Economists suspect foul play as trade credit, miscellaneous accounts surge
The overall Balance of Payment (BoP) recorded a whopping surplus of Rs 33.89 billion in the three months of fiscal year 2011-12, compared to a deficit of Rs 6.88 billion in the same period last year, according to the central bank.
The central bank contributed surplus current account and bulging service account for the BoP surplus, whereas the economists contributed the whopping BoP surplus to 'the unusual' trade credit and miscellaneous accounts.
"The whopping BoP surplus could mean either there is significant foreign investment within the country or huge export surge, which the central data defied," they said, adding that the foreign investment posted 2.20 billion compared to Rs 0.18 billion in the same period a year before.
Similarly, total trade deficit during the three months went up by eight per cent to Rs 82.23 billion. "The merchandise exports increased by 6.9 per cent to Rs 18.04 billion, whereas merchandise imports increased by 7.8 per cent to Rs 100.26 billion in the first three months," according to the central bank data.
"The BoP is not realistically calculated," economists said, adding that the tradition has it that the central bank has enough room to play. "The miscellaneous account and trade credit account recorded Rs 10.95 billion and Rs 10.08 billion respectively, making the BoP surplus data suspicious."
In the same period last fiscal year, the miscellaneous account was negative.
According to the central bank, the current account, however, has recorded Rs 13.82 billion surplus against Rs 2.17 billion deficit in the same period last fiscal year. "The acceleration in the growth of remittance along with improvement in the service account was attributed to the surplus in the current account," the central bank said, "After experiencing deficit for a long time, the service account has also turned into surplus mainly due to a significant rise in tourism income."
Tourism income also rose by 29.8 per cent in the first three months of 2011-12 in contrast to a decline by 20.9 per cent in the same period last year. The net transfer account registered a growth of 19 per cent to Rs 87.95 billion compared to that of a year ago.
Under transfers, pension receipts, however, declined by 22.9 per cent to Rs 6.66 billion.
But the depreciation of Nepali rupee vis-à-vis the US dollar benefitted the country as the third month of the current fiscal year witnessed an inflow of Rs 75.88 billion in remittance.
"Workers' remittances increased by 28.3 per cent to Rs 75.88 billion in the compared to its growth of 14.2 per cent in the same period last year," according to the central bank.
Nepali currency vis-à-vis the US dollar depreciated by 9.15 per cent in
mid-October 2011 from the level of mid-July 2011, it said, adding that it had appreciated by 5.25 per cent in the same period of a fiscal year ago. "The exchange rate of one US dollar stood at Rs 78.10 in mid- October compared to Rs 70.95 in mid-July."
Last fiscal year, the country had received Rs 253.55 billion remittances — an increment by 9.4 per cent billion compared to its growth of 10.5 per cent a previous fiscal year.
On a monthly basis, the remittance inflows increased by 12.2 per cent in September-October compared to the value of the previous month.
The remittance inflow
Shrawan — Rs 17.7 billion
Bhadra — Rs 47.33 billion
Ashwin — Rs 75.88 billion
(Source: Nepal Rastra Bank)
Wednesday, November 30, 2011
Mobile phone users growing by 10 people everyday
Almost 10 people are getting the mobile phone facility in a day, according to Nepal Telecommunications Authority (NTA) report.
The number of mobile phone users increased by 1.5 million — an increment of 13 per cent — in last six months, the latest Management Information System (MIS) report of the Authority stated, adding that the number of mobile phone users stood at 12.5 million by mid-October while by mid-May 11 million individuals had subscribed for mobile phones.
Along with increased number of mobile users, the overall telephony penetration rate has also increased by over 10 percentage points to 53.50 per cent from six months ago's 43.65 per cent. The telephony rate included all three kinds of available telephone service; fixed, mobile, limited mobility services.
Though, the mobile users have continually grown lately the number of landline users have contracted by 1.24 per cent in recent six months. At present there are about 843,847 fixed landline users while six months ago there were 845,657 fixed landlines.
Telephony penetration rate refers to percentage of active phone numbers within the specific population. However, within the growing number of people with two-three SIM cards of different carriers the right assessment of telephony penetration rate has become difficult to assess entirely based on active number of SIMs.
The regulator's report also revealed that Nepal Telecom (NT) is losing its market share to its prime competition Ncell. Nepal Telecom covered 52 per cent of the market by mid-May, which has come down to 49 per cent as Ncell's market share has crept up as Nepal Telecom's market share waned.
Ncell gained 45 per cent market shares by mid-October which stood at 42 per cent six months ago. UTL and other telecommunication service provider's market scenario did not change during the period.
Similarly, the consumers of data and internet services have crossed 3.6 million, according to the report. "The users of data and internet services were 3.2 million until previous month."
The internet users via GPRS available in the mobile phones dominated the internet usage as 91 per cent of total internet penetration can be accounted for GPRS. Likewise, among the internet users, Ncell tops the list of internet service providers with 59 per cent of domination in the market followed by Nepal Telecom with 38 per cent market share in internet subscription with its GPRS, ADSL, Dial-Up and CDMA services.
The Telephony Penetration Rate
Mobile: 47.38
Fixed:3.16 Others:2.9
The number of mobile phone users increased by 1.5 million — an increment of 13 per cent — in last six months, the latest Management Information System (MIS) report of the Authority stated, adding that the number of mobile phone users stood at 12.5 million by mid-October while by mid-May 11 million individuals had subscribed for mobile phones.
Along with increased number of mobile users, the overall telephony penetration rate has also increased by over 10 percentage points to 53.50 per cent from six months ago's 43.65 per cent. The telephony rate included all three kinds of available telephone service; fixed, mobile, limited mobility services.
Though, the mobile users have continually grown lately the number of landline users have contracted by 1.24 per cent in recent six months. At present there are about 843,847 fixed landline users while six months ago there were 845,657 fixed landlines.
Telephony penetration rate refers to percentage of active phone numbers within the specific population. However, within the growing number of people with two-three SIM cards of different carriers the right assessment of telephony penetration rate has become difficult to assess entirely based on active number of SIMs.
The regulator's report also revealed that Nepal Telecom (NT) is losing its market share to its prime competition Ncell. Nepal Telecom covered 52 per cent of the market by mid-May, which has come down to 49 per cent as Ncell's market share has crept up as Nepal Telecom's market share waned.
Ncell gained 45 per cent market shares by mid-October which stood at 42 per cent six months ago. UTL and other telecommunication service provider's market scenario did not change during the period.
Similarly, the consumers of data and internet services have crossed 3.6 million, according to the report. "The users of data and internet services were 3.2 million until previous month."
The internet users via GPRS available in the mobile phones dominated the internet usage as 91 per cent of total internet penetration can be accounted for GPRS. Likewise, among the internet users, Ncell tops the list of internet service providers with 59 per cent of domination in the market followed by Nepal Telecom with 38 per cent market share in internet subscription with its GPRS, ADSL, Dial-Up and CDMA services.
The Telephony Penetration Rate
Mobile: 47.38
Fixed:3.16 Others:2.9
Bankers ask NRB to lower deposit insurance premium
Central bank has directed the commercial banks to get their small deposits insured as soon as possible but Nepal Bankers Association (NBA) is lobbying to get deposit insurance premium lowered.
The banks have difficulty in paying the deposit insurance premium, said NBA's president Ashoke Rana in an official meeting with the governor Dr Yubaraj Khatiwada at the central bank today.
The Nepal Rastra Bank (NRB) needs to consider revising the premium, he requested, urging to separate premium on the basis of class of financial institutions.
The Class A- commercial banks, Class B-development banks, Class C-finance companies and Class D-microcredit institutions should have different premium rates, according to the association.
But Khatiwada pointed out that the insurance premium depends on the business size and risks on which regulator cannot interfere. "The central bank can do nothing in premium as it comes under the Deposit and Credit Guarantee Corporation that is a government entity," he said.
The deposit insurance is a safety mechanism that will cushion the fall of any banks and financial insititutions incase it goes into liquidation, so the banks need to get their deposits insured soon, Khatiwada said, adding that the central bank is open to more dialogues.
The governor also asked the banks to publish stress related indicators in their monthly balance sheet that they publish every month.
Both the fiscal and monetary policy of the current fiscal year had directed the commercial banks to get their small deposits up to Rs 200,000 insured by the deposit insurer Deposit and Credit Guarantee Corporation (DCGC) by the end of current fiscal year. The central bank is also planning to fine the banks and financial institutions that doesnot follow the financial and monetary policy.
The DCGC charges Rs 0.2 as guarantee fee for every Rs 100 worth of eligible deposits held at the financial institutions annually that is required to pay on half yearly basis.
Deputy governor Maha Prasad Adhikari replying the bankers queries on how the premium is managed, on the occasion, informed that the DCGC is investing premium on the government securities. Among 31 commercial banks, only four — Mega Bank, Citizens Bank International, Machchhapuchhre Bank and Civil Bank — have got their deposits insured by DCGC till date.
The banks have difficulty in paying the deposit insurance premium, said NBA's president Ashoke Rana in an official meeting with the governor Dr Yubaraj Khatiwada at the central bank today.
The Nepal Rastra Bank (NRB) needs to consider revising the premium, he requested, urging to separate premium on the basis of class of financial institutions.
The Class A- commercial banks, Class B-development banks, Class C-finance companies and Class D-microcredit institutions should have different premium rates, according to the association.
But Khatiwada pointed out that the insurance premium depends on the business size and risks on which regulator cannot interfere. "The central bank can do nothing in premium as it comes under the Deposit and Credit Guarantee Corporation that is a government entity," he said.
The deposit insurance is a safety mechanism that will cushion the fall of any banks and financial insititutions incase it goes into liquidation, so the banks need to get their deposits insured soon, Khatiwada said, adding that the central bank is open to more dialogues.
The governor also asked the banks to publish stress related indicators in their monthly balance sheet that they publish every month.
Both the fiscal and monetary policy of the current fiscal year had directed the commercial banks to get their small deposits up to Rs 200,000 insured by the deposit insurer Deposit and Credit Guarantee Corporation (DCGC) by the end of current fiscal year. The central bank is also planning to fine the banks and financial institutions that doesnot follow the financial and monetary policy.
The DCGC charges Rs 0.2 as guarantee fee for every Rs 100 worth of eligible deposits held at the financial institutions annually that is required to pay on half yearly basis.
Deputy governor Maha Prasad Adhikari replying the bankers queries on how the premium is managed, on the occasion, informed that the DCGC is investing premium on the government securities. Among 31 commercial banks, only four — Mega Bank, Citizens Bank International, Machchhapuchhre Bank and Civil Bank — have got their deposits insured by DCGC till date.
Gold touches new high of Rs 55,500 per tola
The gold price has reached yet another high of Rs 55, 497 for a tola (11.664 grams) at domestic market with the strengthening US dollars against Nepali currency.
"International gold price have also gone up by $17 per ounce from yesterday to $1,723 per ounce today pushing the domestic price up," informed president of Nepal Gold and Silver Dealers Association (Negosida) Tej Ratna Shakya.
The dollar exchange rate have also gone up by Rs 0.30 from yesterday further pressuring the price in the domestic market to increase, he added.
The uncertainty regarding the Euro's future as Eurozone is going through the worst debt troubles is also pushing the investors seek safety of gold investment. Moreover, as Euro is becoming weaker dollar has started to get strong further devaluing Indian Currency against which Nepali currency is pegged. The yellow metal was at its highest on November 9 when a tola touched Rs 55,200. However, the silver price stood at Rs 1,074 for a tola today.
"International gold price have also gone up by $17 per ounce from yesterday to $1,723 per ounce today pushing the domestic price up," informed president of Nepal Gold and Silver Dealers Association (Negosida) Tej Ratna Shakya.
The dollar exchange rate have also gone up by Rs 0.30 from yesterday further pressuring the price in the domestic market to increase, he added.
The uncertainty regarding the Euro's future as Eurozone is going through the worst debt troubles is also pushing the investors seek safety of gold investment. Moreover, as Euro is becoming weaker dollar has started to get strong further devaluing Indian Currency against which Nepali currency is pegged. The yellow metal was at its highest on November 9 when a tola touched Rs 55,200. However, the silver price stood at Rs 1,074 for a tola today.
Tuesday, November 29, 2011
Nepal to stress on budgetary support in Aid Effectiveness conference
Nepal is asking the donors to believe in government as it has increased its accountability and transparency in expenditure.
"We will request the donors to channelise their aid through government budget," said finance secretary Krishnahari Baskota before flying to Busan, South Korea to take part in the Fourth High Level Forum on Aid Effectiveness that started today.
"The government has increased its accountability and transparency in expenditure," he said, adding that the donors, who seek accountability of their aid, can now believe on the government machinery.
Nepal has also upgraded its budget format according to the International Monetary Fund (IMF) standard to make the donors more comfortable and increase country ownership of the aid instead of off the budgetary aid, the finance secretary, who is taking part in the evaluation meeting — of earlier commitments and implementation of 2005 Paris Declaration — with finance minister Barsha Man Pun, added. "The people of the donor countries have right to know that their tax has been used effectively."
Meanwhile, the key actors meeting in Busan today, the first day of the Fourth High Level Forum on Aid Effectiveness, laid emphasis on inclusive ownership, mutual accountability and the platform of the groundbreaking Paris Declaration.
Speakers representing donor and recipient governments and civil society experts stressed the importance of going beyond technical targets to meet challenges in achieving inclusive indicators that are commonly based on concrete figures in poverty reduction.
Developing mechanisms to create diverse stakeholders, including citizen participation in decision-making and implementation of balanced partnerships to achieve transparency and poverty reduction have been defined as some of the landmarks of ownership and accountability.
The concepts are aimed at encouraging domestic accountability that will foster development efficiency through the participation of grassroots-level citizens. The test in Busan is to implement political commitments to strengthen the process and move away from shaping aid narrowly through donor disbursements.
Still, surveys post-Paris indicate that more than 60 per cent of donor and developing countries have not met their targets apart from mutual accountability that remains a sticking point for donor countries.
The donors also pointed to pressure from tax payers in their countries who expect concrete improvement in poverty eradication in shorter spaces of time.
Experts also pointed to the need to move ahead in achieving effectiveness in Busan to combat widening development issues – the emergence of new aid players against a backdrop of global disillusionment with the results of trillions of dollars already spent in overseas development.
Counter methods included the urgent need to monitor and disseminate success stories of mutual accountability like gaining the trust of grassroots communities that often feel ignored in the aid debate.
Some 2,000 delegates will, until December 1, review progress in improving the effectiveness of aid, before making commitments towards a new development paradigm.
Nepal to seek loan
KATHMANDU: Nepal will also seek loan from ExIm Bank of South Korea during the meeting at Busan, according to finance secretary Krishnahari Baskota. "The government will also ask the South Korean government to increase number of Nepali employees under Employment Permit System (EPS) and strengthen relationships between Financial Information Units of both the countries to fight against the flow of dirty money," he added.
"We will request the donors to channelise their aid through government budget," said finance secretary Krishnahari Baskota before flying to Busan, South Korea to take part in the Fourth High Level Forum on Aid Effectiveness that started today.
"The government has increased its accountability and transparency in expenditure," he said, adding that the donors, who seek accountability of their aid, can now believe on the government machinery.
Nepal has also upgraded its budget format according to the International Monetary Fund (IMF) standard to make the donors more comfortable and increase country ownership of the aid instead of off the budgetary aid, the finance secretary, who is taking part in the evaluation meeting — of earlier commitments and implementation of 2005 Paris Declaration — with finance minister Barsha Man Pun, added. "The people of the donor countries have right to know that their tax has been used effectively."
Meanwhile, the key actors meeting in Busan today, the first day of the Fourth High Level Forum on Aid Effectiveness, laid emphasis on inclusive ownership, mutual accountability and the platform of the groundbreaking Paris Declaration.
Speakers representing donor and recipient governments and civil society experts stressed the importance of going beyond technical targets to meet challenges in achieving inclusive indicators that are commonly based on concrete figures in poverty reduction.
Developing mechanisms to create diverse stakeholders, including citizen participation in decision-making and implementation of balanced partnerships to achieve transparency and poverty reduction have been defined as some of the landmarks of ownership and accountability.
The concepts are aimed at encouraging domestic accountability that will foster development efficiency through the participation of grassroots-level citizens. The test in Busan is to implement political commitments to strengthen the process and move away from shaping aid narrowly through donor disbursements.
Still, surveys post-Paris indicate that more than 60 per cent of donor and developing countries have not met their targets apart from mutual accountability that remains a sticking point for donor countries.
The donors also pointed to pressure from tax payers in their countries who expect concrete improvement in poverty eradication in shorter spaces of time.
Experts also pointed to the need to move ahead in achieving effectiveness in Busan to combat widening development issues – the emergence of new aid players against a backdrop of global disillusionment with the results of trillions of dollars already spent in overseas development.
Counter methods included the urgent need to monitor and disseminate success stories of mutual accountability like gaining the trust of grassroots communities that often feel ignored in the aid debate.
Some 2,000 delegates will, until December 1, review progress in improving the effectiveness of aid, before making commitments towards a new development paradigm.
Nepal to seek loan
KATHMANDU: Nepal will also seek loan from ExIm Bank of South Korea during the meeting at Busan, according to finance secretary Krishnahari Baskota. "The government will also ask the South Korean government to increase number of Nepali employees under Employment Permit System (EPS) and strengthen relationships between Financial Information Units of both the countries to fight against the flow of dirty money," he added.
RBB gets new board, NBL to get soon
Rastriya Banijya Bank (RBB) has got a new board under the leadership of Narhari Dhakal.
The new board — appointed by the current government led by Prime Minister Dr Baburam Bhattarai — took the oath of secrecy of the office amid a ceremony today.The wholly state-owned bank has been a centre for appointment for the cadres of successive governments.
Chairman of the board Dhakal is a development economist, who has more than 25 year long experience in working in financial sector restructuring and establishment across many Asian countries, according to the Rastriya Banijya Bank that has been on search of chief executive since its last chief executive Janardan Acharya's term expired.
Though the government started the process of new chief executive appointment, the anti-graft body has stopped the process after an unsatisfied candidate complained.The other members of the RBB board appointed today include Shanta Raj Subedi, Bishnu Das Dangol, Bal Chandra Shrestha and Pitri Bhakta Pokharel.Similarly, another partly government-owned Nepal Bank Ltd is also gearing up for the change in the board due to the pressure from the government-affiliated union in the bank.
At present, NBL's board is headed by Keshav Khadka with Pramod Raj Sharma, Ramesh Prasad Upadhayay and Surendra Mani Tripathi — who were appointed by the former government of CPN-UML, but with the change in the guard of government, the UCPN-Maoist affiliated union in the oldest bank of the country has forwarded the name of Dr Bharat Shrestha to head the board with Kamala Hyachuri, Dinanath Pathak, Bhawanath Upadhayay.
The new board — appointed by the current government led by Prime Minister Dr Baburam Bhattarai — took the oath of secrecy of the office amid a ceremony today.The wholly state-owned bank has been a centre for appointment for the cadres of successive governments.
Chairman of the board Dhakal is a development economist, who has more than 25 year long experience in working in financial sector restructuring and establishment across many Asian countries, according to the Rastriya Banijya Bank that has been on search of chief executive since its last chief executive Janardan Acharya's term expired.
Though the government started the process of new chief executive appointment, the anti-graft body has stopped the process after an unsatisfied candidate complained.The other members of the RBB board appointed today include Shanta Raj Subedi, Bishnu Das Dangol, Bal Chandra Shrestha and Pitri Bhakta Pokharel.Similarly, another partly government-owned Nepal Bank Ltd is also gearing up for the change in the board due to the pressure from the government-affiliated union in the bank.
At present, NBL's board is headed by Keshav Khadka with Pramod Raj Sharma, Ramesh Prasad Upadhayay and Surendra Mani Tripathi — who were appointed by the former government of CPN-UML, but with the change in the guard of government, the UCPN-Maoist affiliated union in the oldest bank of the country has forwarded the name of Dr Bharat Shrestha to head the board with Kamala Hyachuri, Dinanath Pathak, Bhawanath Upadhayay.
Monday, November 28, 2011
Government appoints Pant as Investment Board chief executive
The Cabinet today appointed Radhesh Pant as chief executive of Investment Board.Pant, currently chief executive officer of Kumari Bank, has a long professional and impressive background.
Earlier, he was the managing director of Bank of Kathmandu that he turned into a robust financial institution after his appointment. Educated in the US, Pant was also the president of Nepal Bankers Association (NBA).
He is B Tech From Indian Institute of Technology Bombay and an MBA from University of California, Los Angeles.He has also worked as Strategic Consultant for Kathmandu University Medical College and spent a stint with Necon Air as the advisor to the chairman for more than two years in 1999-2002.
He worked for almost 10 years in the US before coming back to Nepal in 1999. From 1989 - 1992, Pant worked as a financial analyst at Prime, a division of Kangyo Kakumaru Research, Japanese Investment bank, in California.
From 1992-1999, he held various positions at Amgen Inc, the largest biotechnology company in the world. At Amgen, he started off as a senior financial analyst and rose up to the position of Manager Treasury.
The Investment Board that has Prime Minister Dr Baburam Bhattarai as chiarman and Finance Minister Barsha Man Pun as its vice-chairman will start its operations after Pant's appointment of chief executive.
The selection committee has yesterday recommended three names including Radhesh Pant to the Investment Board.
Some eight candidates have applied for the post of chief executive of the Board that is envisioned to give a one-window solution to potential investors in big projects over Rs 25 billion.The Parliament had approved the Investment Board Act on August 15, after two years of pending, whereas the idea was floated some 14 years ago by bi-national chambers.
The board that will have a secretariat will work as a one-window system to address investors' concerns will be directly under the Prime Minister’s Office.
Pant's appointment as the chief executive is expected to smoothen inflow of foreign direct investment (FDI) by creating investment friendly environment by facilitating investment in infrastructure projects and projects with large capital base.
Urge for national innovation policy frameworks to develop renewal energy
It is often said that technologies for the renewable energy sector are off-patent and available, but making use of these is not an easy task.
Developing countries need greater know-how and absorptive capacity to make use of such technologies, according to UNCTAD's Technology and Innovation Report 2011.
It called for coordinated policy support at the national, regional and international levels. Technological absorptive capacity is also important to facilitate the private sector's greater involvement in the development of renewable energy technologies (RETs). "It could ensure the future deployment and scale-up of locally manufactured technologies in all developing countries and least developed countries (LDCs), as is currently being witnessed in countries such as Brazil, China and India, said the Report that proposed an integrated innovation policy framework for RET use, adaptation, innovation and production in developing countries and LDCs.
"Such a framework requires close coordination between the national innovation systems that provide the necessary conditions for the development of RETs, and the energy policies that promote the gradual integration of RETs into industrial development strategies," it said, adding that such a framework is essential for creating a virtuous cycle of interaction between economic development, RETs, and science, technology and innovation.
Policy frameworks are being put in place across countries in one form or another. A review of policy trends shows a steady increase in policy activity in this regard: by 2010, more than 100 countries had introduced either a target or a policy mechanism for promoting renewable energy technologies. The number of developing countries that are beginning to implement policies on renewable energy technologies is increasing too; these countries now represent more than half of all the countries that have such a policy framework in place.However, such policies, the report suggested, should be well coordinated with the energy regimes and with an innovation systems framework for best results.
UNCTAD's Technology and Innovation Report 2011 argued that national governments in developing countries have a pivotal role to play in combining conventional sources of energy with renewable energy technologies.
As the report showed, expanding the use of renewable energy technologies is critical to fostering technological improvements that will bring down their usage costs. Government agencies and the policy framework can play a decisive role by promoting the general innovation environment for the development of science, technology and innovation; making renewable energy technologies viable; and enabling enterprise development in and through renewable energy technologies.
It showed that developing countries may face a variety of constraints in each of these areas, but there are also several opportunities. In the developing-country context, a few well-coordinated incentives can go a long way towards achieving significant results, and these can serve as the building blocks for an integrated framework in the years to come. Such proactive government interventions will need the support of the international community to benefit from the full potential that renewable energy technologies offer for alleviating (and eventually eliminating) energy poverty and simultaneously promoting climate-friendly solutions on a global scale.
Forging strong partnerships with the international community could also lead to the widespread dissemination of environmentally sustainable technologies worldwide, resulting in enhanced economic development and greater opportunities for large segments of populations that have been left behind in the process of globalisation.
Developing countries need greater know-how and absorptive capacity to make use of such technologies, according to UNCTAD's Technology and Innovation Report 2011.
It called for coordinated policy support at the national, regional and international levels. Technological absorptive capacity is also important to facilitate the private sector's greater involvement in the development of renewable energy technologies (RETs). "It could ensure the future deployment and scale-up of locally manufactured technologies in all developing countries and least developed countries (LDCs), as is currently being witnessed in countries such as Brazil, China and India, said the Report that proposed an integrated innovation policy framework for RET use, adaptation, innovation and production in developing countries and LDCs.
"Such a framework requires close coordination between the national innovation systems that provide the necessary conditions for the development of RETs, and the energy policies that promote the gradual integration of RETs into industrial development strategies," it said, adding that such a framework is essential for creating a virtuous cycle of interaction between economic development, RETs, and science, technology and innovation.
Policy frameworks are being put in place across countries in one form or another. A review of policy trends shows a steady increase in policy activity in this regard: by 2010, more than 100 countries had introduced either a target or a policy mechanism for promoting renewable energy technologies. The number of developing countries that are beginning to implement policies on renewable energy technologies is increasing too; these countries now represent more than half of all the countries that have such a policy framework in place.However, such policies, the report suggested, should be well coordinated with the energy regimes and with an innovation systems framework for best results.
UNCTAD's Technology and Innovation Report 2011 argued that national governments in developing countries have a pivotal role to play in combining conventional sources of energy with renewable energy technologies.
As the report showed, expanding the use of renewable energy technologies is critical to fostering technological improvements that will bring down their usage costs. Government agencies and the policy framework can play a decisive role by promoting the general innovation environment for the development of science, technology and innovation; making renewable energy technologies viable; and enabling enterprise development in and through renewable energy technologies.
It showed that developing countries may face a variety of constraints in each of these areas, but there are also several opportunities. In the developing-country context, a few well-coordinated incentives can go a long way towards achieving significant results, and these can serve as the building blocks for an integrated framework in the years to come. Such proactive government interventions will need the support of the international community to benefit from the full potential that renewable energy technologies offer for alleviating (and eventually eliminating) energy poverty and simultaneously promoting climate-friendly solutions on a global scale.
Forging strong partnerships with the international community could also lead to the widespread dissemination of environmentally sustainable technologies worldwide, resulting in enhanced economic development and greater opportunities for large segments of populations that have been left behind in the process of globalisation.
Sunday, November 27, 2011
Nepal offers tax relaxation to Indian investors, to share banking, tax evasion information
The two South Asian neighbours sign DTAA to encourage trade, economic cooperation
Nepal can attract more Indian investment as the revised Double Taxation Avoidance Agreement (DTAA) signed today has provided tax relaxation to Indian investors and traders in India once they pay tax in Nepal.
"It will provide tax stability, facilitated mutual economic cooperation and stimulated flow of investment, technology and services between the two South Asian neighbours," said finance minister Barsha Man Pun after signing the agreement with his Indian counterpart Pranab Mukherjee, who flew to Kathmandu today morning to sign the pact.
The revised agreement — that replaces the old one signed in 1987 — has also lowered the threshold of tax rates on dividends and interest to reflect Nepal’s wish to attract more foreign direct investment (FDI).
An Indian investor, who has more than 10 per cent investment in Nepal, can take home more benefit as one is liable to pay only five per cent tax on dividends. Similarly, the old accord that was according to UN provision had 15 per cent tax on interest but the revised one has brought it down to 10 per cent.
"It will help in boosting overall business and investment climate," he said, adding that Nepali and Indian authorities can also share information on banking and tax evasion according to new agreement.
The revised DTAA that incorporated provision of exchange of information on banking and tax evasion according to the provisions of Organisation for Economic Cooperation and Development (OECD) will facilitate effective tax collection and controlling of fiscal evasion.
Though, it was planned to sign along with Bilateral Investment Promotion and Protection Agreement (BIPPA) during Prime Minister Baburam Bhattarai’s India visit in October, the accord could not be signed due to some technical reason, said Mukherjee.
"BIPPA and DTAA will provide necessary help to expand trade and investments between the two neighbours," he said, adding that the meeting between the commerce secretaries of both the countries in December will identify new areas of cooperation, projects and funding."The mechanism will strengthen and deepen our bilateral relations, and we would be in a position to move forward and expand our trade and other economic activities," the Indian finance minister added.
India is the biggest source of foreign investments and also largest trading partner of Nepal. Indian firms are the biggest investors accounting for about 47.5 per cent of total approved foreign direct investments of the country.
The tax relaxation in DTAA will help Nepal attract more investment from India, said finance secretary Krishna Hari Baskota.
The FDI flows into the countries where the environment is FDI-friendly, has skilled labour, uninterrupted power supply and easy link to market. "Nepal is trying to create conducive environment for the FDI inflow as more investment will result into more employment and production pulling the inflation down," he added.
The negotiation for the revision of DTAA has started when the current Prime Minister Dr Baburam Bhattarai was finance minister back in 2008.
Nepal can attract more Indian investment as the revised Double Taxation Avoidance Agreement (DTAA) signed today has provided tax relaxation to Indian investors and traders in India once they pay tax in Nepal.
"It will provide tax stability, facilitated mutual economic cooperation and stimulated flow of investment, technology and services between the two South Asian neighbours," said finance minister Barsha Man Pun after signing the agreement with his Indian counterpart Pranab Mukherjee, who flew to Kathmandu today morning to sign the pact.
The revised agreement — that replaces the old one signed in 1987 — has also lowered the threshold of tax rates on dividends and interest to reflect Nepal’s wish to attract more foreign direct investment (FDI).
An Indian investor, who has more than 10 per cent investment in Nepal, can take home more benefit as one is liable to pay only five per cent tax on dividends. Similarly, the old accord that was according to UN provision had 15 per cent tax on interest but the revised one has brought it down to 10 per cent.
"It will help in boosting overall business and investment climate," he said, adding that Nepali and Indian authorities can also share information on banking and tax evasion according to new agreement.
The revised DTAA that incorporated provision of exchange of information on banking and tax evasion according to the provisions of Organisation for Economic Cooperation and Development (OECD) will facilitate effective tax collection and controlling of fiscal evasion.
Though, it was planned to sign along with Bilateral Investment Promotion and Protection Agreement (BIPPA) during Prime Minister Baburam Bhattarai’s India visit in October, the accord could not be signed due to some technical reason, said Mukherjee.
"BIPPA and DTAA will provide necessary help to expand trade and investments between the two neighbours," he said, adding that the meeting between the commerce secretaries of both the countries in December will identify new areas of cooperation, projects and funding."The mechanism will strengthen and deepen our bilateral relations, and we would be in a position to move forward and expand our trade and other economic activities," the Indian finance minister added.
India is the biggest source of foreign investments and also largest trading partner of Nepal. Indian firms are the biggest investors accounting for about 47.5 per cent of total approved foreign direct investments of the country.
The tax relaxation in DTAA will help Nepal attract more investment from India, said finance secretary Krishna Hari Baskota.
The FDI flows into the countries where the environment is FDI-friendly, has skilled labour, uninterrupted power supply and easy link to market. "Nepal is trying to create conducive environment for the FDI inflow as more investment will result into more employment and production pulling the inflation down," he added.
The negotiation for the revision of DTAA has started when the current Prime Minister Dr Baburam Bhattarai was finance minister back in 2008.
Committee recommends Pant, Joshi, Singh for Investment Board chief executive, to be appointed tomorrow
The selection committee has recommended three names — Radhesh Pant, Surendra Govind Joshi and Shanker Man Singh — for the appointment of chief executive officer of the Investment Board.
The cabinet will most probably appoint the executive chief tomorrow. After the appointment of the executive chief, the board will start its operations.
Pant, currently chief executive officer of Kumari Bank, has a long professional and impressive background, whereas Joshi was consultant of multinational agencies, and Singh is currently general manager of Nepal Stock Exchange (Nepse).
Today's meeting of the Investment Board has decided to send the name to the Cabinet for the appointment of the chief executive to the much-hyped Investment Board.
Some eight candidates — including Pant, Joshi, Singh, and Tularaj Basyal, Hemant Kharel, Jamuna Khatri, Surendra Poudel and Rishi Koirala — have applied for the post of chief executive of the Board that is envisioned to give a one-window solution to potential investors in big projects.
The cabinet will most probably appoint the executive chief tomorrow. After the appointment of the executive chief, the board will start its operations.
Pant, currently chief executive officer of Kumari Bank, has a long professional and impressive background, whereas Joshi was consultant of multinational agencies, and Singh is currently general manager of Nepal Stock Exchange (Nepse).
Today's meeting of the Investment Board has decided to send the name to the Cabinet for the appointment of the chief executive to the much-hyped Investment Board.
Some eight candidates — including Pant, Joshi, Singh, and Tularaj Basyal, Hemant Kharel, Jamuna Khatri, Surendra Poudel and Rishi Koirala — have applied for the post of chief executive of the Board that is envisioned to give a one-window solution to potential investors in big projects.
Saturday, November 26, 2011
Investment Board to get chief executive
Some eight candidates have applied for the post of chief executive of Investment Board that is envisioned to give a one-window solution to potential investors in big projects over Rs 10 billion.
The cabinet will appoint the executive chief once the selection body that has finance minister Barsha Man Pun, National Planning Commission vice-chairman Deependra Bahadur Chhetri and ex-secretary Bimal Wagle forwards three names among the eight applicants.
"The government is going to appoint the chief executive next week," according to Prime Minister Dr Baburam Bhattarai.After the appointment of the executive chief, the board will start its operations," said the premier, who is the chairman of the Board. The Prime Minister will appoint finance minister as the vice-chairman of the board.
The house had approved the much-awaited Investment Board Act on August 15, after two years to attract big investments, though the idea was floated some 14 years ago by bi-national chambers.
The board that will have a secretariat that will work as a one-window system to address investors’ concerns will be directly under the Prime Minister’s Office. It is expected to smoothen inflow of foreign direct investment (FDI) by creating investment friendly environment by facilitating investment in infrastructure projects and projects with large capital base.
According to the World Investment Report (WIR) of UNCTAD, Nepal ranks at the bottom of the list of countries attracting foreign investment among the Least Developed Countries (LDCs).
The cabinet will appoint the executive chief once the selection body that has finance minister Barsha Man Pun, National Planning Commission vice-chairman Deependra Bahadur Chhetri and ex-secretary Bimal Wagle forwards three names among the eight applicants.
"The government is going to appoint the chief executive next week," according to Prime Minister Dr Baburam Bhattarai.After the appointment of the executive chief, the board will start its operations," said the premier, who is the chairman of the Board. The Prime Minister will appoint finance minister as the vice-chairman of the board.
The house had approved the much-awaited Investment Board Act on August 15, after two years to attract big investments, though the idea was floated some 14 years ago by bi-national chambers.
The board that will have a secretariat that will work as a one-window system to address investors’ concerns will be directly under the Prime Minister’s Office. It is expected to smoothen inflow of foreign direct investment (FDI) by creating investment friendly environment by facilitating investment in infrastructure projects and projects with large capital base.
According to the World Investment Report (WIR) of UNCTAD, Nepal ranks at the bottom of the list of countries attracting foreign investment among the Least Developed Countries (LDCs).
Friday, November 25, 2011
Government vows to create business friendly environment
Finance secretary Krishna Hari Baskota asked the business community to suggest on policy changes that can help create conducive environment for business. "The government will help them create business friendly environment," he promised inaugurating a brainstorming session organised by the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and Nepal Business Forum (NBF) today.
"Unless the export increases, the country cannot develop," he said, adding that the government is always positive on creating export-friendly policy.
Acting president of FNCCI, Bhaskar Raj Rajkarnikar, on the occasion, said that the private sector should redefine and reform its role in the changing socio-economic context. "Economic uncertainty is the major problem facing the country," he said, adding that the session could help identify 50 projects for Nepal Investment Year 2012-13.
Similarly, senior private sector development specialist of IFC Laura Anne Watson said that the session would be helpful in delivering the promise of Nepal Investment Year 2012-13. "Private sector is the vibrant development partner of government in every country," she said.
Nepal has improved its ranking on Doing Business indicators rising by three places to 107, which is a good signal to investors that the country is helping to create a better environment for entrepreneurs.
Some 23 representatives from 13 districts from the central development region and FNCCI executive committee members participated in the brainstorming session organised with the support of International Finance Corporation (IFC), a member of the World Bank.
The objective of the session was to identify issues hampering Nepal's business sector and recommend policy measures to the government.
Vice president of FNCCI Bhawani Rana explained that there are various committees in Nepal Business Forum like High Level Business Forum chaired by the Prime Minister, Private Sector Development Committee chaired by the chief secretary and Steering Committee chaired by the Minister of Industry. The recommendations will be forwarded to the relevant committees.
"Unless the export increases, the country cannot develop," he said, adding that the government is always positive on creating export-friendly policy.
Acting president of FNCCI, Bhaskar Raj Rajkarnikar, on the occasion, said that the private sector should redefine and reform its role in the changing socio-economic context. "Economic uncertainty is the major problem facing the country," he said, adding that the session could help identify 50 projects for Nepal Investment Year 2012-13.
Similarly, senior private sector development specialist of IFC Laura Anne Watson said that the session would be helpful in delivering the promise of Nepal Investment Year 2012-13. "Private sector is the vibrant development partner of government in every country," she said.
Nepal has improved its ranking on Doing Business indicators rising by three places to 107, which is a good signal to investors that the country is helping to create a better environment for entrepreneurs.
Some 23 representatives from 13 districts from the central development region and FNCCI executive committee members participated in the brainstorming session organised with the support of International Finance Corporation (IFC), a member of the World Bank.
The objective of the session was to identify issues hampering Nepal's business sector and recommend policy measures to the government.
Vice president of FNCCI Bhawani Rana explained that there are various committees in Nepal Business Forum like High Level Business Forum chaired by the Prime Minister, Private Sector Development Committee chaired by the chief secretary and Steering Committee chaired by the Minister of Industry. The recommendations will be forwarded to the relevant committees.
South Asia plans regional energy grid
India is looking at increasing power availability by 800,000 GW by 2030 to sustain its impressive growth rates of eight per cent to nine per cent.
Releasing a report on 'South Asia Energy Cooperation and Business Opportunities in the Power Sector' published by the Confederation of Indian Industry (CII) at a programme yesterday, Sudhir Vyas — Secretary (Economic Relations) at the Indian Ministry of External Affairs — said India’s demand for energy will drive the formation of SAARC energy grid.
"Countries were doing a lot at the bilateral level but they needed to scale up the process to the regional level," he added.
Chief Mentor at Tata Power Company Amulya Charan opined that all neighboring countries including Nepal, Bhutan, Pakistan and Sri Lanka either had the demand or the supply resources which were unfulfilled and therefore setting up a SAARC grid had huge potential.
“The multiple nation grid is a well established phenomenon and needs to be replicated in South Asia," he said, adding that it will lead to a win-win situation for all the countries in the region.
Chairman at Integrated Research and Action for Development Dr Kirit Parikh said a competitive electricity sector with independent regulators was imperative to meet the goals of power to all. "The power purchase agreements need to be symmetric with clauses like formula-based tariff setting built into these agreements so that developers are assured of getting the right price," added Parikh.
Similarly, CII National Committee member Dr Sudhir Kapur said that an almost four fold increase in energy demand was expected given the growth potential in the entire south Asian region. "Currently, thermal plants account for the bulk of the power supply in the region at 65 per cent followed by hydro power at 20 per cent," he said, adding that Nepal has not been able to exploit even 1,000 MW of its 82,000 MW of hydropower potential of which 43,000 MW power is economically viable and exploitable.
He highlighted on the need to capitalise on the over 200 GW of hydropower potential in countries including India, Bhutan and Nepal to meet the challenge of energy security and climate change.
Another CII National Committee member Jayant Deo said it was important to develop mechanisms for deviation settlement, payment security and clearing and settlement to facilitate the development of cross border power exchanges. "It will pave the way for a single South Asia electricity market,” he added.
Releasing a report on 'South Asia Energy Cooperation and Business Opportunities in the Power Sector' published by the Confederation of Indian Industry (CII) at a programme yesterday, Sudhir Vyas — Secretary (Economic Relations) at the Indian Ministry of External Affairs — said India’s demand for energy will drive the formation of SAARC energy grid.
"Countries were doing a lot at the bilateral level but they needed to scale up the process to the regional level," he added.
Chief Mentor at Tata Power Company Amulya Charan opined that all neighboring countries including Nepal, Bhutan, Pakistan and Sri Lanka either had the demand or the supply resources which were unfulfilled and therefore setting up a SAARC grid had huge potential.
“The multiple nation grid is a well established phenomenon and needs to be replicated in South Asia," he said, adding that it will lead to a win-win situation for all the countries in the region.
Chairman at Integrated Research and Action for Development Dr Kirit Parikh said a competitive electricity sector with independent regulators was imperative to meet the goals of power to all. "The power purchase agreements need to be symmetric with clauses like formula-based tariff setting built into these agreements so that developers are assured of getting the right price," added Parikh.
Similarly, CII National Committee member Dr Sudhir Kapur said that an almost four fold increase in energy demand was expected given the growth potential in the entire south Asian region. "Currently, thermal plants account for the bulk of the power supply in the region at 65 per cent followed by hydro power at 20 per cent," he said, adding that Nepal has not been able to exploit even 1,000 MW of its 82,000 MW of hydropower potential of which 43,000 MW power is economically viable and exploitable.
He highlighted on the need to capitalise on the over 200 GW of hydropower potential in countries including India, Bhutan and Nepal to meet the challenge of energy security and climate change.
Another CII National Committee member Jayant Deo said it was important to develop mechanisms for deviation settlement, payment security and clearing and settlement to facilitate the development of cross border power exchanges. "It will pave the way for a single South Asia electricity market,” he added.
Thursday, November 24, 2011
Journey to economic prosperity begins from today: PM
Prime Minister Dr Baburam Bhattarai today claimed that the nation's journey to the economic prosperity has started from today.
Listing his priority, he said that the first one peace process has almost come to an end and the country will now move forward with the second priority, economic development," he said, during an interaction with the Finance Ministry officials. He also stressed on policy reform for the economic development.
The UCPN-Maoist ideologue Bhattarai also hailed the government officials. "Due to lengthy transition phase, the country could not move ahead in the path to economic development," he said, urging the business and industrial community to invest in the productive areas to enhance economic development.
"The import based revenue mobilisation could not help the country to develop," he added.
The premier also highlighted the role of capital market for the financial sector reform. Showing serious concern on poor performance of public enterprises, he promised that the coalition government will end all kinds of political bickering in the government corporations to improve their performance.
Though, he promised not to interfere, the public entities have always been a recruiting centre for cadres of the line ministers. "The government is preparing a regulation to completely halt political bickering in the public enterprises," Bhattarai said.
Listing his priority, he said that the first one peace process has almost come to an end and the country will now move forward with the second priority, economic development," he said, during an interaction with the Finance Ministry officials. He also stressed on policy reform for the economic development.
The UCPN-Maoist ideologue Bhattarai also hailed the government officials. "Due to lengthy transition phase, the country could not move ahead in the path to economic development," he said, urging the business and industrial community to invest in the productive areas to enhance economic development.
"The import based revenue mobilisation could not help the country to develop," he added.
The premier also highlighted the role of capital market for the financial sector reform. Showing serious concern on poor performance of public enterprises, he promised that the coalition government will end all kinds of political bickering in the government corporations to improve their performance.
Though, he promised not to interfere, the public entities have always been a recruiting centre for cadres of the line ministers. "The government is preparing a regulation to completely halt political bickering in the public enterprises," Bhattarai said.
IFC buys RMDC shares worth Rs 54 million
International Finance Corporation (IFC) has injected equity capital in Rural Microfinance Development Center (RMDC) to support microfinance in Nepal.
IFC — a member of World Bank Group — has invested in 300,000 unit shares of soon to be public RMDC at premium price of Rs 180 per unit share.
It has invested Rs 54 million ($700,000) as equity capital in the wholesale lending agency to expand the micro credit service in the country. Along with the financing, IFC will also be providing assistance in developing a robust business model to RMDC.
"The project is supposed to aid in poverty reduction, women empowerment and propel economic development," pointed out IFC's country manager for Bangladesh, Bhutan and Nepal Kyle Kelhofer, while signing the agreement with RMDC.
Kelhofer and chairman of RMDC Ashoke Rana signed an agreement today on behalf of their respective institutions here today to join hands in fighting against poverty through microfinance.
IFC as a development institutions focuses on private sector development for the sustainable growth of the developing countries.
At present, the existing micro finance institutions are catering to estimated 1.7 million households by providing hassle free micro loans sans collaterals. There are 100 microfinance institutions affiliated to RMDC that comprise 76 per cent of the total micro credit market of Nepal.
"IFC's support will not only strengthen RMDC's ability to offer finance to microfinance institutions but also give out a positive message regarding the financial sector," expressed RMDC CEO Shankar Man Singh. "The coordination between these two agencies — IFC and RMDC — will also boost the entrepreneurship and self-reliance among the low income groups.
"The wholesale lender to microfinance institutions -rural development banks, microfinance development banks, rural cooperatives and financial NGOs -RMDC is planning to increase its paid up capital to Rs 520 million through Initial Public Offering (IPO) and from adding new promoters.
Six more non-promoters banks are also going to add more capital in RMDC by purchasing 140,000 unit shares at premium price. The rest 1.5 million unit shares of the proposed expansion will be issued through IPO in the near future.
IFC is the first agency to step in and inject equity capital according to RMDC's plan to expand its capital base. RMDC's current paid up capital stand at Rs 320 million belonging to 13 commercial banks, Nepal Rastra Bank (NRB), five Grameen Bikas Banks, Nirdhan Utthan Bank and Deposit and Credit Guarantee Corporation (DCGC).
IFC — a member of World Bank Group — has invested in 300,000 unit shares of soon to be public RMDC at premium price of Rs 180 per unit share.
It has invested Rs 54 million ($700,000) as equity capital in the wholesale lending agency to expand the micro credit service in the country. Along with the financing, IFC will also be providing assistance in developing a robust business model to RMDC.
"The project is supposed to aid in poverty reduction, women empowerment and propel economic development," pointed out IFC's country manager for Bangladesh, Bhutan and Nepal Kyle Kelhofer, while signing the agreement with RMDC.
Kelhofer and chairman of RMDC Ashoke Rana signed an agreement today on behalf of their respective institutions here today to join hands in fighting against poverty through microfinance.
IFC as a development institutions focuses on private sector development for the sustainable growth of the developing countries.
At present, the existing micro finance institutions are catering to estimated 1.7 million households by providing hassle free micro loans sans collaterals. There are 100 microfinance institutions affiliated to RMDC that comprise 76 per cent of the total micro credit market of Nepal.
"IFC's support will not only strengthen RMDC's ability to offer finance to microfinance institutions but also give out a positive message regarding the financial sector," expressed RMDC CEO Shankar Man Singh. "The coordination between these two agencies — IFC and RMDC — will also boost the entrepreneurship and self-reliance among the low income groups.
"The wholesale lender to microfinance institutions -rural development banks, microfinance development banks, rural cooperatives and financial NGOs -RMDC is planning to increase its paid up capital to Rs 520 million through Initial Public Offering (IPO) and from adding new promoters.
Six more non-promoters banks are also going to add more capital in RMDC by purchasing 140,000 unit shares at premium price. The rest 1.5 million unit shares of the proposed expansion will be issued through IPO in the near future.
IFC is the first agency to step in and inject equity capital according to RMDC's plan to expand its capital base. RMDC's current paid up capital stand at Rs 320 million belonging to 13 commercial banks, Nepal Rastra Bank (NRB), five Grameen Bikas Banks, Nirdhan Utthan Bank and Deposit and Credit Guarantee Corporation (DCGC).
Jhapa records highest rice production
Jhapa district topped the list of highest rice producing district whereas Syangja tooped the list of highest maize producing district.
"Though, we have good crops in all the regions this year, productivity is still low," spokesperson of the ministry Dr Hari Dahal said, adding that current productivity is around 3.3 MT per hector.
Bhaktapur has the highest productivity of 5.93 MT per hector followed by Lalitpur and Nuwakot districts with 5.79 MT per hector and 5.76 MT per hector, respectively, he added.
In high rice yield, Terai has contributed 73.24 per cent to 3.71 million MT followed by Hill 25.82 per cent to 1.20 million MT and Mountain 3.05 per cent to 154,459 MT.
Food security situation has significantly improved with record production of two major crops, rice and maize, thanks to good monsoon.
"The country has bumper crops this year," Dahal said, adding that rice production recorded 5.07 million metric tonnes (MT) and maize 2.17 MT this year improving the food security situation as the production is sufficient to feed 26.62 million populace.
"We can even export up to 200,000 MT rice to neighbouring or third countries in quantitative restriction," he said. "Bangladesh has been suffering a food shortage of about half a million MT this year."
Nepal has witnessed 13.7 per cent increment in rice and 5.4 per cent in maize production.
Earlier rice production has recorded 4.52 million MT in fiscal year 2008-09. Last two years had witnessed continuous fall posting only 4.02 million MT in 2009-10 and 4.46 million MT in 2010-11.
According to him, increase in rice production contributed by not only the good monsoon but also increased cultivation area. Rice cultivating area has increased by 2.3 per cent to 1.53 million hectors. However, maize production has increased to 2.17 million MT despite 3.8 per cent fall in production area.
According to the ministry, millet (Kodo) and buckwheat (Phapar) production also increased by 4.1 per cent and 13.3 per cent, respectively. About 315,067 MT millet and 10,021 MT buckwheat have produced in the country this year.
Global rice production has increased by three per cent in the current year. Rice production has decreased in only a half dozen countries including Japan, Indonesia and South Korea.
Top rice producing districts
Jhapa–321,840 MT
Rupandehi–301,000 MT
Morang–277,610 MT
Bara–241,340 MT
Kapilbastu–207,350 MT
(Source: Ministry of Agriculture and Cooperatives)
Top maize producing districts
Syanja–92,750 MT
Ilam–77,500 MT
Bhojpur–74,370 MT
Tanahu–63,970 MT
Baglung–59,044 MT
(Source: Ministry of Agriculture and Cooperatives)
Rice-Maize prodution on rise
Year — Rice — Maize
2009-10 –– 4.02 — 1.85
2011-12 –– 4.46 — 2.06
2010-11 — 5.07 — 2.17
(Figures in million metric tonne. Source: Ministry of Agriculture and Cooperatives)
"Though, we have good crops in all the regions this year, productivity is still low," spokesperson of the ministry Dr Hari Dahal said, adding that current productivity is around 3.3 MT per hector.
Bhaktapur has the highest productivity of 5.93 MT per hector followed by Lalitpur and Nuwakot districts with 5.79 MT per hector and 5.76 MT per hector, respectively, he added.
In high rice yield, Terai has contributed 73.24 per cent to 3.71 million MT followed by Hill 25.82 per cent to 1.20 million MT and Mountain 3.05 per cent to 154,459 MT.
Food security situation has significantly improved with record production of two major crops, rice and maize, thanks to good monsoon.
"The country has bumper crops this year," Dahal said, adding that rice production recorded 5.07 million metric tonnes (MT) and maize 2.17 MT this year improving the food security situation as the production is sufficient to feed 26.62 million populace.
"We can even export up to 200,000 MT rice to neighbouring or third countries in quantitative restriction," he said. "Bangladesh has been suffering a food shortage of about half a million MT this year."
Nepal has witnessed 13.7 per cent increment in rice and 5.4 per cent in maize production.
Earlier rice production has recorded 4.52 million MT in fiscal year 2008-09. Last two years had witnessed continuous fall posting only 4.02 million MT in 2009-10 and 4.46 million MT in 2010-11.
According to him, increase in rice production contributed by not only the good monsoon but also increased cultivation area. Rice cultivating area has increased by 2.3 per cent to 1.53 million hectors. However, maize production has increased to 2.17 million MT despite 3.8 per cent fall in production area.
According to the ministry, millet (Kodo) and buckwheat (Phapar) production also increased by 4.1 per cent and 13.3 per cent, respectively. About 315,067 MT millet and 10,021 MT buckwheat have produced in the country this year.
Global rice production has increased by three per cent in the current year. Rice production has decreased in only a half dozen countries including Japan, Indonesia and South Korea.
Top rice producing districts
Jhapa–321,840 MT
Rupandehi–301,000 MT
Morang–277,610 MT
Bara–241,340 MT
Kapilbastu–207,350 MT
(Source: Ministry of Agriculture and Cooperatives)
Top maize producing districts
Syanja–92,750 MT
Ilam–77,500 MT
Bhojpur–74,370 MT
Tanahu–63,970 MT
Baglung–59,044 MT
(Source: Ministry of Agriculture and Cooperatives)
Rice-Maize prodution on rise
Year — Rice — Maize
2009-10 –– 4.02 — 1.85
2011-12 –– 4.46 — 2.06
2010-11 — 5.07 — 2.17
(Figures in million metric tonne. Source: Ministry of Agriculture and Cooperatives)
Wednesday, November 23, 2011
NRB to invest in 91-day Indian T-Bills
Nepal Rastra Bank (NRB) can now invest in higher interest yielding 91-day Treasury Bills (T-Bills) issued by Indian central bank.
Reserve Bank of India (RBI) has given green signal for Nepali central bank to purchase more interest yielding 91-days T-Bills, said spokesperson for NRB Bhaskar Mani Gyanwali.
Currently NRB's investment portfolio contains 14-day Indian T-Bills only along with T-Bills of financially stronger countries. "Investing in instruments with longer maturity period means NRB yields more interest income," he said, adding that central bank had requested Indian central bank to allow investment in the securities with longer maturity period for higher interest income.
During the recent official visit of Prime Minister Dr Baburam Bhattarai to India also the matter was discussed as a high priority.
For Nepal, investment in Indian securities is more lucrative than in treasuries belonging to foreign countries as Indian T-Bills are yielding returns higher than three per cent. Moreover, the recent global financial scenario has signaled to volatility of government securities issued by developed countries.
NRB´s investment on 14-day T-Bills in India has been fetching it interest income of five per cent. With investments in 91-day T-Bills, the investment will yield eight per cent return.
According to the NRB report, its investment is presently fetching returns at an average of 1.40 per cent. Returns on investment done on dollar stands merely at 0.3 per cent, which is much lower than investments on other convertible currency and in India.
According to NRB, it has put around 18 per cent of its total investments in US treasury bills and invested another 55 per cent on US dollar, 17 per cent in Euro T-Bills and about 10 per cent in UK T-Bills.
"The investment in dollar-denominated treasuries is rather less profitable due to interest rates being lower," Gyanwali said, adding that NRB can not invest the reserve in single currency or instruments as Nepal needs all types of currencies to make payments for imports.
The central bank's investment trend of last couple of years demonstrates the rearrangement of its investment portfolio. NRB had invested Rs 46.8 billion in US government T-bills in fiscal year 2008-09, which was reduced to Rs 29.7 billion in the next fiscal year.
However, the investment in Indian T-Bills have been more than doubled in the same period from Rs 18 billion to Rs 38.9 billion.
Along with the investment in treasuries, the major chunk of NRB reserves is kept in liquid instruments like foreign currencies especially — US dollars and in precious metals like gold and silver.
The Investment Guidelines allow NRB to invest as much as IRs 25 billion on Indian instruments. It also seeks NRB to maintain 40 per cent of total investment portfolio on liquid instruments. But NRB must make sure it has enough reserve to finance goods and services imports for six months and have to clear principle and interest of external debts for a year, according to Guideline.
As global economic instability has been affecting currency and securities market, the central bank’s profits has been dropping in recent years. The profit for 2006-07 had stood at Rs 6.25 billion, but it dropped to Rs 1.73 billion in 2009-10. However, it increased to Rs 2.28 billion in 2010-11.
Diversifying investment in more Indian securities has been a prominent issue that NRB had been lobbying for since some time.
Along with it, NRB has also been lobbying to RBI for the permission to open branch of Nepali remittance companies in India for channelise remittance formally.
At present, RBI allows the remittance from India through its Indo-Nepal Remittance Facility that allows Nepali migrants to send up to 50,000 Indian Currency (IC) in a single transaction through its National Electronic Fund Transfer (NEFT) member Indian commercial banks to Nepal SBI Bank's account that then routes the remittance to the receiver through its branches or a designated money transfers.
However, the money transfer channel has not been much successful as migrant workers in India are not aware about the money transfer facilities and chose to use informal channels.
Reserve Bank of India (RBI) has given green signal for Nepali central bank to purchase more interest yielding 91-days T-Bills, said spokesperson for NRB Bhaskar Mani Gyanwali.
Currently NRB's investment portfolio contains 14-day Indian T-Bills only along with T-Bills of financially stronger countries. "Investing in instruments with longer maturity period means NRB yields more interest income," he said, adding that central bank had requested Indian central bank to allow investment in the securities with longer maturity period for higher interest income.
During the recent official visit of Prime Minister Dr Baburam Bhattarai to India also the matter was discussed as a high priority.
For Nepal, investment in Indian securities is more lucrative than in treasuries belonging to foreign countries as Indian T-Bills are yielding returns higher than three per cent. Moreover, the recent global financial scenario has signaled to volatility of government securities issued by developed countries.
NRB´s investment on 14-day T-Bills in India has been fetching it interest income of five per cent. With investments in 91-day T-Bills, the investment will yield eight per cent return.
According to the NRB report, its investment is presently fetching returns at an average of 1.40 per cent. Returns on investment done on dollar stands merely at 0.3 per cent, which is much lower than investments on other convertible currency and in India.
According to NRB, it has put around 18 per cent of its total investments in US treasury bills and invested another 55 per cent on US dollar, 17 per cent in Euro T-Bills and about 10 per cent in UK T-Bills.
"The investment in dollar-denominated treasuries is rather less profitable due to interest rates being lower," Gyanwali said, adding that NRB can not invest the reserve in single currency or instruments as Nepal needs all types of currencies to make payments for imports.
The central bank's investment trend of last couple of years demonstrates the rearrangement of its investment portfolio. NRB had invested Rs 46.8 billion in US government T-bills in fiscal year 2008-09, which was reduced to Rs 29.7 billion in the next fiscal year.
However, the investment in Indian T-Bills have been more than doubled in the same period from Rs 18 billion to Rs 38.9 billion.
Along with the investment in treasuries, the major chunk of NRB reserves is kept in liquid instruments like foreign currencies especially — US dollars and in precious metals like gold and silver.
The Investment Guidelines allow NRB to invest as much as IRs 25 billion on Indian instruments. It also seeks NRB to maintain 40 per cent of total investment portfolio on liquid instruments. But NRB must make sure it has enough reserve to finance goods and services imports for six months and have to clear principle and interest of external debts for a year, according to Guideline.
As global economic instability has been affecting currency and securities market, the central bank’s profits has been dropping in recent years. The profit for 2006-07 had stood at Rs 6.25 billion, but it dropped to Rs 1.73 billion in 2009-10. However, it increased to Rs 2.28 billion in 2010-11.
Diversifying investment in more Indian securities has been a prominent issue that NRB had been lobbying for since some time.
Along with it, NRB has also been lobbying to RBI for the permission to open branch of Nepali remittance companies in India for channelise remittance formally.
At present, RBI allows the remittance from India through its Indo-Nepal Remittance Facility that allows Nepali migrants to send up to 50,000 Indian Currency (IC) in a single transaction through its National Electronic Fund Transfer (NEFT) member Indian commercial banks to Nepal SBI Bank's account that then routes the remittance to the receiver through its branches or a designated money transfers.
However, the money transfer channel has not been much successful as migrant workers in India are not aware about the money transfer facilities and chose to use informal channels.
Tuesday, November 22, 2011
Historic weak rupee to increase remittance inflow
Weak Indian Currency (IC) against US dollar pulled Nepali rupee to its historic low today.
Today, exchange rate of Nepali currency against US Dollars touched the highest of Rs 84.5 against a dollar on an average in the open market, according to exchange rate fixed by different commercial banks.
Indian currency with which Nepali currency is pegged had reached historic low yesterday at Indian Currency 52.78 per dollar. However, the Indian foreign exchange rate redeemed itself a little reaching IC 52.58 at around 11 in the morning.
Though, Nepal's financial conditions have nothing to do with the current depreciation of its currency, the fixed exchange rate regime with India has pulled Nepali currency along with it on the bitter-sweet downward ride making the imports from third country dearer.
For Nepal, the strong US dollar translates as expensive imports from third countries at the same time the dollar income — remittances and tourist incomes — from foreign countries will go up.
"The stronger dollar will be leading to higher inflow of remittance as most of the migrant workers are paid in dollars," economist Dr Chiranjibi Nepal said, "Depsite no change in salary of the workers, the receivers will be getting more here at home.The other advantage of having strong dollar is being paid more for the exports."
"Unfortunately for Nepal, merchandise and service export to third country is nominal so that the opportunity we have from having strong US dollars can not be well exploited," expressed Nepal. "On the other hand, imports from third country especially fuel and other capital equipments will become expensive. The Chinese merchandise had already started to become expensive resulting from stronger US dollars.
"Nepal imported goods worth Rs 133.27 billion paying in dollars from third countries in the last fiscal year along with the imports worth Rs 47.8 billion from India that has been paid in dollars. The expensive import might lead to further price rise as being observed in India.
Moreover, expensive dollar will also create difficulty in debt servicing. "The government target in the budget to repay debt and interest will shortfall, if the exchange rate keeps moving up," expressed Nepal.
This fiscal year's budget has designated Rs 20.3 billion for debt servicing at the estimated rate of Rs 85 a dollar to be safe. "But the dollar's rise above Rs 85 will hit the government coffer also," according to Finance Ministry.
The Indian currency has started to depreciate since last few months due to the withdrawal of foreign institutional investors from the Indian equity market. In India, foreign portfolio investors have bought equities worth $393 million so far this year while they had invested $29 billion last year.
Most of the foreign institutional investors are reallocating the funds to commodities and US securities as global economic outlook seem to be less cheerful in the coming days.
Dollar Exchange Rate (in Rs)
2007-11-18 — Rs 62.90
2009-03-11 — Rs 82.70
2010-05-03 — Rs 70.65
2011-11-22 — Rs 83.5
(Source: Nepal Rastra Bank)
Today, exchange rate of Nepali currency against US Dollars touched the highest of Rs 84.5 against a dollar on an average in the open market, according to exchange rate fixed by different commercial banks.
Indian currency with which Nepali currency is pegged had reached historic low yesterday at Indian Currency 52.78 per dollar. However, the Indian foreign exchange rate redeemed itself a little reaching IC 52.58 at around 11 in the morning.
Though, Nepal's financial conditions have nothing to do with the current depreciation of its currency, the fixed exchange rate regime with India has pulled Nepali currency along with it on the bitter-sweet downward ride making the imports from third country dearer.
For Nepal, the strong US dollar translates as expensive imports from third countries at the same time the dollar income — remittances and tourist incomes — from foreign countries will go up.
"The stronger dollar will be leading to higher inflow of remittance as most of the migrant workers are paid in dollars," economist Dr Chiranjibi Nepal said, "Depsite no change in salary of the workers, the receivers will be getting more here at home.The other advantage of having strong dollar is being paid more for the exports."
"Unfortunately for Nepal, merchandise and service export to third country is nominal so that the opportunity we have from having strong US dollars can not be well exploited," expressed Nepal. "On the other hand, imports from third country especially fuel and other capital equipments will become expensive. The Chinese merchandise had already started to become expensive resulting from stronger US dollars.
"Nepal imported goods worth Rs 133.27 billion paying in dollars from third countries in the last fiscal year along with the imports worth Rs 47.8 billion from India that has been paid in dollars. The expensive import might lead to further price rise as being observed in India.
Moreover, expensive dollar will also create difficulty in debt servicing. "The government target in the budget to repay debt and interest will shortfall, if the exchange rate keeps moving up," expressed Nepal.
This fiscal year's budget has designated Rs 20.3 billion for debt servicing at the estimated rate of Rs 85 a dollar to be safe. "But the dollar's rise above Rs 85 will hit the government coffer also," according to Finance Ministry.
The Indian currency has started to depreciate since last few months due to the withdrawal of foreign institutional investors from the Indian equity market. In India, foreign portfolio investors have bought equities worth $393 million so far this year while they had invested $29 billion last year.
Most of the foreign institutional investors are reallocating the funds to commodities and US securities as global economic outlook seem to be less cheerful in the coming days.
Dollar Exchange Rate (in Rs)
2007-11-18 — Rs 62.90
2009-03-11 — Rs 82.70
2010-05-03 — Rs 70.65
2011-11-22 — Rs 83.5
(Source: Nepal Rastra Bank)
PAC directs government to close casinos as they are operating illegally
The Public Accounts Committee (PAC) today directed government to close operations of nine casinos after they failed to clear their outstanding royalty dues and renew their operating licence on time.
Out of ten casinos, nine — which have an outstanding Rs 490.18 million royalty dues also — failed to renew their licences, according to Ministry of Tourism and Civil Aviation.
The committee directs the government to close down their operation within 15 days, according to the PAC.
The only casino that renewed its licence on time was Casino Shangri-La, according to the ministry. "Casinos cannot operate their services since they have failed to follow legal provision."
Casino has to pay Rs 20 million at the beginning of fiscal year to renew their licence, according to Finance Ministry. Lawmakers also directed the concerned ministries to collect dues strictly at the earliest from those casinos. The parliamentarian also directed the Ministry of Tourism and Civil Aviation to endorse new regulation within a month.
"Regulation is a must to end irregularities," lawmakers said, asking the ministry to provide the progress report on royalty dues collection every 15 days to the committee.
The meeting also urged the concerned ministries to abide by its earlier decision, secretary at the committee Som Bahadur Thapa said. PAC had in February directed ministries concerned to shift the casinos out of the valley gradually. However, there has been no progress so far.
Currently, there are 10 casinos — Casino Royale at Hotel & Yeti, Casino Venus at Hotel Malla, Casino Rad at Hotel Radisson, Casino Grande at Hotel Pokhara Grande, Fulbari Casino at Hotel Fulbari, Casino Nepal at Hotel Soaltee, Casino Anna at Hotel de’l Annapurna, Casino Everest at Hotel Everest, Casino Tara at Hotel Hyatt and Casino Shangri-La at Hotel Shangri-La.
Of them, two casinos are in Pokhara and rest are being operated in the the valley. The operation of Casino Nepal and Casino Royale has already been halted due to labour-management dispute.
The dues
Casino Anna – Rs 129.5 million
Casino Royale – Rs 45.2 million
Casino Everest – Rs 21 million
Casino Tara – Rs 13.4 million
Casino Nepal – Rs 147.3 million
Casino Rad – Rs 20.5 million
Casino Venus – Rs 10.5 million
Casino Fulbari – Rs 80.9 million
Casino Grande – Rs 18.3 million
(Source: Finance Ministry)
Out of ten casinos, nine — which have an outstanding Rs 490.18 million royalty dues also — failed to renew their licences, according to Ministry of Tourism and Civil Aviation.
The committee directs the government to close down their operation within 15 days, according to the PAC.
The only casino that renewed its licence on time was Casino Shangri-La, according to the ministry. "Casinos cannot operate their services since they have failed to follow legal provision."
Casino has to pay Rs 20 million at the beginning of fiscal year to renew their licence, according to Finance Ministry. Lawmakers also directed the concerned ministries to collect dues strictly at the earliest from those casinos. The parliamentarian also directed the Ministry of Tourism and Civil Aviation to endorse new regulation within a month.
"Regulation is a must to end irregularities," lawmakers said, asking the ministry to provide the progress report on royalty dues collection every 15 days to the committee.
The meeting also urged the concerned ministries to abide by its earlier decision, secretary at the committee Som Bahadur Thapa said. PAC had in February directed ministries concerned to shift the casinos out of the valley gradually. However, there has been no progress so far.
Currently, there are 10 casinos — Casino Royale at Hotel & Yeti, Casino Venus at Hotel Malla, Casino Rad at Hotel Radisson, Casino Grande at Hotel Pokhara Grande, Fulbari Casino at Hotel Fulbari, Casino Nepal at Hotel Soaltee, Casino Anna at Hotel de’l Annapurna, Casino Everest at Hotel Everest, Casino Tara at Hotel Hyatt and Casino Shangri-La at Hotel Shangri-La.
Of them, two casinos are in Pokhara and rest are being operated in the the valley. The operation of Casino Nepal and Casino Royale has already been halted due to labour-management dispute.
The dues
Casino Anna – Rs 129.5 million
Casino Royale – Rs 45.2 million
Casino Everest – Rs 21 million
Casino Tara – Rs 13.4 million
Casino Nepal – Rs 147.3 million
Casino Rad – Rs 20.5 million
Casino Venus – Rs 10.5 million
Casino Fulbari – Rs 80.9 million
Casino Grande – Rs 18.3 million
(Source: Finance Ministry)
Workers’ outflow posts record high
Nepalis joining foreign jobs set new record in the fourth month of the current fiscal year (mid-October to mid-November).
Department of Foreign Employment issued foreign job permits to 47,176 Nepalis in Kartik, which is the largest in Nepali foreign employment history. Earlier, in Shrawan (mid-July to mid-August) some 45,165 had joined foreign jobs. But migration to foreign countries has dropped in Bhadra and Ashwin due to festive season. Around 37,808 and 26,581 Nepalis had joined abroad job in Bhadra and Ashwin, respectively.
Increased unskilled workers demand in major job destinations – Qatar, Malaysia, UAE and Saudi Arabia – contributed to the record growth.
According to the department, Qatar bagged top hiring position with employing 12,875 Nepalis followed by Malaysia (10,158), UAE (9,535), Saudi Arabia (8,914) and Kuwait (2,412).
Though, the record number of Nepalis joined foreign jobs last month, outsourcers contribution has decreased significantly. Organised sector sent just half of the total migrant workers at 22,041, while 25,135 reached Gulf countries and Malaysia through individual contracts. Migration through individual contracts has started rising since last year and it had surpassed organised sector two months ago.
Women migration to foreign job has also set record in Kartik. About 7,333 Nepalis women migrant workers reached the destinations, mainly Gulf countries. Kuwait topped in women migrant workers hiring list with 958 entries in the tiny country, while Israel (291), Malaysia (245) and lebanon (103) became the second, third and forth host countries.
Gulf countries Bahrain and Oman hired 891 and 41 Nepalis, respectively in a month, whereas war-ravaged Afghanistan hired 265 Nepali workers mainly in security sector. South Korea provided jobs to 263 Nepalis including 54 from Employment Permit System (EPS).
About 35 and 15 Nepali job seekers reached Euro zone countries the UK and Finland respectively while Asia’s biggest economy Japan hired 245 Nepali workers in Kartik.
The outflow
Shrawan — 45,165
Bhadra — 37,808
Ashwin — 26,581
Kartik — 47,176
Department of Foreign Employment issued foreign job permits to 47,176 Nepalis in Kartik, which is the largest in Nepali foreign employment history. Earlier, in Shrawan (mid-July to mid-August) some 45,165 had joined foreign jobs. But migration to foreign countries has dropped in Bhadra and Ashwin due to festive season. Around 37,808 and 26,581 Nepalis had joined abroad job in Bhadra and Ashwin, respectively.
Increased unskilled workers demand in major job destinations – Qatar, Malaysia, UAE and Saudi Arabia – contributed to the record growth.
According to the department, Qatar bagged top hiring position with employing 12,875 Nepalis followed by Malaysia (10,158), UAE (9,535), Saudi Arabia (8,914) and Kuwait (2,412).
Though, the record number of Nepalis joined foreign jobs last month, outsourcers contribution has decreased significantly. Organised sector sent just half of the total migrant workers at 22,041, while 25,135 reached Gulf countries and Malaysia through individual contracts. Migration through individual contracts has started rising since last year and it had surpassed organised sector two months ago.
Women migration to foreign job has also set record in Kartik. About 7,333 Nepalis women migrant workers reached the destinations, mainly Gulf countries. Kuwait topped in women migrant workers hiring list with 958 entries in the tiny country, while Israel (291), Malaysia (245) and lebanon (103) became the second, third and forth host countries.
Gulf countries Bahrain and Oman hired 891 and 41 Nepalis, respectively in a month, whereas war-ravaged Afghanistan hired 265 Nepali workers mainly in security sector. South Korea provided jobs to 263 Nepalis including 54 from Employment Permit System (EPS).
About 35 and 15 Nepali job seekers reached Euro zone countries the UK and Finland respectively while Asia’s biggest economy Japan hired 245 Nepali workers in Kartik.
The outflow
Shrawan — 45,165
Bhadra — 37,808
Ashwin — 26,581
Kartik — 47,176
Nepse revises debut price
Nepal Stock Exchange (Nepse) has revised its debutant price rules for the new stocks to kick-start the trading of newly listed shares faster.
According to the new rules, the starting price for newly listed companies can be fixed at a range falling between paid up value of the unit share and three times the paid up value or net worth or three times the net worth, whichever is lower.
According to the earlier rule, the newly listed companies could have debuted at price band between three times to five times the net worth of the company. The rule created difficulty in trading of the shares of newly listed companies as no one was ready to buy the shares of relatively unknown companies at the share price of well established companies.
On the stock market's heydays two years back, the stocks of many companies opened at price higher than Rs 1,000 as the clever investors were able to inflate the price through rumours.
Nepse had stepped in and brought the opening base price band to curb the unnecessary fuelling of share prices. However, at present when the stock prices are going down, the rule is not practical. Nepse needed to revise the rule to stop the suffering of the investors that have purchased the shares through primary issue.
According to the new rules, the starting price for newly listed companies can be fixed at a range falling between paid up value of the unit share and three times the paid up value or net worth or three times the net worth, whichever is lower.
According to the earlier rule, the newly listed companies could have debuted at price band between three times to five times the net worth of the company. The rule created difficulty in trading of the shares of newly listed companies as no one was ready to buy the shares of relatively unknown companies at the share price of well established companies.
On the stock market's heydays two years back, the stocks of many companies opened at price higher than Rs 1,000 as the clever investors were able to inflate the price through rumours.
Nepse had stepped in and brought the opening base price band to curb the unnecessary fuelling of share prices. However, at present when the stock prices are going down, the rule is not practical. Nepse needed to revise the rule to stop the suffering of the investors that have purchased the shares through primary issue.
Monday, November 21, 2011
Central bank discouraging government policy of using cheque?
The central bank — financial advisor of the government — is discouraging government policy of transacting through cheque by making it expensive for the customers.
The government has been trying to encourage people to use account payee cheque for over Rs 50,000 transaction but the central bank affiliated Nepal Clearing House Ltd (NCHL) is charging banks and financial institutions for clearing cheques, which the bankers are ‘suspected’ to pass on to the customers discouraging transaction through cheque.
However, the central bank claimed that it is 'cautious' that banks and financial institutions' not pass the cost on to the customers.
The NCHL that is going to operate Electric Cheque Clearance (ECC) is charging commercial banks Rs 10 per cheque above Rs 5,000 and Rs 5 for a cheque upto Rs 5,000, except the costs that banks and financial institutions have to bear to get membership of the clearing house, buy software, network connectivity, login fee and annual renewal fee.
"It is going to be an expensive affair from software installation to per cheque clearance cost," said a banker, without wanting to be named. "Either the banks and financial institutions have to bear the extra cost or pass it on to the consumers, both not being very practical option," he added.
The software is financially not viable but we cannot protest against the central bank, said another banker, according to whom the company has bought software at three times higher cost from Jordan-based software developing company ProgresSoft Corporation.
The company has developed the software for Cheque Truncation System (CTS) which will help automated cheque clearance.Currently, the NHCL has central bank, Nepal Bankers Association (NBA) and SCT that provides integrated shared services network for ATMs and Point-of-sale (PoS) terminals — as share holders.
NCHL has authorised capital of Rs 250 million and issued capital of Rs 128.57 million, out of which 70 per cent to Rs 89.99 million has been paid by the promoters. The NHCL will float 30 per cent shares to public later.
It has currently 27 institutional promoter shareholders including Nepal Rastra Bank, 23 commercial banks, two development banks.
However, the development banks and finance companies are also going to be its equity partners soon, said SCT managing director Rabindra Malla, who differed that the system is costly.
"It comes to almost at the cost of installing an ATM," he said, adding that the system will save time cost as automated system will reduce operating cost in the long run.
According to president of Nepal Finance Companies Association Rajendra Man Shakya, the association is analysing the cost currently. "We were not part of the process in the beginning," he said, adding that Development Bankers Association-Nepal and Nepal Finance Companies Association have been involved recently. But their equity structure is still under discussion.
But, the members of NBA that is one of the major shareholders, opined that the central bank's move to award the clearing business to a private sector was theoretically wrong as the private sector will automatically work for profit. But others claimed that there is no wrong in the involvement of private sector but expensive software and cheque clearance charges should be questioned.
The government has been trying to encourage people to use account payee cheque for over Rs 50,000 transaction but the central bank affiliated Nepal Clearing House Ltd (NCHL) is charging banks and financial institutions for clearing cheques, which the bankers are ‘suspected’ to pass on to the customers discouraging transaction through cheque.
However, the central bank claimed that it is 'cautious' that banks and financial institutions' not pass the cost on to the customers.
The NCHL that is going to operate Electric Cheque Clearance (ECC) is charging commercial banks Rs 10 per cheque above Rs 5,000 and Rs 5 for a cheque upto Rs 5,000, except the costs that banks and financial institutions have to bear to get membership of the clearing house, buy software, network connectivity, login fee and annual renewal fee.
"It is going to be an expensive affair from software installation to per cheque clearance cost," said a banker, without wanting to be named. "Either the banks and financial institutions have to bear the extra cost or pass it on to the consumers, both not being very practical option," he added.
The software is financially not viable but we cannot protest against the central bank, said another banker, according to whom the company has bought software at three times higher cost from Jordan-based software developing company ProgresSoft Corporation.
The company has developed the software for Cheque Truncation System (CTS) which will help automated cheque clearance.Currently, the NHCL has central bank, Nepal Bankers Association (NBA) and SCT that provides integrated shared services network for ATMs and Point-of-sale (PoS) terminals — as share holders.
NCHL has authorised capital of Rs 250 million and issued capital of Rs 128.57 million, out of which 70 per cent to Rs 89.99 million has been paid by the promoters. The NHCL will float 30 per cent shares to public later.
It has currently 27 institutional promoter shareholders including Nepal Rastra Bank, 23 commercial banks, two development banks.
However, the development banks and finance companies are also going to be its equity partners soon, said SCT managing director Rabindra Malla, who differed that the system is costly.
"It comes to almost at the cost of installing an ATM," he said, adding that the system will save time cost as automated system will reduce operating cost in the long run.
According to president of Nepal Finance Companies Association Rajendra Man Shakya, the association is analysing the cost currently. "We were not part of the process in the beginning," he said, adding that Development Bankers Association-Nepal and Nepal Finance Companies Association have been involved recently. But their equity structure is still under discussion.
But, the members of NBA that is one of the major shareholders, opined that the central bank's move to award the clearing business to a private sector was theoretically wrong as the private sector will automatically work for profit. But others claimed that there is no wrong in the involvement of private sector but expensive software and cheque clearance charges should be questioned.
Bad loans eat into banks’ profits
As the realty sector is sailing on the difficult waters the Non Performing Assets (NPA) of the commercial banks have gone up in the first quarter of the current fiscal year.
The amount of NPA has reached 2.4 per cent on first quarter which stood at 1.84 per cent in the corresponding quarter last fiscal year, according to the unaudited financial data of 17 commercial banks that have published their financial for the first quarter of the current fiscal year.
Among 17 commercial banks, Agriculture Development Bank ltd (ADBL) owns the highest amount of NPAs of 11.05 per cent while Everest Bank Ltd (EBL) has the lowest.
The NPA of banks reflect the amount of loans that have gone sour. It is a loan that the financial institutions have been unable to recover from the customer within stipulated time, especially those exceeding 90 days of the predetermined period. The NPAs are one of the key indicators that gauge the financial strength of any financial institution as higher NPA reflects vulnerability of the financial institutions.
The commercial banks have about Rs 150 billion worth loans floated to realty sector — including real estate and housing projects — that is 21 per cent of total lending portfolio, though the central bank suspects more lending in the sector.Since sometime back the real estate sector has cooled down leading to more bad loans. The sector has been pressuring the central bank and the banks as they have not been able to serve interest in time due to slackening business lately.
Nepal Rastra Bank (NRB) recently has also extended the outstanding interest payment for one more months after the end of first quarter to aid the interest payment to the financial institutions.
"NRB's decision to include the interest income by mid-November instead by mid-October will help the banks to reduce NPLs and also give relief to the borrowers - especially the realty sector," according to spokesperson for the central bank Bhaskar Mani Gyanwali.
"NPL can be expected to decline as the rest of the banks might be waiting to revise the balance sheet including the interest payment made by mid-November," he added.But, the housing developers are not confident that the move is going to aid them as it came too late to rescue them from managing the finances to pay the outstanding dues.
The NPA, also known as, Non Performing Loans (NPL) is a dead liability that does not yield any income to the banks in the form of principal and interest payments rather eats into their profit as the banks need to provision certain portion of their profit to balance the assets that might go bad in the future so that higher NPAs leading to the lower profit. The first quarter profits of the commercial banks revealed that the profit has come down compared to the same quarter in the last fiscal year.
However, an interesting trend has been also revealed in the balance sheets. Despite the rising NPA, loan loss provisioning has gone down, instead of increasing with NPA. The 17 commercial banks have provisioned Rs 50 billion to cover the loss arising from possibility of loans going bad in the first quarter while in the same perios of last fiscal year these banks had provisioned Rs 82 billion.
The amount of NPA has reached 2.4 per cent on first quarter which stood at 1.84 per cent in the corresponding quarter last fiscal year, according to the unaudited financial data of 17 commercial banks that have published their financial for the first quarter of the current fiscal year.
Among 17 commercial banks, Agriculture Development Bank ltd (ADBL) owns the highest amount of NPAs of 11.05 per cent while Everest Bank Ltd (EBL) has the lowest.
The NPA of banks reflect the amount of loans that have gone sour. It is a loan that the financial institutions have been unable to recover from the customer within stipulated time, especially those exceeding 90 days of the predetermined period. The NPAs are one of the key indicators that gauge the financial strength of any financial institution as higher NPA reflects vulnerability of the financial institutions.
The commercial banks have about Rs 150 billion worth loans floated to realty sector — including real estate and housing projects — that is 21 per cent of total lending portfolio, though the central bank suspects more lending in the sector.Since sometime back the real estate sector has cooled down leading to more bad loans. The sector has been pressuring the central bank and the banks as they have not been able to serve interest in time due to slackening business lately.
Nepal Rastra Bank (NRB) recently has also extended the outstanding interest payment for one more months after the end of first quarter to aid the interest payment to the financial institutions.
"NRB's decision to include the interest income by mid-November instead by mid-October will help the banks to reduce NPLs and also give relief to the borrowers - especially the realty sector," according to spokesperson for the central bank Bhaskar Mani Gyanwali.
"NPL can be expected to decline as the rest of the banks might be waiting to revise the balance sheet including the interest payment made by mid-November," he added.But, the housing developers are not confident that the move is going to aid them as it came too late to rescue them from managing the finances to pay the outstanding dues.
The NPA, also known as, Non Performing Loans (NPL) is a dead liability that does not yield any income to the banks in the form of principal and interest payments rather eats into their profit as the banks need to provision certain portion of their profit to balance the assets that might go bad in the future so that higher NPAs leading to the lower profit. The first quarter profits of the commercial banks revealed that the profit has come down compared to the same quarter in the last fiscal year.
However, an interesting trend has been also revealed in the balance sheets. Despite the rising NPA, loan loss provisioning has gone down, instead of increasing with NPA. The 17 commercial banks have provisioned Rs 50 billion to cover the loss arising from possibility of loans going bad in the first quarter while in the same perios of last fiscal year these banks had provisioned Rs 82 billion.
Sunday, November 20, 2011
Surya Nepal awards social entrepreneurs
The Surya Nepal Asha Social Entrepreneurship Award has been awarded today evening to five social entrepreneurs for the first time.
Surya Nepal has recognised the contribution of the ordinary people that have made changes in the society.
Ram Sapkota of Mountain Delights Treks and Expedition and Tukee Nepal, Jyamrung — for the impact that has been made in Jyamrung, Dhading with projects range from eco toilets, micro hydro electricity, and health to education; Sabita Maharjan of Kirtipur Hosiery for her contribution in cooperative that she started along with Kirtipur Hosiery that has generated employment making women financially independent; Shyam Badan Yadav of Kalash Milk Industry, Dhorey Village, Parsa for providing income generating sources through milk collection centre he has established and by distributing free livestock — some 39 to start with and increasing to 100 in 1.5 months — to poor people in the village of Dhorey and neighbouring villages; Vijaya Develoment Resource Centre of Nawalparasi for its contribution in mainstreaming different dimensions of development under one umbrella encompassing education, media, microfinance and various other thematic areas following its vision of an equitable, affluent and self reliant society; Chhahari Services of Kathmandu that caters to women with no skills to generate income by empowering them through capacity building and income generating trainings were honoured with the awards.
"There are many ordinary people doing extraordinary work to create social, environmental and economic value," the organiser said, adding that the five winners have been recognised for their achievements and should encourage others to follow these examples of individuals creating value for the people, planet and profit.
The vision of the award is not only to celebrate the hidden heroes for their great initiatives but also to showcase their ventures and the impact they have made.
"After an intense process of short listing amongst 66 applicants, to narrow it down to the winners, ventures were physically visited to verify all relevant information and documents," the organisers added.
The winners will each get a package which includes a cash prize of Rs 1000,00 from Surya Nepal along with the opportunity of networking through ChangeFusion Nepal.
Each of the winners will have to disclose how the funds will be used and the money will be handed over by ChangeFusion Nepal. Updates on each of the winning ventures will be regularly posted on the ChangeFusion Nepal Social Media sites as well as the website. Surya Nepal Asha Social Entrepreneurship Award 2011 is sponsored by Surya Nepal, organised by ChangeFusion Nepal and supported by NBI.
Surya Nepal has recognised the contribution of the ordinary people that have made changes in the society.
Ram Sapkota of Mountain Delights Treks and Expedition and Tukee Nepal, Jyamrung — for the impact that has been made in Jyamrung, Dhading with projects range from eco toilets, micro hydro electricity, and health to education; Sabita Maharjan of Kirtipur Hosiery for her contribution in cooperative that she started along with Kirtipur Hosiery that has generated employment making women financially independent; Shyam Badan Yadav of Kalash Milk Industry, Dhorey Village, Parsa for providing income generating sources through milk collection centre he has established and by distributing free livestock — some 39 to start with and increasing to 100 in 1.5 months — to poor people in the village of Dhorey and neighbouring villages; Vijaya Develoment Resource Centre of Nawalparasi for its contribution in mainstreaming different dimensions of development under one umbrella encompassing education, media, microfinance and various other thematic areas following its vision of an equitable, affluent and self reliant society; Chhahari Services of Kathmandu that caters to women with no skills to generate income by empowering them through capacity building and income generating trainings were honoured with the awards.
"There are many ordinary people doing extraordinary work to create social, environmental and economic value," the organiser said, adding that the five winners have been recognised for their achievements and should encourage others to follow these examples of individuals creating value for the people, planet and profit.
The vision of the award is not only to celebrate the hidden heroes for their great initiatives but also to showcase their ventures and the impact they have made.
"After an intense process of short listing amongst 66 applicants, to narrow it down to the winners, ventures were physically visited to verify all relevant information and documents," the organisers added.
The winners will each get a package which includes a cash prize of Rs 1000,00 from Surya Nepal along with the opportunity of networking through ChangeFusion Nepal.
Each of the winners will have to disclose how the funds will be used and the money will be handed over by ChangeFusion Nepal. Updates on each of the winning ventures will be regularly posted on the ChangeFusion Nepal Social Media sites as well as the website. Surya Nepal Asha Social Entrepreneurship Award 2011 is sponsored by Surya Nepal, organised by ChangeFusion Nepal and supported by NBI.
Developing countries sovereign wealth fund assets to increase in development finance for LDCs
Channelling only a tiny part — one per cent — of the $3.5 trillion of foreign exchange reserves held by developing countries in their sovereign wealth funds to least developed countries (LDCs) can lead to a significant increase in development finance for these countries, claims the Least Developed Countries Report 2011 (LDC 2011), a leading UNCTAD publication.
The report, released today is subtitled 'The Potential Role of South-South Cooperation for Inclusive and Sustainable Development'.
The new proposal for increased South-South financial cooperation builds on the fact that using surplus financial resources from dynamic, emerging developing countries to fund development-oriented investment in LDCs can serve to build productive capacities, facilitate trade and support sustainable development. In addition to increasing access to financing for LDCs, such investments would provide sovereign wealth funds with an opportunity to further diversify their portfolios.
Given the declining prospects for increases in official development assistance from industrial countries facing fiscal austerity and possible limits for private flows due to the crisis, access to new forms of development finance is especially critical for building inclusive development paths in LDCs.
A very fragile global recovery and highly constrained international liquidity conditions call for the creation of major financial mechanisms that could enhance the lending capacity of institutions such as regional development banks. These banks can be significantly expanded to provide low interest loans to LDCs as an essential instrument to facilitate their development strategies.
In the context, UNCTAD is proposing that developing countries with sovereign wealth funds invest one per cent of their assets in regional development banks, for example in the form of increased paid-in capital. It should be done on a voluntary basis.
Generally, regional development banks have performed very well in providing effective development financing, but they require additional resources to fund crucial investments, and this approach could prove to be an optimal vehicle for channelling resources to LDCs. It could facilitate intensified regional infrastructure investment that can promote trade and provide finance for green technologies, it said, adding that the financial details must be drawn up on a regional basis. "Lenders and recipients should agree jointly on precise mechanisms and levels."
Regional development banks, like the Asian Development Bank (ADB), for example, are already playing a key role in facilitating regional economic integration. Greater involvement of the regional banks will enable a greater sense of regional ownership and control of development projects. Regional or subregional development banks often rely on informal peer pressure rather than imposing conditionality. It allows them to disburse resources in a more timely and flexible fashion.
They also tend to better reflect the experiences of successful developing countries, the report added.
Although LDCs have very limited power to negotiate with large global institutions, their voice can be amplified by regional or subregional development banks. Information asymmetries may be far smaller at the regional level. Therefore, regional public institutions may be well placed to provide regional public goods, especially those requiring large initial investments and regional coordination mechanisms.
Good examples include financing regional infrastructure and coordinating the financing of region-wide projects in areas such as technological innovation. Another important function of regional and subregional development banks is financing small and medium-sized enterprises. Financial sectors in most LDCs are mostly unable to fulfil these financing functions, as they remain shallow, underdeveloped and vulnerable to external shocks. In addition, the high level of indebtedness and dependence on foreign capital inflows means that LDCs are exceptionally exposed to external shocks.
The report, released today is subtitled 'The Potential Role of South-South Cooperation for Inclusive and Sustainable Development'.
The new proposal for increased South-South financial cooperation builds on the fact that using surplus financial resources from dynamic, emerging developing countries to fund development-oriented investment in LDCs can serve to build productive capacities, facilitate trade and support sustainable development. In addition to increasing access to financing for LDCs, such investments would provide sovereign wealth funds with an opportunity to further diversify their portfolios.
Given the declining prospects for increases in official development assistance from industrial countries facing fiscal austerity and possible limits for private flows due to the crisis, access to new forms of development finance is especially critical for building inclusive development paths in LDCs.
A very fragile global recovery and highly constrained international liquidity conditions call for the creation of major financial mechanisms that could enhance the lending capacity of institutions such as regional development banks. These banks can be significantly expanded to provide low interest loans to LDCs as an essential instrument to facilitate their development strategies.
In the context, UNCTAD is proposing that developing countries with sovereign wealth funds invest one per cent of their assets in regional development banks, for example in the form of increased paid-in capital. It should be done on a voluntary basis.
Generally, regional development banks have performed very well in providing effective development financing, but they require additional resources to fund crucial investments, and this approach could prove to be an optimal vehicle for channelling resources to LDCs. It could facilitate intensified regional infrastructure investment that can promote trade and provide finance for green technologies, it said, adding that the financial details must be drawn up on a regional basis. "Lenders and recipients should agree jointly on precise mechanisms and levels."
Regional development banks, like the Asian Development Bank (ADB), for example, are already playing a key role in facilitating regional economic integration. Greater involvement of the regional banks will enable a greater sense of regional ownership and control of development projects. Regional or subregional development banks often rely on informal peer pressure rather than imposing conditionality. It allows them to disburse resources in a more timely and flexible fashion.
They also tend to better reflect the experiences of successful developing countries, the report added.
Although LDCs have very limited power to negotiate with large global institutions, their voice can be amplified by regional or subregional development banks. Information asymmetries may be far smaller at the regional level. Therefore, regional public institutions may be well placed to provide regional public goods, especially those requiring large initial investments and regional coordination mechanisms.
Good examples include financing regional infrastructure and coordinating the financing of region-wide projects in areas such as technological innovation. Another important function of regional and subregional development banks is financing small and medium-sized enterprises. Financial sectors in most LDCs are mostly unable to fulfil these financing functions, as they remain shallow, underdeveloped and vulnerable to external shocks. In addition, the high level of indebtedness and dependence on foreign capital inflows means that LDCs are exceptionally exposed to external shocks.
Govt plans separate agency to monitor big cooperatives
The government is planning to form a separate agency to monitor big cooperatives after central bank refused to monitor them.
Department of Cooperatives is creating a new agency, said registrar of the department Sudarshan Prasad Dhakal.
"We have submitted a detail proposal to the Ministry of Agriculture and Cooperatives to form a separate agency inside the department," he said, adding that the ministry has forwarded the proposal to Finance Ministry and Ministry of General Administration for their consent in budgeting and staffing issues.
"It will come under the department but gets a separate jurisdiction to monitor cooperatives," he said, adding that it will start monitoring and inspection from cooperatives that have over Rs 50 million annual transactions.
There are around 15,000 saving and credit cooperatives in the country but some 200 cooperatives have such big transactions.
Most of the big cooperatives are in the Kathmandu Valley, Kathmandu, Lalitpur and Bhaktapur districts. Around 12 per cent cooperatives are in the major towns like Biratnagar, Pokhara, Birgunj, Butwal and Nepalgunj.
According to him, the department has proposed a joint-secretary level chief monitoring officer, five section officers and a dozen of supporting staff for the monitoring wing. "Nepal Rastra Bank (NRB) will provide technical support to the team," Dhakal said, adding that the central bank is also positive on the new agency.
The department data revealed that cooperative sector has around Rs 111 billion deposit and mobilised loans worth Rs 97 billion in the different sectors. Savings and credit cooperatives have a share of 87.38 per cent deposits and almost equal share in lending too.
Financial activities of saving and credit cooperative has come under public criticism in recent years as they are not abiding by the basic norms of cooperative – cooperation and collaboration among members but are more profit oriented and have lent heavily on lands.
The economists have been urging the government to strictly monitor the sector for the financial sector's stability. And, the government has promised to monitor big saving and credit cooperative through central bank in the budget for the fiscal year 2011-12.
Department of Cooperatives is creating a new agency, said registrar of the department Sudarshan Prasad Dhakal.
"We have submitted a detail proposal to the Ministry of Agriculture and Cooperatives to form a separate agency inside the department," he said, adding that the ministry has forwarded the proposal to Finance Ministry and Ministry of General Administration for their consent in budgeting and staffing issues.
"It will come under the department but gets a separate jurisdiction to monitor cooperatives," he said, adding that it will start monitoring and inspection from cooperatives that have over Rs 50 million annual transactions.
There are around 15,000 saving and credit cooperatives in the country but some 200 cooperatives have such big transactions.
Most of the big cooperatives are in the Kathmandu Valley, Kathmandu, Lalitpur and Bhaktapur districts. Around 12 per cent cooperatives are in the major towns like Biratnagar, Pokhara, Birgunj, Butwal and Nepalgunj.
According to him, the department has proposed a joint-secretary level chief monitoring officer, five section officers and a dozen of supporting staff for the monitoring wing. "Nepal Rastra Bank (NRB) will provide technical support to the team," Dhakal said, adding that the central bank is also positive on the new agency.
The department data revealed that cooperative sector has around Rs 111 billion deposit and mobilised loans worth Rs 97 billion in the different sectors. Savings and credit cooperatives have a share of 87.38 per cent deposits and almost equal share in lending too.
Financial activities of saving and credit cooperative has come under public criticism in recent years as they are not abiding by the basic norms of cooperative – cooperation and collaboration among members but are more profit oriented and have lent heavily on lands.
The economists have been urging the government to strictly monitor the sector for the financial sector's stability. And, the government has promised to monitor big saving and credit cooperative through central bank in the budget for the fiscal year 2011-12.
Revenue mobilisation looks down to target
The revenue leakages have hit the government revenue mobilisation target.
According to Finance Ministry, it has suffered a revenue shortfall of Rs 6 billion compared to its target during the first quarter of the current fiscal year.
The government has been failing to meet its revenue target since the first month of current fiscal year, the ministry source said, adding that the revenue mobilisation started falling short since the first month of the current fiscal year and could not meet its annual target, if the trend continued.
The government had set the target of Rs 16.70 billion for mid-October to mid-November, joint secretary Shanta Raj Subedi said, adding that the primary data has showed that the target will fall by Rs 700 million short.
However, the ministry said that it will make up the shortfall by increasing non-tax revenue. "The ministry is optimist that it could increase the contribution of non-tax revenue," under secretary Ganga Prasad Sharma said, adding that the revenue mobilisation will increase once public enterprises start to pay royalty.
"The registration fee and other non-tax revenue collection are also expected to increase in the coming months," he added, "Rs 6 billion shortfall is not a big deal."
However, the contribution of the non-tax revenue has negligible share in the total revenue mobilisation. "The government has only a couple of entities that can pay it tax," according to another official at the Finance Ministry.
Fines, penalties, service fees, judicial fees, registration fee comes under non-tax revenue, the ministry source said, adding that non-tax revenue collection cannot work miracle since the transaction of real estate has slumped and most of the public enterprises themselves are in the dire need of capital injection.
The Value Added Tax (VAT) is the largest contributor in the revenue followed by income tax, according to the last year's revenue mobilisation data.
The government had planned to mobilise Rs 248 billion revenue in the current fiscal year but it seems it cannot be able to meet target, like the last fiscal year, when it had recorded Rs 6 billion shortfall in its revenue mobilisation target.
IRD probes 405 firms
KATHMANDU: Inland Revenue Department (IRD) has completed the investigation of 405 firms that had 'cheated' the national coffer by producing fake VAT bills. The department has fixed Rs 3.58 billion revenue from these firms, the department source said, adding that it will complete the investigation of rests of the 113 firms soon. "Most of the remaining cases are related to the large taxpayers," it said.
According to Finance Ministry, it has suffered a revenue shortfall of Rs 6 billion compared to its target during the first quarter of the current fiscal year.
The government has been failing to meet its revenue target since the first month of current fiscal year, the ministry source said, adding that the revenue mobilisation started falling short since the first month of the current fiscal year and could not meet its annual target, if the trend continued.
The government had set the target of Rs 16.70 billion for mid-October to mid-November, joint secretary Shanta Raj Subedi said, adding that the primary data has showed that the target will fall by Rs 700 million short.
However, the ministry said that it will make up the shortfall by increasing non-tax revenue. "The ministry is optimist that it could increase the contribution of non-tax revenue," under secretary Ganga Prasad Sharma said, adding that the revenue mobilisation will increase once public enterprises start to pay royalty.
"The registration fee and other non-tax revenue collection are also expected to increase in the coming months," he added, "Rs 6 billion shortfall is not a big deal."
However, the contribution of the non-tax revenue has negligible share in the total revenue mobilisation. "The government has only a couple of entities that can pay it tax," according to another official at the Finance Ministry.
Fines, penalties, service fees, judicial fees, registration fee comes under non-tax revenue, the ministry source said, adding that non-tax revenue collection cannot work miracle since the transaction of real estate has slumped and most of the public enterprises themselves are in the dire need of capital injection.
The Value Added Tax (VAT) is the largest contributor in the revenue followed by income tax, according to the last year's revenue mobilisation data.
The government had planned to mobilise Rs 248 billion revenue in the current fiscal year but it seems it cannot be able to meet target, like the last fiscal year, when it had recorded Rs 6 billion shortfall in its revenue mobilisation target.
IRD probes 405 firms
KATHMANDU: Inland Revenue Department (IRD) has completed the investigation of 405 firms that had 'cheated' the national coffer by producing fake VAT bills. The department has fixed Rs 3.58 billion revenue from these firms, the department source said, adding that it will complete the investigation of rests of the 113 firms soon. "Most of the remaining cases are related to the large taxpayers," it said.
Saturday, November 19, 2011
Farmers get double price for organic tea
Farmers are getting double price for orthodox tea green leaves after being quality certified.
"They are being paid up to Rs 60 per kg of green leaves," said senior programme officer at the Inclusive Development of the Economy (Include) of Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) Arun Rana.
"The amount is more than double the average for orthodox tea green leaves," he said, adding that the Private Public Partnership for Organic Tea Promotion in Ilam has been successful in making tea farmers more quality aware.
"In addition, both the Sunderpaani and Kolbung Cooperatives get additional payments per kg to cover their office expenses," Rana added.
Under the promotion programme, the IMO/EU certification has also enhanced the capacity of organic farming for more than 200 farmers. "Of them 166 tea farmers are certified as organic first time in Nepal and additional 62 farmers are in the stage of conversion," he added.
Through the project, Gorkha Tea Estate has been able to capacitate over 200 smallholder-farmer households towards attaining future market security and they are fetching almost double to Rs 45 to Rs 50, the market average rate for a kg of green leaves.
The successful Private Public Partnership has brought about notable results in the orthodox tea green leaves' farmers due to GIZ Private Public Partnership Project that has not not only be scaled up in the tea subsector but also needs to be replicated in other agriculture subsectors, according to chairman of Gorkha Tea Estate — the first IMO (Switzerland based) and EU certified organic tea in Nepal — Uday Chapagain.
An initiative of GIZ, the 'Organic production of high quality tea in rural areas of Nepal' is a partnership between Gorkha Tea Estate and Tee Geschwender.
Germans tea consumption has increased to 4,500 tonne per annum from earlier 500 tonne, Thomas Holz of Tee Geschwender said, adding that the Germans prefer the quality tea. "Nepali green orthodox tea has great potential as Nepal produces various types of green tea," he added. "With a little more effort Nepal can export more to Germany." Tee Geschwender is one of the biggest tea retailers in Germany with about 25 per cent of the specialised tea trade.
"They are being paid up to Rs 60 per kg of green leaves," said senior programme officer at the Inclusive Development of the Economy (Include) of Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) Arun Rana.
"The amount is more than double the average for orthodox tea green leaves," he said, adding that the Private Public Partnership for Organic Tea Promotion in Ilam has been successful in making tea farmers more quality aware.
"In addition, both the Sunderpaani and Kolbung Cooperatives get additional payments per kg to cover their office expenses," Rana added.
Under the promotion programme, the IMO/EU certification has also enhanced the capacity of organic farming for more than 200 farmers. "Of them 166 tea farmers are certified as organic first time in Nepal and additional 62 farmers are in the stage of conversion," he added.
Through the project, Gorkha Tea Estate has been able to capacitate over 200 smallholder-farmer households towards attaining future market security and they are fetching almost double to Rs 45 to Rs 50, the market average rate for a kg of green leaves.
The successful Private Public Partnership has brought about notable results in the orthodox tea green leaves' farmers due to GIZ Private Public Partnership Project that has not not only be scaled up in the tea subsector but also needs to be replicated in other agriculture subsectors, according to chairman of Gorkha Tea Estate — the first IMO (Switzerland based) and EU certified organic tea in Nepal — Uday Chapagain.
An initiative of GIZ, the 'Organic production of high quality tea in rural areas of Nepal' is a partnership between Gorkha Tea Estate and Tee Geschwender.
Germans tea consumption has increased to 4,500 tonne per annum from earlier 500 tonne, Thomas Holz of Tee Geschwender said, adding that the Germans prefer the quality tea. "Nepali green orthodox tea has great potential as Nepal produces various types of green tea," he added. "With a little more effort Nepal can export more to Germany." Tee Geschwender is one of the biggest tea retailers in Germany with about 25 per cent of the specialised tea trade.
Nepal to host global hospitality conference next week
Nepal is hosting 49th edition of world congress of International Hotel and Resturant Association (IH&RA) on November 28-30.
President of IH&RA Dr Ghassan Aidi landed in Kathmandu today to attend the three-day congress that will address the important global issues of climate change and hospitality, international standardisation for hotels and restaurants, the future of hospitality industry and its contribution in reducing poverty.
"During the congress contemporary topics like investment and realities will also be discussed,” informed president of the Hotel Association Nepal (HAN) Prasiddha Bahadur Pandey.
The organisers have expected around 200 international and national delegates to participate in the congress that Nepal has been trying to host since 2007. "In 2009, HAN bid for the IH&RA world congress but lost the bid securing third position but retried again in January 2010 in Lausanne, Switzerland and won the bid to organise the 49th IH&RA world congress for the year 2012,” Pandey said, adding that they have estimated a budget of Rs 11.5 million for the programme.
The event that is expected to be attended by over 50 chain hotels and restaurants across the globe will be inaugurated by President Dr Ram Baran Yadav on November 28.
International Hotel and Resturant Association — the only global business organisation representing the hospitality industries worldwide — was established in 1869 in Koblenz Germany and moved to Switzerland in 2008. It's members are national hotels and restaurants associations as well as local and international hotels chains representing around 50 brands. It also includes allied members like suppliers to the industry, educational institutes, consultants, and complementary hospitality and travel and tourism associations.
Officially recognised by UN, the IH&RA monitors and lobbies all international organisations and agencies. On behalf of the hospitality industry, the IH&RA estimated to comprise 300,000 hotels and seven million restaurants worldwide.
President of IH&RA Dr Ghassan Aidi landed in Kathmandu today to attend the three-day congress that will address the important global issues of climate change and hospitality, international standardisation for hotels and restaurants, the future of hospitality industry and its contribution in reducing poverty.
"During the congress contemporary topics like investment and realities will also be discussed,” informed president of the Hotel Association Nepal (HAN) Prasiddha Bahadur Pandey.
The organisers have expected around 200 international and national delegates to participate in the congress that Nepal has been trying to host since 2007. "In 2009, HAN bid for the IH&RA world congress but lost the bid securing third position but retried again in January 2010 in Lausanne, Switzerland and won the bid to organise the 49th IH&RA world congress for the year 2012,” Pandey said, adding that they have estimated a budget of Rs 11.5 million for the programme.
The event that is expected to be attended by over 50 chain hotels and restaurants across the globe will be inaugurated by President Dr Ram Baran Yadav on November 28.
International Hotel and Resturant Association — the only global business organisation representing the hospitality industries worldwide — was established in 1869 in Koblenz Germany and moved to Switzerland in 2008. It's members are national hotels and restaurants associations as well as local and international hotels chains representing around 50 brands. It also includes allied members like suppliers to the industry, educational institutes, consultants, and complementary hospitality and travel and tourism associations.
Officially recognised by UN, the IH&RA monitors and lobbies all international organisations and agencies. On behalf of the hospitality industry, the IH&RA estimated to comprise 300,000 hotels and seven million restaurants worldwide.
Friday, November 18, 2011
Central bank closes refinancing window
The central bank has closed all the refinancing facilities — except for the Lender of the Last Resort — provided to banks and financial institutions as the liquidity situation has got comfortable in lately.
Nepal Rastra Bank (NRB) has annulled the provision of refinancing the banks and financial institutions that are in need of additional liquidity, spokesperson for the central bank Bhaskar Mani Gyawali said, adding that they are now in comfortable position with their liquidity situation so NRB has decided to close all the refinancing windows.
Central bank had introduced the provision, when the banks and financial institutions had faced light liquidity situation in June. The provision allowed commercial banks, development banks and finance companies eligible for refinancing facility up to 60 per cent of their core capital to manage liquidity. Then banks and financial institutions got their good loans refinances up to 80 per cent against the collateral of good loans at seven per cent interest rate. Earlier central bank only provided refinancing facilities to productive sector loans or to the loans floated to sick industries.
Since last couple of months the liquidity in financial sector has eased so that commercial banks alone are supposed to be in possession of surplus liquidity about Rs 40 billion. However, almost half of the development banks and finance companies are still in difficult waters in terms of liquidity. "There is 'Lender to Last Resort' provision for those financial institutions that need financial assistance to manage liquidity, moreover, the refinancing provision and 'Lender to Last is almost same," pointed out NRB's spokesperson.
The new directive regarding Lender to Last Resort provision issued in March will also provide finances to the banks and financial institutions, if they are unable to meet their immediate liabilities resulting from large withdrawal of deposit at the prevailing bank rate -that is -seven per cent.
Nepal Rastra Bank (NRB) has annulled the provision of refinancing the banks and financial institutions that are in need of additional liquidity, spokesperson for the central bank Bhaskar Mani Gyawali said, adding that they are now in comfortable position with their liquidity situation so NRB has decided to close all the refinancing windows.
Central bank had introduced the provision, when the banks and financial institutions had faced light liquidity situation in June. The provision allowed commercial banks, development banks and finance companies eligible for refinancing facility up to 60 per cent of their core capital to manage liquidity. Then banks and financial institutions got their good loans refinances up to 80 per cent against the collateral of good loans at seven per cent interest rate. Earlier central bank only provided refinancing facilities to productive sector loans or to the loans floated to sick industries.
Since last couple of months the liquidity in financial sector has eased so that commercial banks alone are supposed to be in possession of surplus liquidity about Rs 40 billion. However, almost half of the development banks and finance companies are still in difficult waters in terms of liquidity. "There is 'Lender to Last Resort' provision for those financial institutions that need financial assistance to manage liquidity, moreover, the refinancing provision and 'Lender to Last is almost same," pointed out NRB's spokesperson.
The new directive regarding Lender to Last Resort provision issued in March will also provide finances to the banks and financial institutions, if they are unable to meet their immediate liabilities resulting from large withdrawal of deposit at the prevailing bank rate -that is -seven per cent.
CIB nabs former chairman of NDB Amar Gurung
The Central Investigation Bureau of Nepal Police today arrested former chairman of Nepal Development Bank, Amar Gurung, for misappropriating Rs 360.5 million.
He was arrested from Maharajgunj, where he had been hiding. Gurung (62) of Armola, Kaski, had been on the run since 2009.
CIB Chief DIG Upendra Kant Aryal said the central bank had found Gurung guilty of misusing loan and bank resources, sanctioning illegal loan, siphoning off deposit, and defrauding depositors and investors against Nepal Rastra Bank Act, Banking Offences and Punishment Act and ‘Fraud Chapter’ of Civil Code.
“Gurung had abused the authority and cheated depositors and investors of around Rs 360.5 million,” said DIG Aryal.
The investigating bureau said it had also launched a manhunt to nab Uttam Pun (50) of Kusunti, Lalitpur, for embezzling millions of rupees and deteriorating financial health of NDB. Pun, former executive chairman of the bank, is still at large. Gurung has been referred to Metropolitan Police Range, Hanumandhoka, to press banking offence charges against him.
On July 9, 2009, the central bank had moved Patan Appellate Court seeking liquidation of the troubled Nepal Development Bank. Following a court decision, the bank had gone to liquidation on December 18, 2009, becoming the first domestic bank to have been asked to terminate its business. Though it had a paid-up capital of Rs 320 million, losses were pegged at around Rs 670.87 million. It had total assets worth Rs 730.13 million, but the non-performing assets (NPA) stood at 55.09 per cent and capital adequacy ratio a whopping 48.31 per cent — almost five times more than the permissible limit.
The bank had Rs 720 million in deposits, of which more than two-thirds belongs to Employees Provident Fund (EPF) and the Nepali Army Welfare fund.
NDB — Nepal’s first development bank that started its operations in 1998 — had been ailing for many years. The former chairman Uttam Pun who had shares worth Rs 1.6 billion was asked to step down by the central bank and Gurung was appointed as the chairman.
The central bank had declared NDB an ailing institution on October 11, 2007. Over the years, NDB never followed the central bank’s regulatory obligations, instead frittered away depositors’ money and moved to court to stop central bank’s directives.
Uttam Pun — the then executive chairman and promoter of NDB — had repeatedly moved the Appellate Court, and got a reprieve from the judiciary even as the unsuspecting public continued to deposit in his institution. The bank had Rs 720 million in deposits of which more than two-thirds belongs to Employees Provident Fund (EPF) and Nepal Army Welfare fund.
EPF had Rs 331 million and Army Welfare Fund had Rs 180 million in fixed term deposits, which was later changed to call deposit as it had not been able to pay back the deposits even after the maturity of the fixed terms.
He was arrested from Maharajgunj, where he had been hiding. Gurung (62) of Armola, Kaski, had been on the run since 2009.
CIB Chief DIG Upendra Kant Aryal said the central bank had found Gurung guilty of misusing loan and bank resources, sanctioning illegal loan, siphoning off deposit, and defrauding depositors and investors against Nepal Rastra Bank Act, Banking Offences and Punishment Act and ‘Fraud Chapter’ of Civil Code.
“Gurung had abused the authority and cheated depositors and investors of around Rs 360.5 million,” said DIG Aryal.
The investigating bureau said it had also launched a manhunt to nab Uttam Pun (50) of Kusunti, Lalitpur, for embezzling millions of rupees and deteriorating financial health of NDB. Pun, former executive chairman of the bank, is still at large. Gurung has been referred to Metropolitan Police Range, Hanumandhoka, to press banking offence charges against him.
On July 9, 2009, the central bank had moved Patan Appellate Court seeking liquidation of the troubled Nepal Development Bank. Following a court decision, the bank had gone to liquidation on December 18, 2009, becoming the first domestic bank to have been asked to terminate its business. Though it had a paid-up capital of Rs 320 million, losses were pegged at around Rs 670.87 million. It had total assets worth Rs 730.13 million, but the non-performing assets (NPA) stood at 55.09 per cent and capital adequacy ratio a whopping 48.31 per cent — almost five times more than the permissible limit.
The bank had Rs 720 million in deposits, of which more than two-thirds belongs to Employees Provident Fund (EPF) and the Nepali Army Welfare fund.
NDB — Nepal’s first development bank that started its operations in 1998 — had been ailing for many years. The former chairman Uttam Pun who had shares worth Rs 1.6 billion was asked to step down by the central bank and Gurung was appointed as the chairman.
The central bank had declared NDB an ailing institution on October 11, 2007. Over the years, NDB never followed the central bank’s regulatory obligations, instead frittered away depositors’ money and moved to court to stop central bank’s directives.
Uttam Pun — the then executive chairman and promoter of NDB — had repeatedly moved the Appellate Court, and got a reprieve from the judiciary even as the unsuspecting public continued to deposit in his institution. The bank had Rs 720 million in deposits of which more than two-thirds belongs to Employees Provident Fund (EPF) and Nepal Army Welfare fund.
EPF had Rs 331 million and Army Welfare Fund had Rs 180 million in fixed term deposits, which was later changed to call deposit as it had not been able to pay back the deposits even after the maturity of the fixed terms.
World Bank's Goldstein meets Prime Minister
Donors have admired the Seven Point Agreement between the major political parties on November 1.
In a meeting with Prime Minister Dr Baburam Bhattarai at his office today, the World Bank country director for Nepal and Bangladesh Ellen Goldstein welcomed the landmark deal and reaffiramed the World Bank's stand to help Nepal keep the momentum.
"We at the World Bank have long held the view that Nepal needs to come to early closure on the outstanding issues of peace and constitution writing in order to get on a path of accelerated development,” she said, adding that the bank would like to support Nepal in addressing short-run economic challenges in the areas of fiscal management and the financial sector.
Goldstein also shared the highlights of the World Bank Group’s Interim Strategy for Nepal for the Fiscal Years 2012 and 2013 and informed the Prime Minister that the Bank’s financial commitment to Nepal has more than tripled in the past five years.
She also introduced the World Bank’s new Country Manager for Nepal Tahseen Sayed to the Prime Minister. While Goldstein is based in Dhaka, Sayed will provide leadership to the bank’s day to day operations in Nepal out of the Kathmandu Office starting on January 15, 2012.Sayed, who joined the World Bank in 1996, has over fifteen years of experience in project management experience.
She moved to the bank’s Bangladesh Office in December 2008 as operations advisor and deputy country director. Before joining the World Bank, she held a number of positions in the Canadian International Development Agency, the Pakistan Institute of Strategic Studies, the Center for Documentation and Research of the Ministry of Foreign Affairs, United Arab Emirates (UAE), and the Center for Strategic and International Studies, Washington DC.
She holds a degree in Law and Diplomacy from the Fletcher School at Tufts University.
In a meeting with Prime Minister Dr Baburam Bhattarai at his office today, the World Bank country director for Nepal and Bangladesh Ellen Goldstein welcomed the landmark deal and reaffiramed the World Bank's stand to help Nepal keep the momentum.
"We at the World Bank have long held the view that Nepal needs to come to early closure on the outstanding issues of peace and constitution writing in order to get on a path of accelerated development,” she said, adding that the bank would like to support Nepal in addressing short-run economic challenges in the areas of fiscal management and the financial sector.
Goldstein also shared the highlights of the World Bank Group’s Interim Strategy for Nepal for the Fiscal Years 2012 and 2013 and informed the Prime Minister that the Bank’s financial commitment to Nepal has more than tripled in the past five years.
She also introduced the World Bank’s new Country Manager for Nepal Tahseen Sayed to the Prime Minister. While Goldstein is based in Dhaka, Sayed will provide leadership to the bank’s day to day operations in Nepal out of the Kathmandu Office starting on January 15, 2012.Sayed, who joined the World Bank in 1996, has over fifteen years of experience in project management experience.
She moved to the bank’s Bangladesh Office in December 2008 as operations advisor and deputy country director. Before joining the World Bank, she held a number of positions in the Canadian International Development Agency, the Pakistan Institute of Strategic Studies, the Center for Documentation and Research of the Ministry of Foreign Affairs, United Arab Emirates (UAE), and the Center for Strategic and International Studies, Washington DC.
She holds a degree in Law and Diplomacy from the Fletcher School at Tufts University.
FAO celebrates six decades of operation in Nepal
Food and Agriculture Organisation (FAO) of United Nations in Nepal and Ministry of Agriculture and Cooperatives jointly celebrated FAO’s 60 years of collaboration in Kathmandu today.
On the occasion, FAO representative in Nepal Bui Thi Lan expressed FAO's appreciation to the government and all stakeholders for their support and reiterate its continued cooperation and commitment to working in Nepal with farmers to address the challenges and opportunities associated with agriculture and rural development for a hunger-free Nepal.
Nepal became a member of FAO on November 21, 1951. It was the first among the UN agencies to start its technical assistance and field level work in Nepal. During last 60 years of service, Nepal FAO office has made great strides in vital areas of agriculture and rural development by providing advice on policy matters and technical support in relevant sub sectors in Nepal. FAO has also played an active role in times of disaster and emergency to provide urgent humanitarian support.
During the period, several hundred projects and programmes have been implemented by FAO, embracing a broad range of programmes related to crops, livestock, forestry, fishery, food and nutrition security, rural development and environment conservation.
'United Against Hunger' was a campaign organised by FAO worldwide to recognise the efforts made in the fight against world hunger at national, regional and international level. In the same spirit Nepal FAO office also organised a nationwide campaign engaging different sectors, focused on amplifying the message that society has to take special care to ensure no one goes hungry.
To this effect FAO Nepal office collected the highest number of signatures in the world from wide range of Nepalese citizens reconfirming the willingness to fight against hunger.
The achievement of 60 years of cooperation was seen an opportune moment to reflect upon the successes achieved over those years while at the same time reaffirming the commitment and cooperation of the government and FAO to maintain the momentum in the future.The function was inaugurated by vice president Parmananda Jha.
On the occasion, FAO representative in Nepal Bui Thi Lan expressed FAO's appreciation to the government and all stakeholders for their support and reiterate its continued cooperation and commitment to working in Nepal with farmers to address the challenges and opportunities associated with agriculture and rural development for a hunger-free Nepal.
Nepal became a member of FAO on November 21, 1951. It was the first among the UN agencies to start its technical assistance and field level work in Nepal. During last 60 years of service, Nepal FAO office has made great strides in vital areas of agriculture and rural development by providing advice on policy matters and technical support in relevant sub sectors in Nepal. FAO has also played an active role in times of disaster and emergency to provide urgent humanitarian support.
During the period, several hundred projects and programmes have been implemented by FAO, embracing a broad range of programmes related to crops, livestock, forestry, fishery, food and nutrition security, rural development and environment conservation.
'United Against Hunger' was a campaign organised by FAO worldwide to recognise the efforts made in the fight against world hunger at national, regional and international level. In the same spirit Nepal FAO office also organised a nationwide campaign engaging different sectors, focused on amplifying the message that society has to take special care to ensure no one goes hungry.
To this effect FAO Nepal office collected the highest number of signatures in the world from wide range of Nepalese citizens reconfirming the willingness to fight against hunger.
The achievement of 60 years of cooperation was seen an opportune moment to reflect upon the successes achieved over those years while at the same time reaffirming the commitment and cooperation of the government and FAO to maintain the momentum in the future.The function was inaugurated by vice president Parmananda Jha.
Thursday, November 17, 2011
Effective monitoring must for fruitful execution
Budget execution and monitoring, accounting system, lack of human resource and motivation of civil servants, lack of understanding of the role of various actors in reviewing and assessment of aid effectiveness have hit the development activities hard, according to Nepal Portfolio Performance Review 2011 (NPPR) meeting — a key dialogue mechanism between the government and its donor partners — organised here today.
"Budget execution follows elaborate and complex process and monitoring of the implementation process is weak," the review said, adding that the pace of expenditure is uneven, with 60 per cent of spending taking place in the last two months, especially in the development budget.
Finance secretary Krishna Hari Baskota, on the occasion, shared that the government is revising Foreign Aid Policy in the changed context. "But, aid commitment is not enough, we need to improve programme performance and increase aid disbursement, he added.
Foreign aid plays an important role in the country's socio-economic development and it has contributed 26 per cent to the budget for the fiscal year 2010-11, he said, adding that over the last one decade Nepal has made significant efforts to ensure aid effectiveness.
Similarly, finance minister Barsha Man Pun stressed on importance of donors support in budget.
Nepal Portfolio Performance Review (NPPR) meeting has become the annual platform for the donors and government to interact face to face on development issues after the government owned it since 2006. This year's meeting will discuss on five issues; Human resource management, public finance management, procurement, MfDR and mutual accountability.
The donors and related ministries will brainstorm on the selected issues in groups and draw an action plan for the better coordination of aid to make it more effective."The meeting will help address bottlenecks in development activities' progress and effectively monitor the aid apart from alignment in national system and mutual accountability," according to Foreign Aid Department chief of Finance Ministry Lal Shanker Ghimire.
Similarly, JICA Nepal — one of the partners of NPPR since its beginning — chief representative Mitsuyoshi Kawasaki said that achieving full compliance of annually planned actions is still a challenge. "All the policies or programmes designed are either not implemented fully or the changes not measured," he said, urging to focus and lead towards full compliance of what is committed.
On the occasion, the development partners raised question on government's view on Common Results Framework to align donors' work, long term plan, Foreign Aid Policy review and Busan meeting on aid effectiveness that Nepal is also taking part in November end.
Similarly, 2011 Survey on Monitoring the Paris Declaration-Nepal Country Report has recommended donors to reduce and streamline conditionality as far as possible to enhance ownership and leadership of the government.
"Budget execution follows elaborate and complex process and monitoring of the implementation process is weak," the review said, adding that the pace of expenditure is uneven, with 60 per cent of spending taking place in the last two months, especially in the development budget.
Finance secretary Krishna Hari Baskota, on the occasion, shared that the government is revising Foreign Aid Policy in the changed context. "But, aid commitment is not enough, we need to improve programme performance and increase aid disbursement, he added.
Foreign aid plays an important role in the country's socio-economic development and it has contributed 26 per cent to the budget for the fiscal year 2010-11, he said, adding that over the last one decade Nepal has made significant efforts to ensure aid effectiveness.
Similarly, finance minister Barsha Man Pun stressed on importance of donors support in budget.
Nepal Portfolio Performance Review (NPPR) meeting has become the annual platform for the donors and government to interact face to face on development issues after the government owned it since 2006. This year's meeting will discuss on five issues; Human resource management, public finance management, procurement, MfDR and mutual accountability.
The donors and related ministries will brainstorm on the selected issues in groups and draw an action plan for the better coordination of aid to make it more effective."The meeting will help address bottlenecks in development activities' progress and effectively monitor the aid apart from alignment in national system and mutual accountability," according to Foreign Aid Department chief of Finance Ministry Lal Shanker Ghimire.
Similarly, JICA Nepal — one of the partners of NPPR since its beginning — chief representative Mitsuyoshi Kawasaki said that achieving full compliance of annually planned actions is still a challenge. "All the policies or programmes designed are either not implemented fully or the changes not measured," he said, urging to focus and lead towards full compliance of what is committed.
On the occasion, the development partners raised question on government's view on Common Results Framework to align donors' work, long term plan, Foreign Aid Policy review and Busan meeting on aid effectiveness that Nepal is also taking part in November end.
Similarly, 2011 Survey on Monitoring the Paris Declaration-Nepal Country Report has recommended donors to reduce and streamline conditionality as far as possible to enhance ownership and leadership of the government.
Global smartphone sales up by 42 per cent
Worldwide sales of mobile devices totaled 440.5 million units in the third quarter of 2011, up by 5.6 per cent from the same period last year, according to Gartner.
Non-smartphone devices performed well, driven by demand in emerging markets for low-cost devices from white-box manufacturers and for dual-Sim models. Regions such as Asia/Pacific and the Middle East and Africa made up for a weaker performance in the Western European market and are expected to support growth over the full year, the market researcher said.
Smartphone sales to end users reached 115 million units in the third quarter, up by 42 per cent from a year earlier. Sequentially, smartphone sales slowed to seven per cent growth from the second quarter.
Smartphones accounted for 26 per cent of all mobile phone sales, growing only marginally from 25 per cent in the previous quarter. Strong smartphone growth in China and Russia helped increase overall volumes in the quarter, but demand for smartphones stalled in advanced markets such as Western Europe and the US as many users waited for new flagship devices, Gartner added.
Slowdowns also occurred in Latin America and the Middle East and Africa. Nokia continued to be the worldwide leader in mobile device sales with a 23.9 per cent market share, followed by Samsung with 17.8 per cent. However, Samsung became the world's top smartphone vendor, driven by growth in Asia and Western Europe and demand for its Galaxy handsets. Android was the leading operating system, accounting for 52.5 per cent of smartphones sold. Symbian followed with 16.9 per cent, Apple's iOS was at 15 per cent, and Research In Motion's (RIM) BlackBerry accounted for 11 per cent.
Non-smartphone devices performed well, driven by demand in emerging markets for low-cost devices from white-box manufacturers and for dual-Sim models. Regions such as Asia/Pacific and the Middle East and Africa made up for a weaker performance in the Western European market and are expected to support growth over the full year, the market researcher said.
Smartphone sales to end users reached 115 million units in the third quarter, up by 42 per cent from a year earlier. Sequentially, smartphone sales slowed to seven per cent growth from the second quarter.
Smartphones accounted for 26 per cent of all mobile phone sales, growing only marginally from 25 per cent in the previous quarter. Strong smartphone growth in China and Russia helped increase overall volumes in the quarter, but demand for smartphones stalled in advanced markets such as Western Europe and the US as many users waited for new flagship devices, Gartner added.
Slowdowns also occurred in Latin America and the Middle East and Africa. Nokia continued to be the worldwide leader in mobile device sales with a 23.9 per cent market share, followed by Samsung with 17.8 per cent. However, Samsung became the world's top smartphone vendor, driven by growth in Asia and Western Europe and demand for its Galaxy handsets. Android was the leading operating system, accounting for 52.5 per cent of smartphones sold. Symbian followed with 16.9 per cent, Apple's iOS was at 15 per cent, and Research In Motion's (RIM) BlackBerry accounted for 11 per cent.
Wednesday, November 16, 2011
Rising food price hike to increase number of poors
Stronger dollar coupled with food price hike fuelled by rising international fuel prices is going to drag down more populace below the poverty line.
According to International Monetary Fund (IMF), external spillovers from India, international oil prices — due to diversified consumption pattern alongside rising per capital income and increasing economic openness — nominal effective exchange rate, and domestic monetary factors are key to inflation in Nepal.
The government is planning to hike the fuel prices, which according to IMF's inflation dynamics of Nepal, is the key reason for food price hike.
"Nepal’s inflation should move closely with that of India," it said, adding that it was generally true up until 2007-08, but since then Nepal’s inflation —food and nonfood — has been consistently higher. "The cumulative difference of Nepal’s price indices from those of India, which rose dramatically from 2007-08 has more than quadrupled that of nonfood by early 2011.
The responsiveness to international oil prices and the exchange rate has increased in recent years, it said, adding that there is no evidence of monetary policy tools being actively used to manage inflation that is going to contribute in increasing poverty.
According to recent report of Asian Development Bank (ADB), a 20 per cent food price inflation would cause the poverty ratio to rise by over four percentage points, increasing the poor population by more than one million.
According to Central Statistic Bureau (CBS), a quarter of the total 26.62 million population is under the new poverty line meaning they earn less than Rs 54 per day on the basis of consumption.
The rising inflation will pull one million more down to 7.7 million population under the poverty line from the current around 6.7 million poor in the country thanks to the current trend of rising food prices that is above the average of developing Asia.
Both India’s inflation and international oil prices have strong spillovers — one third of the impact — to Nepal. But imported inflation has a quick spillover effect, while the impact of international oil prices is slower but more persistent.
The inflation rate has stood at around two-digit levels for three consecutive years, averaging 10.5 per cent in the last three years and reaching about 10 per cent by mid-2011 mainly driven by food price inflation. In the past three years, Nepal’s food inflation averaged 15.5 per cent, compared to 6.5 per cent of the nonfood. Food price increases have cumulatively contributed to about 0.75 per cent of overall CPI inflation, while nonfood contributed the remaining 0.25 per cent, it added.
The food price inflation has been much higher than nonfood inflation due to the correlation between oil price and those of chemicals and fertilizers used in agricultural production, transportation cost of agricultural products and use of energy in irrigation.
The IMF also said that management of inflation in Nepal will continue to be challenging. The central bank and the market monitoring agencies need more active policy actions to manage inflation.
The report has also warned that the changing pattern of inflation may reflect structural changes in economy including rising imports as a share of GDP, and alerted policy makers to be alert to the changes as they may cause inflation to be more volatile and persistent.
Despite strong spillover from outside, domestic monetary conditions matter for inflation, but the central bank failed to use monetary policy tools effectively to curb inflationary pressures. But the central bank has been blaming the rising informal economy — that is as big as the formal economy — in effective use of the monetary tools to crack whip on price hike.
According to International Monetary Fund (IMF), external spillovers from India, international oil prices — due to diversified consumption pattern alongside rising per capital income and increasing economic openness — nominal effective exchange rate, and domestic monetary factors are key to inflation in Nepal.
The government is planning to hike the fuel prices, which according to IMF's inflation dynamics of Nepal, is the key reason for food price hike.
"Nepal’s inflation should move closely with that of India," it said, adding that it was generally true up until 2007-08, but since then Nepal’s inflation —food and nonfood — has been consistently higher. "The cumulative difference of Nepal’s price indices from those of India, which rose dramatically from 2007-08 has more than quadrupled that of nonfood by early 2011.
The responsiveness to international oil prices and the exchange rate has increased in recent years, it said, adding that there is no evidence of monetary policy tools being actively used to manage inflation that is going to contribute in increasing poverty.
According to recent report of Asian Development Bank (ADB), a 20 per cent food price inflation would cause the poverty ratio to rise by over four percentage points, increasing the poor population by more than one million.
According to Central Statistic Bureau (CBS), a quarter of the total 26.62 million population is under the new poverty line meaning they earn less than Rs 54 per day on the basis of consumption.
The rising inflation will pull one million more down to 7.7 million population under the poverty line from the current around 6.7 million poor in the country thanks to the current trend of rising food prices that is above the average of developing Asia.
Both India’s inflation and international oil prices have strong spillovers — one third of the impact — to Nepal. But imported inflation has a quick spillover effect, while the impact of international oil prices is slower but more persistent.
The inflation rate has stood at around two-digit levels for three consecutive years, averaging 10.5 per cent in the last three years and reaching about 10 per cent by mid-2011 mainly driven by food price inflation. In the past three years, Nepal’s food inflation averaged 15.5 per cent, compared to 6.5 per cent of the nonfood. Food price increases have cumulatively contributed to about 0.75 per cent of overall CPI inflation, while nonfood contributed the remaining 0.25 per cent, it added.
The food price inflation has been much higher than nonfood inflation due to the correlation between oil price and those of chemicals and fertilizers used in agricultural production, transportation cost of agricultural products and use of energy in irrigation.
The IMF also said that management of inflation in Nepal will continue to be challenging. The central bank and the market monitoring agencies need more active policy actions to manage inflation.
The report has also warned that the changing pattern of inflation may reflect structural changes in economy including rising imports as a share of GDP, and alerted policy makers to be alert to the changes as they may cause inflation to be more volatile and persistent.
Despite strong spillover from outside, domestic monetary conditions matter for inflation, but the central bank failed to use monetary policy tools effectively to curb inflationary pressures. But the central bank has been blaming the rising informal economy — that is as big as the formal economy — in effective use of the monetary tools to crack whip on price hike.
Gold sets another record high price
Gold broke all the previous records and was traded at Rs 55,404 per tola (11.664 gram) today in the domestic market due to devaluation of Indian Currency (IC) against the US dollar.
Weakening IC against US dollar has pushed the precious yellow metal price in the domestic market, Nepal Gold and Silver Dealers Association (Negosida) president Tej Ratna Shakya said, adding that the Nepali rupee being pegged with the Indian Currency has automatically weakened.
However, the traders are upbeat about transactions as the marriage season has started. "Some 25 kg gold was traded today," he said, adding that generally the trading has been around 20 kg last week. "But the marriage season has forced the consumers to buy gold as it is tradition, despite the price hike," he added.
The precious yellow metal has rebounced to its record high price of Rs 55,200 per tola in the domestic market on Monday.
Skyrocketing international price coupled with depreciating Indian Currency (IC) against US dollar pushed the precious yellow metal to whole new level, according to the gold traders.
In the beginning of Kartik, the price of the gold was Rs 51,200 per tola in the domestic market but surged by Rs 4,000 in a month.
Last Wednesday, the price had touched the record high price of Rs 55,200 on strong dollar and euro crisis.
Weakening IC against US dollar has pushed the precious yellow metal price in the domestic market, Nepal Gold and Silver Dealers Association (Negosida) president Tej Ratna Shakya said, adding that the Nepali rupee being pegged with the Indian Currency has automatically weakened.
However, the traders are upbeat about transactions as the marriage season has started. "Some 25 kg gold was traded today," he said, adding that generally the trading has been around 20 kg last week. "But the marriage season has forced the consumers to buy gold as it is tradition, despite the price hike," he added.
The precious yellow metal has rebounced to its record high price of Rs 55,200 per tola in the domestic market on Monday.
Skyrocketing international price coupled with depreciating Indian Currency (IC) against US dollar pushed the precious yellow metal to whole new level, according to the gold traders.
In the beginning of Kartik, the price of the gold was Rs 51,200 per tola in the domestic market but surged by Rs 4,000 in a month.
Last Wednesday, the price had touched the record high price of Rs 55,200 on strong dollar and euro crisis.
Central bank to recapitalise Nepal Bank but how?
The oldest commercial bank Nepal Bank Ltd (NBL) might finally be able to recapitalise itself, but there is policy complications on it.
"Hopefully, restructuring of the bank that is the core of the NBL's problem can soon be achieved," said central bank governor Dr Yubaraj Khatiwada hinting at the new plan for recapitalising of the bank during the bank's 75th anniversary celebration here today.
The biggest challenge for the bank at present is to raise necessary capital as its core capital is still negative by about Rs 4.5 billion and is nowhere near paid up capital of Rs 2 billion that a commercial banks need to have, according to the central bank's norms.
Nepal Rastra Bank (NRB) has proposed to raise Rs 4 billion for the bank's recapitalisation — Rs 2 billion will be raised through issuing right shares to the existing shareholders and another Rs 2 billion can be raised from selling or revaluation of the bank's fixed assets, according to the central bank's plan.
The governor also pointed out the need of appointing chief executive of the bank in order to guide the management of the bank which at present is being undertaken by three member team designated by the central bank.
"The financial sector has come a long way in last 75 years when NBL started its business but the problems of low accessibility to banking, low formal financing and, moreover, the lending capacity of the financial sector is not yet strong enough to manage finance for larger hydro project," Khatiwada added.
"NBL's contribution in the financial and industrial sector development is undeniable," lauded President Ram Baran Yadav in the diamond jubilee celebration ceremony.
"It is the institution that inculcated saving habits in an average citizen and taught them about deposits, cheques and even still in some places the bank is being the forerunner in introducing modern banking services," the President pointed out, suggesting the bank to exploit the opportunities created by the advancement of information technology to extend modern and service-oriented banking to unbanked regions of the nation.
After going through almost a decade long Financial Sector Restructuring Programme that started in 2002, the bank was able to improve its financial standing as 60 per cent Non Performing Loans (NPL) has been fallen down to six per cent and accumulated loss worth Rs 10 billion has also been brought down to Rs 4.5 billion.
President turns nostalgic
KATHMANDU: Getting nostalgic on Nepal Bank's diamond jubilee anniversary, President Dr Ram Baran Yadav revealed that Nepal Bank's loan had helped him pay for his education expenses some 57 years ago. The President remembered that after getting accepted into MBBS course in Calcutta Medical College, he did not have money to meet the expenses, so he pledged gold jewelleries of his relatives and acquired loans worth Rs 8,000 from the Nepal Bank then.
"Hopefully, restructuring of the bank that is the core of the NBL's problem can soon be achieved," said central bank governor Dr Yubaraj Khatiwada hinting at the new plan for recapitalising of the bank during the bank's 75th anniversary celebration here today.
The biggest challenge for the bank at present is to raise necessary capital as its core capital is still negative by about Rs 4.5 billion and is nowhere near paid up capital of Rs 2 billion that a commercial banks need to have, according to the central bank's norms.
Nepal Rastra Bank (NRB) has proposed to raise Rs 4 billion for the bank's recapitalisation — Rs 2 billion will be raised through issuing right shares to the existing shareholders and another Rs 2 billion can be raised from selling or revaluation of the bank's fixed assets, according to the central bank's plan.
The governor also pointed out the need of appointing chief executive of the bank in order to guide the management of the bank which at present is being undertaken by three member team designated by the central bank.
"The financial sector has come a long way in last 75 years when NBL started its business but the problems of low accessibility to banking, low formal financing and, moreover, the lending capacity of the financial sector is not yet strong enough to manage finance for larger hydro project," Khatiwada added.
"NBL's contribution in the financial and industrial sector development is undeniable," lauded President Ram Baran Yadav in the diamond jubilee celebration ceremony.
"It is the institution that inculcated saving habits in an average citizen and taught them about deposits, cheques and even still in some places the bank is being the forerunner in introducing modern banking services," the President pointed out, suggesting the bank to exploit the opportunities created by the advancement of information technology to extend modern and service-oriented banking to unbanked regions of the nation.
After going through almost a decade long Financial Sector Restructuring Programme that started in 2002, the bank was able to improve its financial standing as 60 per cent Non Performing Loans (NPL) has been fallen down to six per cent and accumulated loss worth Rs 10 billion has also been brought down to Rs 4.5 billion.
President turns nostalgic
KATHMANDU: Getting nostalgic on Nepal Bank's diamond jubilee anniversary, President Dr Ram Baran Yadav revealed that Nepal Bank's loan had helped him pay for his education expenses some 57 years ago. The President remembered that after getting accepted into MBBS course in Calcutta Medical College, he did not have money to meet the expenses, so he pledged gold jewelleries of his relatives and acquired loans worth Rs 8,000 from the Nepal Bank then.
Tuesday, November 15, 2011
Nepal betters on its fight against hunger
Nepal has improved in the global hunger index (GHI). But this still gives one lots of food for thought as there is still a long way to go.
It ranks 33rd among serious hunger affected country and 55th in the overall global hunger index (GHI) that has 81 countries reviewed in the current year.
Nepal's score improved and managed to climb one category but is still at the bottom of the serious hunger category from alarming situation. Nonetheless, the country is on a winning path in its fight against hunger.
Nepal's score improved to 19.9 this year from last year's 23, when it was under alarming category. In 1990, the country had a score of 27.1 and 1996 score dropped to 24.6 and in 2010 it further dropped due to improving situation.
The lower the score the better the condition of the hunger in the country, according to International Food Policy Research Institute (IFPRI) that calculates the GHI every year, countries with extremely alarming have the score over 30, whereas alarming situation has score between 20 and 29.9, serious falls under score between 10 and 19.9 hunger situation. Similarly, the countries with score under 10 are moderate and under five are ranked under low.
“From food deficit situation a fiscal year ago, the country recorded 4,43,000 metric tonnes (MT) of food grains surplus in the last fiscal years," spokesperson of the Ministry of Agriculture and Cooperatives Hari Dahal said, adding that the situation is improving lately.
The Index is based on three equally weighted indicators; the proportion of undernourished as percentage of the population, the prevalence of underweight in children under the age of five and the under five-mortality rate.
The 2011 GHI report also revealed how the hunger situation has developed since 1990 at global, regional, and national levels. Globally, the GHI fell over one fourth from 19.7 in 1990 to 14.6 in 2011. The global GHI 2010 had been 15.1 in an average. Regardless of the positive trend, the global fight against hunger is not reaching its goals fast enough, the report said, adding that some 29 countries still have an alarming (20-29.9) or extremely alarming (over 30 score) hunger situation.
The global averages hide dramatic differences among regions and countries. The 2010 GHI had fallen by 18 per cent in Sub-Saharan Africa compared with the 1990 GHI, by about 25 per cent in South Asia, and by 39 per cent in the Near East and North Africa.
Sub-Saharan Africa and South Asia share the highest regional GHI scores (22.9 and 21.7 respectively), but food insecurity in the two regions stems from different reasons.In South Asia, the major problem is a high prevalence of underweight children under five, which is a result of lower nutrition and educational status of women. In contrast, the high GHI in Sub-Saharan Africa is due to high child mortality rates and the high proportion of people who cannot meet their calorie requirements because of bad governance, conflicts, political instability and high HIV/Aids rates.
The highest regional GHI score can be found in South Asia. After a rapid decrease between 1990 and 1996, the scores have not changed much despote the economic growth over the same period.
"The progress is inhibited by social inequality and the low nutritional, educational and social status of women," the report said, adding that slightly better numbers in Sub-Saharan Africa stem from the end of a several conflicts in in the 1990s and 2000s, economic growth and successes in fighting Aids.
The Index that is a tool designed to comprehensively measure and track hunger globally and by country and region highlights successes and failures in hunger reduction and provides insights into the drivers of hunger. By raising awareness and understanding of regional and country differences in hunger, the GHI will, it is hoped, trigger actions to reduce hunger.But no one really knows how many people are malnourished. The statistic most frequently cited is that of the UN Food and Agriculture Organisation, which measures 'undernutrition'.
The most recent estimate, released last October by FAO, revealed that 925 million people are undernourished meaning number of hungry people has increased since 1995-97 due to neglect of agriculture relevant to very poor people by governments and international agencies, the current worldwide economic crisis and the significant increase of food prices in the last several years which has been devastating to those with only a few dollars a day to spend.
The 925 million people is 13.1 per cent of the estimated world population of seven billion in the world meaning almost one in seven people are hungry in the world.The FAO estimate is based on statistical aggregates. It first estimates the total food supply of a country and derives the average per capita daily food intake from that. The distribution of average food intake for people in the country is then estimated from surveys measuring food expenditure.
Using the information, and minimum food energy requirements, FAO estimated how many people are likely to receive such a low level of food intake that they are undernourished.
This year's report focused particularly on the issue of food price spikes and volatility, which have played a large role in the global food crises of 2007–08 and 2010–11. Many poor people already spend large shares of their incomes on food, and surges in food prices leave them unable to pay for the food, healthcare, housing, education, and other goods and services they need.An IFPRI researcher describes the factors that have contributed to the increasing and more volatile food prices of recent years and their effects on poor people in developing countries.
Taming food price spikes and volatility will require that is understood as the causes and address them appropriately.
It ranks 33rd among serious hunger affected country and 55th in the overall global hunger index (GHI) that has 81 countries reviewed in the current year.
Nepal's score improved and managed to climb one category but is still at the bottom of the serious hunger category from alarming situation. Nonetheless, the country is on a winning path in its fight against hunger.
Nepal's score improved to 19.9 this year from last year's 23, when it was under alarming category. In 1990, the country had a score of 27.1 and 1996 score dropped to 24.6 and in 2010 it further dropped due to improving situation.
The lower the score the better the condition of the hunger in the country, according to International Food Policy Research Institute (IFPRI) that calculates the GHI every year, countries with extremely alarming have the score over 30, whereas alarming situation has score between 20 and 29.9, serious falls under score between 10 and 19.9 hunger situation. Similarly, the countries with score under 10 are moderate and under five are ranked under low.
“From food deficit situation a fiscal year ago, the country recorded 4,43,000 metric tonnes (MT) of food grains surplus in the last fiscal years," spokesperson of the Ministry of Agriculture and Cooperatives Hari Dahal said, adding that the situation is improving lately.
The Index is based on three equally weighted indicators; the proportion of undernourished as percentage of the population, the prevalence of underweight in children under the age of five and the under five-mortality rate.
The 2011 GHI report also revealed how the hunger situation has developed since 1990 at global, regional, and national levels. Globally, the GHI fell over one fourth from 19.7 in 1990 to 14.6 in 2011. The global GHI 2010 had been 15.1 in an average. Regardless of the positive trend, the global fight against hunger is not reaching its goals fast enough, the report said, adding that some 29 countries still have an alarming (20-29.9) or extremely alarming (over 30 score) hunger situation.
The global averages hide dramatic differences among regions and countries. The 2010 GHI had fallen by 18 per cent in Sub-Saharan Africa compared with the 1990 GHI, by about 25 per cent in South Asia, and by 39 per cent in the Near East and North Africa.
Sub-Saharan Africa and South Asia share the highest regional GHI scores (22.9 and 21.7 respectively), but food insecurity in the two regions stems from different reasons.In South Asia, the major problem is a high prevalence of underweight children under five, which is a result of lower nutrition and educational status of women. In contrast, the high GHI in Sub-Saharan Africa is due to high child mortality rates and the high proportion of people who cannot meet their calorie requirements because of bad governance, conflicts, political instability and high HIV/Aids rates.
The highest regional GHI score can be found in South Asia. After a rapid decrease between 1990 and 1996, the scores have not changed much despote the economic growth over the same period.
"The progress is inhibited by social inequality and the low nutritional, educational and social status of women," the report said, adding that slightly better numbers in Sub-Saharan Africa stem from the end of a several conflicts in in the 1990s and 2000s, economic growth and successes in fighting Aids.
The Index that is a tool designed to comprehensively measure and track hunger globally and by country and region highlights successes and failures in hunger reduction and provides insights into the drivers of hunger. By raising awareness and understanding of regional and country differences in hunger, the GHI will, it is hoped, trigger actions to reduce hunger.But no one really knows how many people are malnourished. The statistic most frequently cited is that of the UN Food and Agriculture Organisation, which measures 'undernutrition'.
The most recent estimate, released last October by FAO, revealed that 925 million people are undernourished meaning number of hungry people has increased since 1995-97 due to neglect of agriculture relevant to very poor people by governments and international agencies, the current worldwide economic crisis and the significant increase of food prices in the last several years which has been devastating to those with only a few dollars a day to spend.
The 925 million people is 13.1 per cent of the estimated world population of seven billion in the world meaning almost one in seven people are hungry in the world.The FAO estimate is based on statistical aggregates. It first estimates the total food supply of a country and derives the average per capita daily food intake from that. The distribution of average food intake for people in the country is then estimated from surveys measuring food expenditure.
Using the information, and minimum food energy requirements, FAO estimated how many people are likely to receive such a low level of food intake that they are undernourished.
This year's report focused particularly on the issue of food price spikes and volatility, which have played a large role in the global food crises of 2007–08 and 2010–11. Many poor people already spend large shares of their incomes on food, and surges in food prices leave them unable to pay for the food, healthcare, housing, education, and other goods and services they need.An IFPRI researcher describes the factors that have contributed to the increasing and more volatile food prices of recent years and their effects on poor people in developing countries.
Taming food price spikes and volatility will require that is understood as the causes and address them appropriately.
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