World Bank provides $150 million to strengthen financial sector

The World Bank’s Board of executive directors today approved a $150 million ‘Finance for Growth’ development policy credit to strengthen financial sector stability, diversify financial solutions, and increase access to financial services in support of Nepal’s green, resilient, and inclusive development.

“A well-functioning financial system is a key enabler for the mobilisation of private investment and driver of economic activity,” World Bank country director for Maldives, Nepal and Sri Lanka Faris Hadad-Zervos said. “By strengthening the financial sector, this project will contribute to Nepal’s green, resilient, and inclusive recovery and growth path, particularly benefiting the poor and vulnerable.”

The second Finance for Growth operation will support enhanced supervision of the banking sector to address financial stability risks in the context of the Covid-19 pandemic’s impacts. The operation will help open up capital, insurance, and disaster risk financing markets, and foster financial product innovations, the multilateral development partner said, adding that it will also support initiatives to increase liquidity and inclusion through access to external commercial borrowing, financial digitalisation, and financial literacy for women. “This will help improve the functioning of the financial sector to support private sector-led growth.”

The operation also initiates a new climate agenda, supporting climate finance resilience policy measures across banking, insurance, and capital markets. This can pave the way for the introduction of green loan principles and incentives for green lending as well as new insurance and capital market products adapted to address both climate mitigation and adaptation challenges.

“Through this project we look forward to supporting the government’s transformative financial sector reform agenda which, among others, introduces a first round of reforms to strengthen financial sector resilience against climate-related risks,” World Bank task team leader for the project Peter Mousley said, adding that it will lay down strong foundations for a more stable, less bank-centric and more inclusive financial sector that is better positioned to mobilize private investment and support real economic activity.

Electricity consumed for irrigation use will be free: Minister Bhusal

Minister for Energy, Water Resources and Irrigation Pampha Bhusal today announced to make the electricity consumed for irrigation free of cost.

Stressing the need for making the agriculture sector independent and supporting the country’s economy, she decided to make the use of electricity free of cost for irrigation purposes.

The government had reduced the cost of electricity used for irrigation by 50 per cent on November 9 last year, she said, adding that the cost has been made free for irrigation purpose.

She also emphasised on increasing the export of handicrafts to strengthen economy.

Speaking at the 41st Annual General Meeting of the Nepal Handicraft Federation, in Kathmandu today, she also urged the business people not to import goods that are produced in Nepal.

Japan’s new cooperation to improve access to clean, safe water starts in Biratnagar

The Japan International Cooperation Agency (JICA) signed a grant agreement with the government in Kathmandu today, to provide grant aid of up to 2.541 billion yen (equivalent to Rs 2.7 billion) for ‘The Project for the Improvement of Water Supply in Biratnagar.’

The project intends to upgrade and expand water supply facilities in the Biratnagar Metropolitan City contributing to the development of social and economic infrastructure, according to a press note issued by the Embassy of Japan in Kathmandu.

Despite being the densely populated industrial city and the capital of Province 1, the city lacks adequate and potable water supply largely due to low quantity of water and dilapidated pipelines. “The project envisions to ensure adequate access to safe water for around 100,000 people in Biratnagar City by constructing and upgrading facilities like water treatment plants, clear water reservoirs, distribution main pipelines to name a few,” it reads.

In addition, serving as a countermeasure against infectious diseases, including Covid-19, the Project aims to contribute not only to the achievement of SDGs Goal 6 (clean water and sanitation) but also to Goal 3 (good health and well-being).

The signing marks another step of consistent support of Japanese assistance to Nepal in water supply sector, one of the fundamental sectors for socio economic development, the embassy press note adds.

Ambassador of Japan to Nepal Kikuta Yutaka, and finance secretary Madhu Kumar Marasini signed the notes to this effect today.

Likewise, another grant agreement for implementing the project was signed by the chief representative of JICA Nepal Okubo Akimitsu, and joint secretary at the International Economic Cooperation and Coordination Division of the Finance Ministry Ishwori Prasad Aryal.

This project aims to enhance the living standard of the people of Biratnagar City by renovating and expanding the water supply facilities, thereby broadening the water supply area in Biratnagar, according to the Finance Ministry. At present, people in Biratnagar have to depend on shallow wells to get water for daily household use and have been affected by shortage of safe drinking water.

“The Government of Japan has been providing multifaceted assistance for the betterment of the living standard of Nepali citizens,” Japan’s ambassador to Nepal Kikuta said, adding that Japan extended multiple support, including timely vaccine support to prevent and control Covid-19.

“This time, our assistance is providing safe water which is of vital importance for human life,” he said, expressing his hope that the support will be effectively utilised to upgrade the living standard of people in Biratnagar. “Japan is committed to extending all possible assistance to Nepal in its endeavor for nation-building and strengthening the friendly relationship between the peoples of Japan and Nepal.”

Government removes quota on import of betel nuts, peas, peppercorns and dates

Though, it has been restricting the imports to ease the pressure on the foreign currency (forex) reserve, the government today removed the quantitative restriction on import of betel nuts, peas, peppercorns and dates.

Publishing a notice in the Nepal Gazette today, the government has removed the quota restriction for the factories, if these goods are to be used as raw materials by the factories concerned. According to the provision, the Department of Commerce, Supplies and Consumer Protection will be providing import licenses to the firms on the recommendation of the Department of Industry (DoI).

The depleting forex reserve has recently forced the government to take strong measure to restrict the import of various luxury items including automobiles and gold. However, the government has turned flexible to the import of high-priced goods, when the country is reeling under a critical forex shortage.

The domestic demand has been fulfilled by the domestic production, the farmers claimed, adding that the government move to ease the restriction has surprised them. They also suspected ‘red-tape’ in removing the quantitative restriction of the  betel nuts, peas, peppercorns and dates.

“Taking advantage of the provision of the South Asian Free Trade Area (SAFTA) agreement, many Nepali traders are found importing the goods from third countries to resell them in the Indian market,” the farmers said. As the SAFTA has a zero tariff provision on goods exported from underdeveloped countries like Nepal, Nepali traders have been importing these goods from third countries paying minimum tariffs and then ‘exporting’ as the finished product to India with zero tariffs. The government had, thus, put the quantitative restriction on import of these goods.

Cabinet appoints Thani as new managing director of Nepal Oil Corporation

The cabinet today appointed Umesh Prasad Thani as the managing director of the state oil monopoly.

Three candidates were shortlisted for the crucial post that has remained vacant for the past two months and the cabinet approved Thani as the new MD of Nepal Oil Corporation (NOC).

According to the Ministry of Industry, Commerce and Supplies (MoICS), the selection committee has yesterday recommended Umesh Prasad Thani, Chandika Prasad Bhatta and Jeevan Prakash Sitaula for the post of NOC chief to the cabinet.

In response to the public call two months ago, some 17 individuals had applied for the vacant position.

Thani, who is considered close to the Nepali Congress, has worked as a member of the board of directors of Nepal Electricity Authority (NEA) earlier.

Sitaula is a former director general of the Department of Industry, whereas Bhatta, who led NOC before Gopal Bahadur Khadka, is the chief of the Special Economic Zone (SEZ) Authority at present.

Finance Minister directs IBN to build large projects on its own

Ignorant of the role of the Investment Board Nepal (IBN), finance minister Janardan Sharma today instructed the board to move ahead with big projects by raising capital on its own. The board was established to ease the inflow of foreign direct investment (FDI) of over Rs 10 billion as a one-window solution.

Addressing the seventh meeting of the Monitoring and Facilitation Committee under the board today, the Finance Minister, who also happens to be the vice chair of the board, said that the Finance Ministry will extend necessary assistance to the board in building capital.

Unlike the nature of work of the board that is waiting for investors to come, it should focus on building capital and investing in big projects, the finance minister said, also claiming that the ministry will discuss how it can help to create such fund.

He also suggested the board to set up a capital fund for export-based projects after holding discussions with the private sector. Urging the board to initiate for investment by envisaging projects that would make a significant contribution to the gross domestic product (GDP) and capital formation, he said that the board should create projects itself.

The board, on the occasion, presented the progress report of Arun III Hydropower Project and its subordinate projects, logistics projects, Khaptad Integrated Tourism Development Programme, Tamor Reservoir Hydropower Project, Upper Marsyangdi Hydropower Project, Vehicle Manufacturing and Assembling Plant and Huaxin Cement Project.

Expressing his dissatisfaction over the non-implementation of the decision of the board to provide one-door approval to large foreign investors, the finance minister asked the board to provide one-door approval to facilitate foreign investment.

The board should facilitate foreign investors to come to Nepal by choosing the project themselves or as investment partners in the project, he said, adding that the traditional mindset of development has to be changed.

Finance Minister orders to submit expenditure plan within a week

Finance Minister Janardan Sharma today asked the ministries to submit an expenditure plan within a week to expedite the capital expenditure.

The government has failed to boost the capital expenditure putting pressure on Finance Ministry as it has aimed to increase the capital expenditure to 90 per cent – in the current fiscal year 2021-22 – in its mid-term budgetary review.

“It seems the target of  mid-term budgetary review is not going to be met as according to the progress report as of today,” he said, asking the secretaries of the top 10 ministries, which has high capital budget allocation.

Speaking at a programme organised at the Finance Ministry to review the budgets of 10 ministries with high capital budget allocation till March 8, the finance minister also directed to implement the budget according to the mid-term review.

Pledging that the Finance Ministry will extend all possible assistance to increase the capital expenditure to 90 per cent, the minister said that the ministries, which have a large capital budget, have spent less, whereas the ministries with less capital budget have spent more. “It is a matter of concern that the progress of the ministries with high capital expenditure is not satisfactory, whereas the ministries with low capital expenditure allocations have seen a very high percentage of progress.

“It is still more serious concern that the ministries that are unable to spend the allocated capital budget are asking for more budget,” said finance secretary Madhu Kumar Marasini, on the occasion.

The ministries, however, claimed that they could spend up to 85 per cent of the capital budget, though, according to the Office of the Comptroller General, the government has not been able to spend 20 per cent of the capital budget till date.