Budget to target six per cent growth

The government is projecting a growth of six per cent in the budget for the next fiscal year 2013-14.

Addressing a pre-budget interaction organised by Management Association of Nepal (MAN) here, today, finance minister Shankar Koirala said that the budget will focus on higher economic growth and inclusive development. "The budget will also try to protect the private sector's investment," he said, adding that the government and private sector are the key players, though the private sector could be further bifurcated to cooperatives or other sectors. "Through the budget the government will help create an investment friendly environment to encourage the private sector to invest."

However, the private sector has limitations and the budget will concentrate on five priority sectors, the finance minister said.

"Energy, infrastructure, agriculture, tourism, and import substitution and export promotion will be key focus areas in the fiscal policy that will have non-controversial and non-political programmes," the former bureaucrat turned minister said, elaborating that generation of energy — with government incentives — and construction of transmission lines will get first priority in the budget.

"Likewise, infrastructure that is a key bottleneck for economic development that has never been a national priority agenda in the country, will get second priority and commercialisation of agriculture along with a focus on livestock and fertiliser production that will increase the contribution of the agriculture sector to the gross domestic product will get third priority, whereas import substitution and export promotion will help industrialisation," he added.

Unlike earlier ones, next fiscal year's budget will not be distributive, said finance secretary Shanta Raj Subedi. "The budget will focus on capital formation and sectors like infrastructure that will give returns in the long run," he said, adding that the government's recurrent expenditure has been increasing in such a way that revenue might not be able to meet administrative and regular salary expenses, though revenue mobilisation has been encouraging as it increased by more than 23 per cent — without changing tax rates — compared to last fiscal year.

President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Suraj Vaidya suggested the government to bring a productive budget that can create employment in the country. "Nepali youths should be involved in the construction of stadiums and airports in Nepal rather than in Qatar and Hong Kong," he said, adding that the budget should reverse the trend of increasing unemployment.

However, senior economist Tula Raj Basyal suggested the government to enhance the capacity of the public sector for effective management of the fiscal policy.

Presenting a paper on the private sector's expectations from the budget, managing director of Jyoti Group Saurabh Jyoti asked the government to involve the private sector in infrastructure projects under Public Private Partnership (PPP) model or Build-Own-Operate-and Transfer (BOOT). "The budget should provide incentives to the private sector to generate hydropower, help land acquisition, promote 'One district one product' programme, reform tax laws to encourage industrialisation, simplify customs and increase skills of foreign job aspirants in association with the private sector," he said, adding that the budget should be private sector friendly as it is the backbone for economic growth.

On the occasion, the finance minister also gave away the Manager of the Year Award to chief executive of Music Nepal Santosh Sharma and chief executive of Shtrii-Shakti Indira Maiya Shrestha.

 

Salary hike !

KATHMANDU: The government has given an assurance to increase the salary of civil servants. During an interaction with civil servant associations at the Finance Ministry, on Friday, finance minister Shankar Koirala said that the government will increase the salary of civil servants in the budget. He, however, said that the salary will be revised, according to the capacity of the budget. But the civil servants have asked for a 100 per cent hike in salary based on household survey of the central bank because there has been no increase in salary in the last three years.

NEA decides to upgrade Upper Trishuli 3A hydro project to 90MW

Despite a huge opposition, Nepal Electricity Authority (NEA) board today decided to upgrade the Upper Trishuli 3A hydro power project, according to the request of the contractor China Gezhouba Group Company Ltd.
The board meeting chaired by the Minister for Energy Uma Kanta Jha decided to upgrade the hydropower project from 60 MW to 90 MW. With the upgradation of the project, its cost has also increased to $132 million from $89 million.
Earlier, the project was expected to be completed by May 30, 2014 but the upgradation – at the time when it has only one year left to complete the project but completed only 21 per cent of the work – will delay the project by two more years.
Those, who are protesting the upgradation, claims that it will cause NEA huge loss of around Rs 4 billion not only due to delay but also the project could not add enough energy in the dry season despite increased cost.
However, the NEA and the contractor are claiming that the upgradation will benefit the country as the project will produce more power.

Since last week, the five trade unions of NEA have been asking the chairman of Interim Election Council Khil Raj Regmi not to upgrade the project that will hurt the NEA.
Former Prime Minister Dr Baburam Bhattarai had – through cabinet decision – allowed NEA board to upgrade the hydropower project, claiming that the study panel formed by him has researched in detail it’s legal and technical aspects and suggested to upgrade the run of the river project to 90MW.
The NEA had decided to award Upper Trishuli 3A hydro power project to China Gezhouba Group Company Ltd under Engineering, Procurement and Construction (EPC) model to avoid the project escalation cost as most of the power projects in the past ran into various trouble and cost the country more.
The protesters claimed that the EPC model of contract cannot be revised and the contractor should pay the government compensation, if it could not complete the project on time.
The Exim Bank of China has provided soft loan of $89 million for the project.

TeliaSonera secures 800 MHz spectrum in Estonia

TeliaSonera -- that has been operating Ncell in Nepal -- won frequencies in the 800 MHz band in the beauty contest in Estonia arranged by the Estonian Technical Surveillance Authority.
The 800 MHz frequencies will enable a faster roll-out of LTE services in Estonian rural areas. With the new frequencies, TeliaSonera will roll-out LTE to cover 95 per cent of Estonian territory in the middle of June. TeliaSonera has already built a LTE network using the 1800/2600 MHz combination in Estonia.
In the spectrum beauty contest, TeliaSonera won 2 x 10 MHz frequencies in the 800 MHz band.

Central bank allows development banks to issue LCs

Central bank has allowed national level development banks to issue Letter of Credits (LC) for imports from now onwards.

The Foreign Exchange Management Department under Nepal Rastra Bank (NRB) has opened up financing international trade by issuing LCs for development banks but the class ‘B’ financial institutions cannot issue LCs for all sorts of imports.
The national level development banks have been asking the central bank to let them issue LCs to be engaged in trade financing.

According to the central bank, national level development banks can issue LCs only on behalf of hydro, infrastructure and transmission line projects, financed or promoted by the class ‘B’ banks.
Since the size of hydro, infrastructure and transmission lines loans are large, only a few national level development banks can lend through a consortium.

A letter of credit refers to a bank’s guarantee that a certain importer will make the payment of bills to the exporter on time and in case of the buyer not being able to pay for the purchase on time, the bank will pay. Banks usually issue LCs on behalf of their clients by extending Trust Receipt loans to importers.

National level development banks that wish to get permission to issue LCs from the central bank also need to have a working relation for a minimum of three years with international agencies. Likewise, they also should not have been through central bank’s Prompt Corrective Action within the last two years.

They can start foreign exchange transaction to issue LC by taking membership of Society for Worldwide Interbank Financial Telecommunication (SWIFT). At present, SWIFT has 32 commercial banks, NRB and Ace Development Bank as member banks from Nepal.

Meanwhile, the central bank has also issued a circular for commercial banks and national development banks allowing them to invest on foreign currency deposits belonging to international agencies in low risk instruments like foreign government issued bonds, call deposits and certificate of deposit for a maximum of two years. “There is no limit placed on 30 per cent of deposits allowable to invest in the deposits placed by international agencies, according to the central bank. “But banks are restricted to invest more than 30 per cent of their other types of foreign deposits in agency banks.”

NIBL buys National Life Insurance stocks

Nepal Investment Bank Ltd (NIBL) — one of the leading domestic commercial banks — has purchased 290,000 units of shares of National Life Insurance Company.

The investment will enable further diversification of income stream for the bank and unlock synergies in cross selling of products, said the bank that has successfully demonstrated its robust financial performance for the past 10 years. "The bank has earned a net profit of Rs 1.34 billion till the third quarter of the current fiscal year 2012-13."

With 42 branches, NIBL is well represented across the country and is in a unique position to provide truly international banking experience in terms of products and services to its customers through an extensive domestic and global network. Currently, Nepal Investment Bank has 70 ATM outlets across the country.

National Life Insurance Company — formerly known as National Life & General Insurance — was incorporated in 1988 under the Company Act 1964 and the Insurance Act 1968 with a prime objective to meet the growing insurance requirements of the country.

The company has earned a niche for itself in the domestic life insurance market. It has reinsurance support and back-up of the world’s leading reinsurance company, Hannover Re, of Germany. National Life Insurance Company, with a paid up capital of Rs 501.3 million, earned a net profit of Rs 96.3 million in the last fiscal year 2011-12, and distributed 25 per cent stock dividend to its shareholders.