 

The LDCs that have better weathered the Covid-19 pandemic from a health policy perspective are those with a broader and more sophisticated base of productive capacities in their economy, the UNCTAD report reads, adding that more generally, the same reasoning also applies to their capacity to respond to other shocks like medical, economic or natural disasters. “Countries that have been able to develop a denser and more diversified fabric of productive capacities have shown greater resilience and have been better prepared to weather different types of shocks.”

The Covid-19 pandemic is estimated to contract the GDP per capita LDCs by 2.6 per cent in 2020 from already low levels, as these countries are forecast to experience their worst economic performance in 30 years, according to the UNCTAD report. “At least 43 out of the 47 LDCs will likely experience a fall in their average income,” it reads, adding that extreme poverty in LDCs is projected to expand by 32 million in 2020 to reach 377 million people. “The poverty rate will rise from 32.5 per cent to 35.7 per cent in 2020, due to the Covid-19-induced economic crisis.”

Meeting the criterion is not only enough for any LDC to graduate, but it also has to prepare a transition plan, so that it keeps sailing above, otherwise, the country could again demoted to LDC. Nepal also has to prepare a transition strategy as it will lose some preferential treatment.

According to a report prepared by the National Planning Commission (NPC) and the United Nations Development Programme (UNDP) also, the Covid-19 pandemic may have profound impacts on the graduation criteria, with new risks of rising trade and export costs impacting external markets, and the need for more concessional aid, including debt relief, to overcome multiple crises. With new impact analysis, Nepal also need to bring a transitional strategy.

Graduation from LDC status becomes effective three years after the United Nations General Assembly (UNGA) takes note of the recommendation made by the Committee for Development Policy (CDP) under the United Nations Economic and Social Council (UNESC) to graduate a country. Though, the government is in hurry to graduate Nepal, Nepal’s graduation will be effective in 2024, if the committee recommends graduation at its next triennial review in 2021. 

Stock market regulator approves T+2 settlement system

 Securities Board of Nepal (Sebon) has reduced the settlement and clearance system time to T+2 from current T+3 to encourage more trading hoping that the exchange will be more dynamic with a faster settlement system.

The move – that was mentioned by the regulator on it’s to-do list of for the fiscal year 2077-78 – is expected to please the stock traders as they will now get paid within the two days of the trading. The regulatory body approved the T+2 due to increasing use of technology in the stock market and international practice, according to the Sebon.

The CDS and Clearing (CDSC) Ltd had submitted a proposal to the regulator to change the current settlement T+3 system to T+2, a press note from the Sebon reads, adding that it has approved the proposal. 

T+3 means that it takes 3 days for the settlement of securities traded as the buyers receive the shares that they buy in about three days. But with the Sebon’s approval of T+2 system, the settlement process for the shares traded will hopefully take lesser time, the press note adds.

It is a frequent complaint from investors that they do not get the shares – in case of buying – and payment – in case of selling – on time. Even under the current system – the T+3 system – the clients have not been able to receive their payment within three days neither have they been able to get paid within a week. However, the authorities have claimed to improve and speed up the settlement system convincing the investors, who still do not believe.

The CDSC said that the T+2 system will be implemented after it issues a public notice addressing all the grievances.

Thursday, January 7, 2021

Nepse inches closer to pshycological 2,200 mark

 Nepal Stock Exchange (Nepse index inches close to a pshycological 2,200 points as it witnessed a double digit growth today to close the last trading day of the week with a new record.

After climbing 15.91 points today, the Nepse index closed at 2,194.49 points, making a new historic high, according to the Nepse. The buying pressure, despite the Constitutional crisis and seemingly political instability, has pushed the total turnover of over Rs 5.87 billion. Of all the sub-indices, trading sector saw considerable strength as it rose by 4.79 per cent, followed by manufacturing & processing sub-index that gained 2.06 per cent. Likewise, non-life insurance, microfinance and finance sectors posted 1 per cent gains each. But the others sector lost, though marginally, the Nepse data reveals.

In terms of market activity, Prabhu Bank’s shares witnessed the highest trading with a turnover of Rs 317 million, followed by Nepal Reinsurance Company (with Rs 274 million) and Chilime Hydropower Company (with Rs 248 million). Nepal Life Insurance Company, NIC Asia Bank and Himalayan Distillery are also the other top turnover stocks today.

However, Multipurpose Finance Company registered the biggest percentage gain of the day as its share price rallied by 10 per cent. Mirmire Laghubitta Bittiya Sanstha, IME General Insurance, Narayani Development Bank and Prabhu Life Insurance Company’s shares also saw notable buying pressure with each of these scrip rallying over 9 per cent, each.

The continuous rise in the share price in the domestic market – despite the Constitutional crisis and political instability – is attributed to the cheap interest rate and lack of other investment instruments. The interest rate in fixed deposit – as of today – hovers around 7 per cent forcing the people to invest in share.

Wednesday, January 6, 2021

World Bank reaffirms economic growth to limit at 0.6 per cent

 The World Bank (WB) reaffirmed its earlier projection of Nepal’s economic growth to be 0.6 per cent in the current fiscal year, though the government has – in the budget that it announced in June – projected a 7 per cent economic growth.

In October too, the development partner had projected Nepal’s economic growth to be remain 0.6 per cent in the fiscal year 2020-21. “The low growth rate is due to the economic impacts of the Covid-19 pandemic in the economy that depends heavily on tourism and travel,” the Global Economic Prospects released today reads, adding that the growth for the next fiscal year could be 2.5 per cent. “The tourism revenue is likely to remain significantly below pre-pandemic levels because of depressed demand as potential tourists remain wary of social interactions and continued restrictions on international travel, although recent vaccine news offers hope.”

With this reason, the recovery is likely to remain modest, it adds.

According to Global Economic Prospects, the South Asian region is projected to grow by 3.3 per cent in 2021. “Weak growth prospects reflect a protracted recovery in incomes and employment, especially in the services sector; limited credit provisioning constrained by financial sector vulnerabilities, and muted fiscal policy support,” it reads, adding that the forecast assumes that a vaccine will be distributed on a large scale in the region starting the second half of 2021 and that there is no widespread resurgence in infections. “In South Asia, Maldives could log the highest economic growth as it has opened up for tourism.”

According to World Bank, the global economy contracted by 4.3 per cent in 2020. But the global economy could expand by 4 per cent in 2021 given that an initial Covid-19 vaccine rollout becomes widespread throughout the year. 

India hands over Rs 306 million chequeto Nepal Reconstruction Authority

 Deputy chief of mission at the Embassy of Indiain Nepal Namgya Khampa handed over a cheque of Rs 306.6 million to chief executive officer (CEO) of National Reconstruction Authority (NRA) Shushil Gyawali today for reconstruction of educational institutions in earthquake affected districts of Nepal.

According to a press note issued by the Indian Embassy in Kathmandu, with this cheque handover, India has reimbursed an amount of Rs 819.8 million to Nepal towards educational sector reconstruction projects. 

Under India’s committed a grant assistance of $50 million towards reconstruction of educational institutions in Nepal, some 71 projects – including the Central Library building of Tribhuvan University (TU) – have presently been taken up by National Reconstruction Authority. “These projects are located in Gorkha, Nuwakot, Ramechhap, Dolakha, Kavre, Dhading, and Sindhupalchowk districts of Nepal,” the press note reads, adding that while 3 schools in Gorkha and 5 in Nuwakot have been completed, construction of 56 schools in five districts is underway and seven schools are in final stage of award of contract. “During the meeting, progress of various Indian government funded reconstruction projects in housing, health and cultural heritage sector were also discussed.”

India has committed $150 million towards reconstruction of 50,000 houses in Gorkha and Nuwakot districts, $50 million for reconstruction of 147 hospitals, and health posts in 10 districts and another $50 million for restoration/reconstruction of 28 cultural heritage sites in 8 districts of Nepal. While housing sector projects are nearly completed and handed over to beneficiaries, projects in education, health and cultural heritage sectors are at various stages of active implementation.

The deputy chief of mission, on the occasion, reiterated continued commitment of Indian government to work with Nepal government towards its reconstruction efforts, therebycomplementing efforts of government and people of Nepal in post-earthquake recovery.

Tuesday, January 5, 2021

Global economy projected to expand by 4 per cent in 2021

 The global economy is expected to expand by 4 per cent in 2021, assuming an initial Covid-19 vaccine rollout becomes widespread throughout the year. A recovery, however, will likely be subdued, unless policy makers move decisively to tame the pandemic and implement investment-enhancing reforms, the World Bank says in its January 2021 Global Economic Prospects.

Although the global economy is growing again after a 4.3 per cent contraction in 2020, the pandemic has caused a heavy toll of deaths and illness, plunged millions into poverty, and may depress economic activity and incomes for a prolonged period. “Top near-term policy priorities are controlling the spread of Covid-19 and ensuring rapid and widespread vaccine deployment,” the World Bank reports, adding that to support economic recovery, authorities also need to facilitate a re-investment cycle aimed at sustainable growth that is less dependent on government debt.

“While the global economy appears to have entered a subdued recovery, policymakers face formidable challenges – in public health, debt management, budget policies, central banking and structural reforms – as they try to ensure that this still fragile global recovery gains traction and sets a foundation for robust growth,” said World Bank Group president David Malpass. “To overcome the impacts of the pandemic and counter the investment headwind, there needs to be a major push to improve business environments, increase labour and product market flexibility, and strengthen transparency and governance.”