Friday, July 30, 2010
Thursday, July 29, 2010
"The central bank's move to make the perks and benefits transparent is weclome," told Sashin Joshi, president of Nepal Bankers Association (NBA) and CEO of NIC Bank here today talking to scribes. "But to fix it is not practical," he said adding that banking is one of the most competitive sectors in Nepal at present. "Such move might start brain-drain in banking sector," Joshi added.
The Monetary Policy for the fiscal year 2010-11 -- announced yesterday by Nepal Rastra Bank (NRB) -- has hinted at controlling perks and benefits of chief executive officers (CEOs), directors and other high-ranking staffers to make it compatible with economic condition of the country.
"Pays and perks should be tied up with performance," suggested Rajan Singh Bhandari, vice-president of NBA and CEO of Citizens Bank Nepal.
The bankers were also concerned over the central bank's interference in the open market. "Reading between the lines, it seems the central bank also wants to control rates," they said adding that the market decides the rates, not the central bank. However, the bankers have themselves, recently, formed a 'gentlemen-agreement' on rates. Though, they claimed that the 'gentlemen-agreement' was not to let the rates go over the board.
The bankers think that increasing the Statutory Liquidity ration (SLR) after adding money at bank's vault is positive move but NRB's indication to dictate rates and fees is not according to the free market economic policy that Nepal is towing.
"The Policy has also failed to clarify how it's going to encourage Merger and Acquisition (M&A), though its a welcome move," Joshi said adding that the tax policy and labour law need to be clear to encourage the M&A. "Similarly, deposit insurance is a good move but it might send wrong message."
The bankers also called the central bank not to discourge Interbank deposits and bring the foreign institutional investors in the capital market, apart from strict regulation on credit cooperatives.
The central bank has apart from Early Warning Signal (EWS) to further strengthen the banks and financial institutions brought -- for the first time -- stress testing, which would predict the impact of economic ups and down in the financial system.
The domestic banks carry high credit and liquidity risks, according to International Monetary Fund (IMF). "Some banks are even facing high solvency risk," the IMF added.
The formal announcement of the Monetary Policy has a very short history of less than a decade in Nepal. But it used to be announced after the budget to support the fiscal policy. This time, it has been announced before the budget and is broadly based on Three Year Interim Plan (2010-2013).
Wednesday, July 28, 2010
Last year's Monetary policy had also targetted seven per cent inflation,which could not be met. Similarly, the growth rate that was pegged at 5.5 also could not be achieved as it remained at 3.5. The BoP was targetted at Rs 18 billion surplus, but by the 11 months of 2009-10, it is Rs 15 billion deficit.
"The connectivity will help Nepal reap regional benefit,' ADB president Haruhiko Kuroda said here today, wrapping up his four-day Nepal visit. "Without better connectivity and infrastructure, the country cannot move ahead."
Tuesday, July 27, 2010
Monday, July 26, 2010
Sunday, July 25, 2010
Asians topped the chart of tourists visitng Nepal at 56 per cent, the annual report of the government said adding that "Out of the total tourists arrivals during the calendar year 2008, eight per cent were from North America, 1.3 per cent from Central and South America, 27.7 per cent from Western Europe, 2.5 per cent from Eastern Europe, 0.2 per cent from Africa and 18.4 per cent from India, 3.5 per cent from Australia and Pacific Region, and 37.6 per cent from other countries."
The number of tourists visiting from the Central and South America, Eastern Europe and Africa has decreased while their number has increased from other parts of the world.
Similarly, the number of hotels and hotel beds in 2008 shows that the number of star-hotels reached to 97, while the number of non-star hotels has been 647 with the addition of 74 non-star hotels. "The number of hotel beds in hotels other than star-hotels increased by 2,381 reaching to 19,124 while beds in the star-hotel have reached 9,369 with additional 49 beds compared to a year ago.
The data reveals that the number of mountaineering teams has also increased by 73 to 235 by mid-March 2009. The number of mountaineers has reached to 1,519 with 510 more climbers. "The government collected a royalty of Rs 252.5 million, that was Rs 35.426 million a fiscal year ago," the report added.
Saturday, July 24, 2010
Asian Development Bank (ADB) President Haruhiko Kuroda is to visit Nepal from 26th to 29th July 2010, with the trip coinciding with the 20th anniversary of the establishment of ADB's resident mission in the country.
During the visit―which will be his first to Nepal as ADB President―Mr. Kuroda is scheduled to meet senior government officials to discuss ADB's ongoing assistance, and to reaffirm continued support for the country’s development objectives. He will also make field trips to ADB-assisted projects and meet with the projects’ beneficiaries.
Following the establishment of the Nepal Resident Mission, ADB has significantly increased its assistance to Nepal, with the amount set to double in 2009-2010 to $559 million, from $258 million in 2007-2008.Since ADB first began extending assistance to Nepal in 1969 it has provided nearly $3 billion in concessional loans and grants for investment projects, and about $138 million in technical assistance grants. The major sectors that receive support include agriculture and natural resources, education, finance, governance, water supply, sanitation and urban development, transport and communications.
Friday, July 23, 2010
The(ADB) will provide a maximum of $20 million to help improve the urban transport system and help reduce congestion and pollution in the capital.
The ADB board of directors has approved a $10 million loan and a grant of up to $10 million, both from ADB’s Special Funds resources, for the Kathmandu Sustainable Urban Transport Project, said the Manila-based bank.
Among the key improvements envisaged under the project are the reorganisation plan of the public transport network system in Kathmandu and the introduction of two pilot bus routes financed through the government-managed Town Development Fund. The fund will also promote the usage of electric or low-emission vehicles and help reduce pollution on the roads of Kathmandu.
Making heritage routes pedestrian-only and improvement of facilities, especially sidewalks, is another important component of the project and will make Kathmandu city-center more pedestrian-friendly. Traffic management works and measures, such as junctions’ improvement and monitoring, will help solve congestion on a short term.
"Any effort to improve the urban transport system in Kathmandu must be led by the public sector, and in the case of public transport the Department of Transport Management(DoTM)," the multilateral donor said.
"ADB is pleased to work closely with DoTM on this project, which will also include support to DoTM to build up knowledge and skills in urban transport management and strengthen s South Asia Department.,” said David Margonsztern, Urban Development Specialist in ADB’
As Nepal moves into a new phase of reconciliation and rebuilding following a decade-long conflict, one challenge it needs to address is constraints in the urban transport system in Kathmandu.
Population growth, rapid urbanisation, and the increasing number of vehicles have led to , road accidents, , and poor public transport operation and services.
"Through this project, we hope to provide the city with a more efficient and sustainable urban transport system that will support economic expansion, help address climate change, and mitigate air pollution,” added Sultan H Rahman, director general of ADB’s South Asia Department.
The ADB loan will have a 32-year term, including a grace period of eight years, an annual interest charge of one per cent during the grace period and 1.5 per cent thereafter. The government will contribute $7.90 million to complete project funding.
Thursday, July 22, 2010
Wednesday, July 21, 2010
Tuesday, July 20, 2010
"However, revenue collection could cross Rs 180 billion as we still have to receive the revenue data from one branch of Rastriya Banijya Bank (RBB) and four branches of Nepal Bank Ltd (NBL)," said revenue secretary Krishnahari Baskota.
"The collection is 25.5 per cent higher than in 2008-09," he said adding that the collection is record in itself. The revenue collection in the fiscal year 2008-09 stood at Rs 143.47 billion.
Encouraged by the robust growth in the first quarter of the fiscal year, the government has -- in its mid-term budgetary evaluation -- revised the revenue collection target upwards to Rs 190 billion. But in the later months, the growth rate of revenue collection has not seen consistence increase making the revised target impossible.
Baskota accepted that the revised target could not be met due to various reasons. "However, the collection is encouraging," he added.
The Value Added Tax (VAT) has contributed the highest in the total collection. "VAT contributes 32 per cent at Rs 56.75 billion in the total collection," he said adding that the second largest contributor is customs as it contributed 19 per cent at Rs 35 billion.
The income tax comes as the third largest contributor as it contributes Rs 33.75 billion, followed by excise duty that contributes Rs 24.25 billion to the national coffer.
Despite successful revenue mobilisation, entrepreneurs blame the government for being revenue-centric. "The import-based revenue has taken a toll on our export competitiveness," the entrepreneurs said adding that the whopping trade imbalance has not only pulled the Balance of Payment (BoP) to deficit, but also hurt the domestic industries. "In last 25 years, the country has never seen BoP deficit," said economist Dr Chiranjivi Nepal. "But this time, the country has seen a whopping BoP deficit of around Rs 18 billion," he said adding that the government has concentrated on revenue mobilisation instead of strengthening the export competitiveness of the local industries. "In the long-run, the domestic industries will be closed and the country will be dependent on imports," Dr Nepal added.
Though Baskota hailed the efforts of the customs officials and various policies -- like plugging the leakages -- the finance ministry has adopted to increase revenue, he also accepted that the revenue is import-based.
Since past a few years, the revenue collection has seen a consistent growth due to an increasing consumption of consumer goods.
Target vrs Collection
2006-07 -- Rs 85.37 billion -- Rs 87.71 billion
2007-08 -- Rs 103.66 billion -- Rs 107.62 billion
2008-09 -- Rs 141.72 billion -- Rs 143.47 billion
2009-10 -- Rs 176.50 billion -- Rs 179.90 billion
Monday, July 19, 2010
Sunday, July 18, 2010
Saturday, July 17, 2010
Monday, July 12, 2010
"Due to the present political deadlock, the caretaker government could not present the regular budget for the fiscal year 2010-11," he said adding that "due to the emergence of special situation, the Special Budget Bill -- that empowers government to withdraw money from to carry out regular services and activities in the coming fiscal year under the Article 96 (a) of the Interim Constitution -- has been presented.
According to him, the revised total expenditure of this fiscal year 2009-10 is estimated to remainat Rs 265.63 billion -- 20.93 per cent higher compared with a fiscal year ago. The 'special budget' will help the government to spend 'not exceeding one-third of the last year's budget'. "The government is forced to bring the 'special budget' as a temporary arrangement to allow itself to carry on with routine expenses and revenue collections in the new financial year, starting from July 17," he said.
Economic policies of the last budget gets continuity until a full-fledged budget is brought by the new government.
It is the second time after the Constituent Assembly (CA) election that the government has failed to present a full-fledged budget on time and made temporary arrangements. Under the Interim Constitution, Pandey has not announced any new tax policies as a caretaker government cannot bring changes to the present tax structure or introduce new taxes. Earlier, former finance minister Dr Mahat had brought such 'special budget' in July 2008. But the entrepreneurs think that such 'temporary arrangements' will hurt the development activities and investors' sentiments. "We are on 'wait and watch' mood," said president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Kush Kumar Joshi. "There will be no new investment as the investors will wait for the new government's programme and policy," he said adding that such arrangements will also not address the business fraternities' problems. Binod Chaudhary, CA member and the president of of Nepalese Industries (CNI) agreed, "Once again the political agenda has pushed the economic agenda to the back burner." "At a time when all the economic indicators are nosediving, expenditures are going up in an uncontrolled manner hurting the economy," he said adding that many Acts that could boost the investors' confidence are gathering dust in the . Another CA member and industrialist Rajendra Khetan thinks that neither had the full-fledged budget nor this arrangement could propel development activities. "However, had the budget come on time, it could have addressed rising and negative Balance of Payment (BoP) position," he said adding that the arrangement is only for the government expenses. Instead of outlining new development programmes and plans, the 'advance budget' aims to enable the government function till the full-fledged budget is brought by the new government to be formed.
Sunday, July 11, 2010
"Similarly, the gross domestic product (GDP) growth has been revised to 3.5 per cent from an estimated 5.5 per cent due to low agriculture yield that was at four per cent in 2008-09," said the survey that has estimated the agriculture sector's growth to remain at 1.2 per cent. The agriculture sector contributes 33.03 per cent to the GDP, according to the pre-budget economic survey.
The survey said construction, commercial services like real estate, leasing and other services, manufacturing, and hotels and restaurants sectors could grow at higher pace than in the last financial year.
The survey has accepted government intervention as the key to address obstacles in accelerating economic growth.
"Government finance situation is satisfactory," said the survey that has estimated revenue mobilisation to grow by 24.6 per cent. Encouraged by the revenue mobilisation, the government has also revised the revenue target upwards to Rs 190 billion from the budgetary estimate of Rs 176.73 billion.
Pandey had presented an accommodative budget of Rs 285.93 billion for 2009-10, with Rs 46.34 billion deficit.
Normally, the Economic Survey is tabled in Parliament a day before the General Budget but due to political deadlock, the Finance Minister will present a Special Budget tomorrow.
He will present an estimation of expenditures and revenue projections, with no changes in tax rates or new policy measures for four months.
The Special Budget will help the government to spend 'not exceeding one-third of the last year's budget'. The government is forced to bring the Special Budget as a temporary arrangement to allow itself to carry on with routine expenses and revenue collections in the new financial year, starting from July 17. Economic policies of the last budget gets continuity until a full-fledged budget is brought by the new government.
It will be the second time after the Constituent Assembly (CA) election that the government has failed to present a full-fledged budget.
Earlier, former finance minister Dr Ram Sharan Mahat had brought such Special Budget in July 2008.
The next finance minister will have a daunting task to tame inflation; check intimidation and threat against business community, create investor-friendly environment, provide security for the investment, and push the plummeting exports up to bridge the widening trade gap.
Sector wise contribution to GDP (2009-10)
Agriculture and Forestry – 33.03 per cent
Wholesale and Retail Trade – 13.97 per cent
Transport, Storage and Communication – 9.76 per cent
Real Estate, renting and business activities -- 8.26 per cent
Education – 6.67 per cent
Construction – 6.64 per cent
Manufacturing – 6.25 per cent
Financial Intermediaries – 4.07 per cent
Hotels and Restaurants – 1.67 per cent
Public Administration and Defence – 1.99 per cent
Electricity, Gas and Water – 1.49 per cent
Health and Social Work – 1.46 per cent
"The average expenditure per employee per month has increased to Rs 27,110 compared with Rs 21,672 a fiscal year ago," said the annual performance review of the PEs published by the Finance Ministry today.
Among the 36 PEs half of the PEs reported profit and the remaining half were in loss in the fiscal year 2008-09, whereas 17 were in profit and 19 in loss during the fiscal year 2007-08, said it.
"PEs under industrial sectors, service sector and social sector are in loss whereas the PEs under the trading sector, public utility sector and financial sector are in profit," according to the performance appraisal.
According to the Financial Comptroller General Office, the government has invested Rs 86.13 billion in these 36 PEs and has received Rs 3.47 billion in dividends in 2008-09. However, the return stands at only 4.03 per cent in comparison to the total government's share investment.
The government has received Rs 3.47 billion in dividends from Nepal Industrial District Management, Nepal Telecom, Nepal Stock Exchange and Rastriya Beema .
The review reveals that overall net profit of the PEs has also more than doubled to Rs 10.55 billion in the fiscal year 2008-09 from Rs 4.94 billion in the fiscal year 2007-08.
The performance appraisal gives a gloomy picture of the auditing of the PEs. "Out of 36 PEs, only 14 have completed audit up to fiscal year 2007-08, 15 PEs have completed audit upto 2006-07, two PEs have completed up to fiscal year 2004-05," according to it.
The government accepts that the task of limiting of number of Board of Directors to five could not be complied because of lack of Act and Regulations as some of the PEs that have specified the number of Board of Directors fixed above five that remained to be amended. Similarly, the government has also failed to hire professional management team to run the PEs.
The unfunded liability has increased by a whopping 92.59 per cent to Rs 9.54 billion in the fiscal year 2008-09, whereas contingent liability has touched Rs 17.10 billion. Similarly, the outstanding balance of the PEs remained Rs 74.6 billion at the end of the fiscal year 2008-09.
The annual performance review of the PEs incorporated per formance of 74 entreprises comprising 36 PEs with full government holding, 26 witgh minority share, 11 development committees involved in commercial activities and Employees Provident Fund that is incorporated under special Act.
Friday, July 9, 2010
Though, the tradition has it that the Monetary Policy is brought to support the government's policy document that is budget.
Tuesday, July 6, 2010
The NOC has revised the prices of petroleum products upwards after it received the new price list from IOC on July 1. "Had the NOC not increased the price, it could have been incurring a loss of Rs 100 million per month, according to the new list," he added.
"With the price hike, price of petrol will be Rs 85 per litre and kerosene and diesel will cost Rs 65.50 per litre each," said Mukunda Dhungel, NOC spokesperson. "After the price hike, NOC will earn Rs 73.9 million in profit."
"The corporation was incurring a loss of Rs 1.16 billion in the current financial year," Dhungel said.
Earlier, the corporation had hiked petrol price to Rs 82 per litre and diesel — the poor man's fuel — and kerosene prices were hiked to Rs 62.50 per litre each. Then also, it had not changed the price of cooking gas. LPG costs Rs 1,250 per cylinder.
On every 1st and 15th of the English calendar month, NOC receives the new rate of diesel, kerosene and petrol from its supplier IOC. The rate of cooking gas is revised on the first of every English month according to the international market price.
According to the increased price in India since June 25, petrol and diesel were cheaper in Nepal by Rs 4.83 and Rs 2.10 per litre. "We had no option to hike to stop the back flow of the petroleum products due to open borders," Dhungel said.
For last one week, there has been a short supply of petroleum products. Though, Dhungel claims that the supply has been normalised, the supply crunch has still been experienced by the people. However, Consumer groups claim that the shortage has been created by NOC to raise the prices of petroleum products after the government turned down its loan request for Rs 1 billion.
But in the last cabinet meeting of the Madhav Kumar Nepal government, it was decided to give Rs 800 million to NOC so that it can pay its dues and supplies in the country could again become normal.
"The deep-rooted corruption in NOC created an artificial scarcity of petroleum products," said Jyoti Baniya, general secretary of the Consumers Rights Protection Forum(CRPF).
"The monopoly of NOC in petroleum products supply is repeatedly making the consumers suffer," a petroleum dealer said adding that the private sector should also be allowed to import petroleum products to create a fair market environment.