MCA-Nepal calls for bids to construct 400 kV transmission lines

Millennium Challenge Account Nepal (MCA-N) – the implementing agency of Millennium Challenge Corporation (MCC) of the US published a global tender today to construct 315-km long transmission lines. The US government-funded MCA-N – issuing a public notice today – called for bids to construct the infrastructure.

According to the notice, the MCA-N has divided the total construction into three sections. “A 400 kV transmission line will be constructed along Lapsiphedi-Ratamate-New Hetauda stretch measuring 117-km,” the notice reads, adding that a 90-km long 400 kV transmission line in Ratamate-Damauli and New Damauli-New Butwal segment will also be expedited under the project. “The MCA-N has set a deadline of March 27, 2023 to apply for the contract.”  

The MCC Compact, which was approved by the Parliament after a huge controversy, has provided Nepal a grant of $500 million to construct high-powered transmission lines and to upscale the highways. The government will be investing $130 million from its side in the five-year long projects under the MCC Compact.

The Millennium Challenge Corporation (MCC) is a bilateral US foreign aid agency established by the US Congress in 2004. It is an independent agency separate from the State Department and USAID. The government signed the MCC grant in 2017 after determining its goals to modernise Nepal's energy and transportation sectors with the hope of helping nearly 80 per cent of the total population. Though, signed in 2017, it took the parliament five years to ratified MCC compact as the compact was ratified on February 27, 2022, with a majority with certain interpretive declaration through understanding between all national parties, due to huge opposition from several quarters of the society.

The MCC-Nepal Compact that aims to increase the availability and reliability of electricity, maintain road quality, and facilitate regional trade– helping to spur investments, accelerate economic growth, and reduce poverty, is a five-year term fixed project, once it starts its work.

Traders not satisfied with Monetary Policy review

Nepal Chamber of Commerce (NCC) claimed that the central bank’s first quarter review of the Monetary Policy will not help maintain fiscal stability.

The Chamber – issuing a press note today – has also concluded that the review along with the tight Monetary Policy can not address the current problems of financial sector. “The Chamber was hopeful that the quarterly review can possibly address the internal economic risks,” reads the press note, adding that the country has, though, witnessed some improvements in the external sector, the internal sector is still vulnerable.

Though the spread rate reduction by 0.4 percentage points will not push interest rate in the coming days, it has nominal chance to slash the existing interest rates, the press note further reads. The Chamber has also suggested central bank to bring down the spread to a maximum of 2 per cent.

Asking the central bank to reduce the bank rate to 5 per cent from current 8.5 per cent, the Chamber has claimed that the review will further negatively affect the industrial sector.

Central bank slashes interest rate gap to pull interest rate down

The central bank has – through the first quarter review of Monetary Policy – slashed the spread rate (difference between lending and borrowing rates) of commercial and development banks to pull the interest rates down.

According to the first quarter review of Monetary Policy for the current fiscal year, the commercial banks spread rate will come down to 4 per cent from the current 4.4 per cent, whereas the spread rate of the development banks has been brought down to 4.6 per cent from current 5 per cent. The central bank also said that it will monitor the premium regularly to not let the lending rate to go up.

Though, the central bank dismissed that it has reduced the spread – to pull down the interest rate due to pressure from the private sector, the private sector itself is, however, not satisfied. The private sector has protested against the central bank and banks and financial institutions (BFIs) alleging them of pushing the interest rates up making the cost of doing business dearer.

But executive director of the central bank’s Research Department Dr Prakash Shrestha said that the downward revision of spread has been according to the central bank policy to bring spread rate slowly down, which is expected to bring the interest rate on loans down.

Though, the private sector is not satisfied saying that the interest rate is still higher, the banks and financial institutions are going to lose a huge portion of their profits due to sqeeze in spread. Some 14 commercial banks will feel the heat of the spread rate reduction as some of the commercial banks already have less then 4 per cent spread rate. A banker, without wanting to be named, said that the commercial banks will lose some Rs 10 billion in the profits due to lower spread rate. According to the unaudited reports of first quarter, NIC Asia Bank has 4.39 per cent spread rate, whereas Citizens Bank International has 3.53 per cent spread rake, making an average of 4.01 per cent spread rate of the total 26 commercial banks. 

The private sector’s another concern working capital loan guidance will be addressed, based on the suggestions received. “It has been operational, and will be addressed as and when the suggestions we receive,” Shrestha added.

The central bank, unveiling the first quarter review of the Monetary Policy 2022- 23, also reads that the BFIs, which are unable to provide loans in the designated areas due to liquidity crunch can calculate the shortfall from mid-December 2023 on basis of mid- June 2023. “The fine imposed on BFIs will be reviewed based on the liquidity risk, if the specified loan-deposit ratio is not reached,” it reads, adding that investments made by BFIs in the bonds issued by public limited companies related to the agricultural sector in the secondary market will also be allowed to be counted within the specified limits so that the BFIs has to invest minimum loans in that sector. “The microfinance financial institutions will, however, have to publish the base rate on monthly basis from mid-January.”

The central bank has also given continuity to the major policy of the Monetary Policy as the pressures on price and external sector stability still remain. Likewise, the Monetary Policy has maintained the targets and projections.

Shah becomes highest tax payer

Vijaya Kumar Shah, chairman of the Jawalakhel Group of Industries became the largest taxpaying Nepali in the last fiscal year. 

Shah, who leads Jawalakhel Group of Industries that incorporates companies like Jawalakhel Distillery, Himalayan Distillery, Raj Brewery, Asian Distillery and Vijay Distillery, received recognition as the largest tax paying person a fiscal year ago on the occasion of the 9th National Tax Day, also.

Finance Secretary Krishna Hari Pushkar honoured Shah along with Surya Nepal Pvt Ltd – as the largest institutional taxpayer today at a programme organised by the Inland Revenue Department (IRD) to mark the 11th National Tax Day 2022.

During the last fiscal year 2021-22, Surya Nepal paid Rs 10.72 billion in taxes, up from Rs 9.34 billion a fiscal year ago. The company sells cigarettes, matchboxes, incense sticks and confectionery.

The government honours largest taxpaying individuals and organisations under 15 categories of taxes on the occasion of the National Tax Day every year.

The government also honoured Nepal Telecom under the largest income taxpayer category, whereas the producer of refined oil and vegetable ghee Shiva Shakti Ghee and Rajesh Metal Crafts were honoured under export-based and special industry categories. The OBC Feeds and Food was honoured under the agriculture and livestock industry category. 

Likewise, Chhimek Laghubitta Bittiya Sanstha received honour under cooperative category, Nabil Bank under banking sector and IME Remittance under remittance category are also honoured for their largest tax contribution in their respective sectors in the last fiscal year.

The Inland Revenue Department (IRD) Nepal has honoured Nabil Bank chief executive officer (CEO) Gyanendra Prasad Dhungana for the bank’s contribution. Nabil Bank had paid Rs 2.79 billion in taxes in the last fiscal year. This is the seventh consecutive year – in the past 10 years – that Nabil Bank has been honoured for its contribution to the national exchequer. “The Bank has paid Rs 18.38 billion in taxes to the state in the last 10 years. “The bank has also distributed Rs 14.45 billion in cash dividends and bonus shares worth Rs 18.8 billion to its investors,” according to the bank.

According to a press note issued by the Inland Revenue Department, the programme to commemorate the 11th National Tax Day also witnessed Nepal Re-insurance Company being honoured as the top taxpayer in the insurance category. Biratnagar-based Nobel Medical College and Teaching Hospital was felicitated as the top taxpayer in the health and education categories. 

Manakamana Darshan, the operator of the cable car in Kurintar and Chilime Hydropower were honoured as the highest taxpayers in tourism businesses and energy-oriented industries, respectively. Similarly, Nepal Stock Exchange topped the list among medium-scale taxpayers.

IME Ltd, the first money transfer company in Nepal, was honoured as the highest taxpayer in the remittance and money transfer category, whereas Hansraj Hulaschand and Co was honoured for its contribution to the commodity trade sector.

According to the department, Gorkha Brewery, the producer of Tuborg, Carlsberg and Gorkha beers, Somersby Apple Cider and Red Bull energy drink, was announced as the largest contributor in the value-added tax (VAT) category. Likewise, Mangalam Industries Pvt Ltd – a manufacturer of water supply, plumbing, sanitation, and drainage piping solutions and also the first CPVC Pipes and Fittings manufacturer and leading polymer piping systems manufacturer and exporter from Nepal – was the highest taxpayer company in the manufacturing industry.  during fiscal year 2021-22. According to the press note of the IRD, the award was handed over to chairman Dr Sudarshan Churiwal and director Mrs Shashi Churiwal of the company.

In the last fiscal year, Rs 429.27 billion in revenue has been collected, against the target of Rs 450.34 billion, according to the department press note. “The total number of taxpayers in the country, including the businesses and individuals holding a permanent account number (PAN) reached 4.81 million as of 2020-21, among which, some 3.05 million are individual PAN card holders, by the end of the last fiscal year.”

मागमा आएको संकुचनले राजश्व संकलनमा दबाब

नीजि क्षेत्रले मागमा आएको संकुचनको असर उद्योग क्षेत्रसँगै सरकारको राजश्वमा समेत परेको जनाएको छ । 

राष्ट्रिय कर दिवस २०७९ को अवसरमा अर्थ मन्त्रालयका राजश्व सचिव रामेश्वर दंगाल र आन्तरिक राजश्व विभागका महानिर्देशक रितेशकुमार शाक्यसँग अन्तरक्रिया गर्दै नेपाल उद्योग परिसंघले मागमा आएको संकुचनको असर उद्योग क्षेत्रसँगै सरकारको राजश्वमा समेत परेको जनाएको हो । परिसंघ सचिवालयमा आयोजित “परिसंघमा परिचर्चा” कार्यक्रममा बोल्दै परिसंघका अध्यक्ष विष्णुकुमार अग्रवालले मागमा आएको संकुचनको असर उद्योग क्षेत्रसँगै सरकारको राजश्वमा समेत परेका कारण त्यसको समग्र असर अर्थतन्त्रले भोगिरहेको बताए । उनले अर्थतन्त्रमा देखिएको समस्या समाधानका लागि ब्याजदर घटाउने, समग्र माग बढाउने खालको नीति अलम्बलन गर्नुपर्नेमा जोड दिए। 

परिसंघले गरेको सर्वेक्षण अनुसार उद्योगको प्रकृति अनुुसार ८० प्रतिशतसम्म मागमा संकुचन आएको देखिएको उनको भनाइ थियो । अर्थतन्त्रमा संकुचन बढ्दै जाँदा उद्योगसँगै राजश्व पनि थप प्रभावित हुने र त्यसको प्रत्यक्ष असर पूँजीगत खर्चका लागि सरकारलाई रकमको अभाव हुन सक्ने उनले बताए। 

उनले बहुदर भ्याट प्रणाली लागू गर्न आवश्यक रहेको स्मरण गराउँदै भारतलगायत अन्तर्राष्ट्रिय बजारमा प्रतिस्पर्धी गराउन पनि बहुदर भ्याट प्रणालीको विकल्प नभएकोमा जोड दिए ।  

राजश्व सचिव रामेश्वर दंगालले राजश्व संकलनमा गिरावट आउँदा त्यसले वित्तिय चाप पारेको स्विकारे । अर्थतन्त्रमा परेको दबाबबारे निजी क्षेत्र जानकार रहेको भन्दै उनले राजश्वमा योगदान दिन उद्योगी व्यवसायीलाई आग्रह गरे । अर्थतन्त्रमा स्थायित्व ल्याउने गरी मौद्रिक नीतिले औजार प्रयोग गर्दा बजेटले लिएका उद्देश्य हासिल गर्न दबाब परेको पनि सचिव दंगालको भनाइ थियो । उनले राजश्वमा दबाब पर्दै गए आन्तरिक ऋण उठाउनुपर्ने र त्यसको प्रत्यक्ष असर निजी क्षेत्रमा जाने लगानी योग्य तरलतामा थप दबाब पर्ने पनि बताए। 

आन्तरिक राजश्व विभागका महानिर्देशक रितेशकुमार शाक्यले निजी क्षेत्रलाई दोहोरो कर नपरोस् भन्नेमा सरकार सचेत रहेको भन्दै कर अधिकारी र करदाताबीच भौतिक सम्पर्क नै हुन नपर्ने गरी कर प्रशासनमा सुधार गर्न लागेको जानकारी गराए । यसले कर प्रशासन र निजी क्षेत्रप्रति लाग्ने आरोप सहनु नपर्ने उनको भनाई छ । निजी क्षेत्र नफस्ट्याई सार्वजनिक क्षेत्र पनि अगाडि बढ्न नसक्ने समते उनले बताए। 

उक्त अवसरमा नेपाल उद्योग परिसंघका उपाध्यक्ष राजेश अग्रवालले उद्योगहरु फस्ट्याउन नीतिगत स्थिरता आवश्यक रहेको बताएका थिए। आर्थिक ऐन र औद्योगिक व्यवसाय ऐनका व्यवस्था एक आपसमा बाँझिदा औद्योगिक प्रबद्र्धनमा असर परेको बताउँदै उनले तयारी वस्तु र कच्चा पदार्थ अन्त शूल्क लगाउँदा राम्रो वातावरण नबनेको बताए। यस्तै उनले तीन वटै तहबाट कर संकलन भईरहेकोमा त्यसमा सुधार ल्याउन एकद्धार प्रणालीबाट मात्रै कर संकलन गर्न सुझाव दिए । 

छलफलमा उद्योगी व्यवसायीहरुले कर तथा राजश्वका विषय, अर्थतन्त्रमा सुधार ल्याउन चालिनुपर्ने कदमका विषयमा सुझाव एवं जिज्ञासा राखेका थिए ।

World Bank to support forest-dependent indigenous peoples and local communities

The World Bank (WB) is providing grant support of $4.5 million to strengthen the capacity of Indigenous Peoples and Local Communities (IPLCs) in Nepal’s forest sector. 

The World Bank and Rural Reconstruction Nepal (RRN) today signed a $4.5 million grant agreement to strengthen the capacity of Indigenous Peoples and Local Communities (IPLCs) in Nepal’s forest sector. The five-year Dedicated Grant Mechanism for Indigenous Peoples and Local Communities in Nepal project will help enhance the capacity of IPLCs to participate in Nepal’s Reducing Emissions from Deforestation and Forest Degradation (REDD+) processes at the local, national, and global levels for the sustainable management of forests, according to the World Bank. “This will help create livelihood opportunities and increase the income of forest-dependent communities in the Madhesh and Lumbini Provinces.”

Rural Reconstruction Nepal is the national executing agency for the project.

World Bank Operations Manager for Maldives, Nepal, and Sri Lanka Lada Strelkova and president of Rural Reconstruction Nepal Dr Arjun Karki signed the agreement. “This project supports Nepal’s Indigenous Peoples and Local Communities through a dedicated funding mechanism that will promote and protect their customary institutions that are crucial for the sustainable management of natural resources and climate resilience,” said World Bank Operations Manager for Maldives, Nepal, and Sri Lanka Lada Strelkova, after signing the agreement. “The project contributes significantly to Nepal’s transition to Green, Resilient, and Inclusive Development (GRID) for sustainable recovery, growth, and jobs.”

The DGM Nepal project aims to provide long-term benefits to IPLCs from the sustainable use of forests, including adding value to products and more active involvement in Nepal’s policy-making process.

“The project provides much-needed support to forest-dependent indigenous peoples and local communities to enhance their resilience and build livelihoods through small-scale forest and non-forest-based business and employment opportunities,” said president of Rural Reconstruction Nepal Dr Arjun Kumar Karki, on the occasion.

IPLCs are both beneficiaries and active proponents and participants in the project. During implementation, they will preside over the use of the grant resources in Nepal through a National Steering Committee (NSC) to provide strategic and leadership guidance to the RRN as executing agency. The NSC is a 14-member team of representative NGOs identified through a self-selection process with an equal representation of IPLC representatives as decision-making members.

“This project is an excellent example of the innovation and leadership of Indigenous Peoples and Local Communities in Nepal,” said Natural Resources Management Specialist at the World Bank Meerim Shakirova, on the occasion. “Notably, it demonstrates that they can lead the design and implementation of development projects, meeting the expectations of the communities they represent as well as the requirements of the World Bank, donors, and partners.”

The DGM Nepal project is funded by the Climate Investment Funds (CIF) Forest Investment Programme (FIP) implemented by the World Bank to enhance the role of IPLCs in protecting the forests they depend on.

“Indigenous Peoples and Local Communities in Nepal are a critical pillar for climate action,” co-chair of the National Steering Committee Bharati Pathak said, adding that they believe the project will improve their capacity and skills to have a greater role in forest-related decisions at the country and international levels.

“If forest-dependent indigenous peoples and local communities from Madhesh and Lumbini Provinces can generate income from forest-related activities and foster innovation through this project’s capacity building and competitive grants mechanism, it will encourage IPLCs to ensure that their traditional knowledge, norms, and values are recognized alongside with the customary law,” said co-chair of the National Steering Committee  Jagat Baram added.

External sector improves after 14 months

After 14 months, money coming into the country has recorded a surplus than the money going out of the country, which has improved the external sector.

According to the ‘Current Macroeconomic and Financial Situation of Nepal’, published today by the central bank, the Balance of Payment (BoP) recorded a surplus of Rs 12.43 billion in the first three months of the current fiscal year as the remittance and foreign direct investment (FDI) inflow increased over the period.

For the last 14 months, the country was facing BoP deficit. As of mid-October last year, the country was in BoP deficit of Rs 87.71 billion. In the US Dollar terms, the BoP remained at a surplus of $91.8 million in the first quarter compared to a deficit of 741.2 million in the first quarter of last year.

The BoP records current account, capital account and financial account of a country’s financial transactions with the rest of the world. It is one of the key indicators to show a country’s net balance in terms of foreign currency reserves.

With the BoP surplus, gross foreign exchange reserves also increased by 2.5 per cent to Rs 1.246 trillion in mid-October from Rs 1.215 trillion in mid-July. According to the central bank, the foreign currency reserve is sufficient for merchandise and services imports of 8.3 months.

In the first three months of the current fiscal year, remittance inflows also increased by 16.8 per cent to post Rs 281.05 billion,, adding Rs 94 billion in a month, due to impressive migrant workers outflow in the recent months of the current fiscal year, and also due to government’s inability to create jobs in the country.

Likewise, imports decreased by 16.2 per cent to Rs 401 billion against an increase of 63.7 per cent a year ago due to government and central bank’s import restrictions, according to the central bank data.

According to the central bank, capital transfer also increased by 34.8 per cent to Rs 2.59 billion and net FDI inflow recorded Rs 79.6 million. In the first quarter of the last fiscal year, capital transfer and net FDI inflow amounted to Rs 1.92 billion and Rs 5.07 billion, respectively.

Nepal’s graduation from LDC will not impact development cooperation hugely

Nepal’s graduation from Least Development Country (LDC) status will impact development cooperation modestly only, according to a research report “Nepal’s graduation from the LDC category: Implications for international trade and development cooperation”.

The impact on development cooperation will be modest as most of the development partners – multilateral and bilateral – have indicated that LDC status is not the main criterion for aid flows, concludes the study conducted by South Asia Watch on Trade, Economics and Environment (SAWTEE) to investigate the implications of graduation for Nepal in the areas of market access, development cooperation, and trade-related policy space. As, the motive of the study was also to offer recommendations in these areas for the government to consider when formulating the transition strategy, the study highlights that Nepal could lose access to specific instruments and funds dedicated exclusively to LDCs, particularly with regard to climate change-related funds, after a transition period.

Some development partners may switch from grants to concessional loans or increase interest rates for concessional loans, it reads, recommending that the government should explore new forms of finance, including blended finance, public-private partnerships, private philanthropies and co-financing, among others, and work with development partners for new forms of support mechanisms such as dedicated funds for graduated countries, disaster insurance, and technology transfer mechanisms.

Nepal is scheduled to graduate from the LDC category in 2026. While this is an important milestone in Nepal’s development journey and a testament to its achievements in socio-economic progress, Nepal’s exit from the category will result in the loss of a variety of international support measures that the international community has provided to help Nepal overcome development-related challenges. The government is also in the process of formulating a transition strategy to ensure smooth, sustainable, and irreversible graduation.

The study has also suggested that graduation from LDC status will have trade implications in terms of higher tariffs and more stringent rules of origin provisions in preference-granting countries. The projected loss in total exports emanating from the increase in tariffs is moderate, it reads, adding, however, the loss emanating from more stringent rules of origin, while uncertain, could be significant, especially in the garments sector.

The study has also recommended the government to aspire to become a party to the more generous preferential schemes such as the EU’s Generalised System of Preferences Plus (GSP+) and the UK’s GSP Enhanced Framework, while studying the implications of acceding to the additional conventions that Nepal needs to ratify to qualify for these schemes. “Nepal should also initiate dialogue with other trading partners seeking an extension to LDC-specific concessions and preferences for another 3-5 years following graduation,” it reads, adding that Nepal should lobby for lenient rules of origin (RoOs) for LDCs for a period sufficient for the private sector to adjust to the new RoOs. “To realise the untapped export potential of Nepal, the government should prepare trade strategies, in consultation with the private sector, to strengthen the overall competitiveness of the economy, upgrade exporter’s capabilities, diversify export products and markets, simplify and streamline processes to attract more foreign direct investment and encourage enterprises to participate in regional, global value chains.”

Likewise, the graduation could result in a loss of policy space, either through the loss of current flexibilities and special treatment, such as in the area of intellectual property rights, or through greater scrutiny of certain practices, such as the subsidy regime, the study reads, adding that the policy space to promote infant industries and exports, and pursue public health objectives, could be squeezed.

Consumers have to pay extra to watch FIFA World Cup

Nepali television viewers have to pay extra to watch the world cup football unlike previous years, according to an apex court decision.

The Supreme Court today issued a ruling in support of imposing extra charges on customers to give them access to the live broadcast of the FIFA World Cup 2022.

An advertising agency, Media Hub had earlier claiming that it has obtained exclusive broadcast rights to the FIFA World Cup, has decided to collect Rs 565 extra (including VAT) per set-top box stating that domestic advertisements do not cover their costs. 

But advocates Kishor Poudel and Anupam Bhattarai filed a writ petition stating that Nepalis didn’t have to pay extra to watch previous World Cups. They also claimed that the additional fees this time was unlawful. On November 8, a single bench of Justice Prakashman Singh Raut has issued the interim order asking the concerned not to charge the customers until the final verdict is made.

But justice duo Prakash Kumar Dhungana and Manoj Kumar Sharma today said that there is no need to continue the short-term interim order issued on November 8. “Watching the World Cup football by paying extra is not a regular but an optional issue for the viewers,” reads the Supreme Court verdict. The matches will be shown live on Himalaya TV.

There also appears to be an option in the agreement between Himalaya TV and Media Hub that some important matches would be broadcast free of cost, which means that customers, who do not pay extra too can watch at least four important matches. 

“We welcome the court’s verdict,” said marketing director at Media Hub Siddhartha Dhital. “All the work for broadcasting the world cup matches had been halted after the court’s interim order,” he said, adding that they will now work 24/7 to ensure the broadcast. 

The 2022 FIFA World Cup – to be hosted by Qatar – kicks off from November 21, and will continue until December 18. A total of 64 matches will be played during a month-long championship. The first match will be played between the host Qatar against Ecuador. Worldwide, billions of soccer fans watch the live coverage of the four-yearly football extravaganza on TV.

According to Dhital, Worldlink and Vianet Communication, two of the leading internet and television services providers, have already signed agreements with Media Hub to broadcast the matches.

Claiming that Media Hub has bid for the broadcast rights for around Rs 250 million for the month-long event, Dhita,l said that an additional Rs 150 million will be spent for promotion and technical support. 

For the first time in history, a Middle Eastern country is hosting the World Cup football. 

According to the international media reports, the Qatar World Cup will be the most expensive event as it will cost around $220 billion to Qatar, some 20 times more than the cost of last World Cup in Russia. Criticising the high prices of the tickets to the World Cup matches football fans around the world accused FIFA.

The most expensive tickets on general sale for the December 18 final at Lusail Stadium cost 5,850 Qatari riyals (£1,179), which is 46 per cent higher than the £807 ticket price for the 2018 final match that France won.

Reuters reports that While fans in Russia paid an average of 214 pounds for a seat, tickets to matches in Qatar cost an average 286 pounds, according to a study by Keller Sports.

Banks not decreasing interest rates

The commercial banks decided that they will not decrease interest rates for next one month due to the current ‘tight’ situation in the financial market and soaring inflation.

Nepal Bankers’ Association’s (NBA) meeting today decided not to raise the interest rates for the next month starting from November 17.

There has been a huge cry from the private sector as the banks hiked the interest rates to contain the but still the interest rate and the inflation doesnot match. The depositors are getting 7 per cent  on their deposits whereas the inflation is above 8.5 per cent. But the private sector is blaming the central bank for supporting the Banks and Financial Institutions (BFIs) ensuring them a huge profits by letting them increase the interest rates. The private sector has also come to street to protest against the interest rates hike, which they have postponed – for the time being – citing the elections to the House of Representatives and provincial assemblies scheduled for November20.

Since mid-September, the banks have increased their interest rates on fixed deposits by 10 percentage points to 12.13 per cent, while the interest rates on savings accounts is only 7.13 per cent per annum on an average. However, the lending rate has gone up to 18 per cent, blame the private sector that funnels the borrowing to imports. But when the bank rates were low also, the inflation was more than the bank deposit rates, hurting not only the savers but also the economy.

However, increasing interest rate failed to create new deposits. But the slowdown in the economy has pushed nonperforming loans (NPL) and the cases of bad debts are also increasing, which are serious concerns. 

Global IME Bank, Bank of Kathmandu sign final pact to merge

Global IME Bank and Bank of Kathmandu (BoK) today signed a final memorandum of understanding for a merger.

Global IME Bank chairman Chandra Prasad Dhakal and BoK chairman Prakash Shrestha signed the final memorandum of understanding (MoU) for the merger amidst a programme in Kathmandu today.

After signing ceremony, Dhakal said large banks are need of the hour to invest in big infrastructure projects. Likewise, Shrestha said that big and capable banks are needed for economic transformation.

After the merger, the bank will become the largest commercial bank in Nepal with a total capital of Rs 57 billion, according to a press note issued by the banks. “The merged bank’s paid-up capital will reach Rs 35.77 billion with a total deposits of Rs 400 billion and loans of Rs 379 billion.”

Earlier, the board of directors (BoD) of both the banks had approved the share swap ratio of 1:1, based on the evaluation report of movable and immovable assets, liabilities and transactions received from the appraiser for the purpose of merger between the two banks. 

According to the press note, the name of the merged bank will be Global IME BoK, and the bank will consist of seven board of directors – five five from Global IME Bank including its chairman Dhakal. There will be two board of directors on behalf of Bank of Kathmandu. “The incumbent chief executive officer (CEO) of Global IME Bank Ratnaraj Bajracharya will remain as the chief executive officer of the merged bank. 

After the merger, Global IME BoK will have 385 branch offices, 367 ATM counters, 275 branchless banking services, 61 extended branch offices and 3 foreign contact offices, the press note reads, adding that the merged entity will have more than 4 million customers.

Why more countries should adopt digitalisation to curb illicit trade in endangered species

Earlier this year, UN Secretary-General António Guterres called on world leaders to end the ‘senseless and suicidal war against nature’.

Technological advancements have now created solutions to help stop this war and improve humanity’s relationship with the natural world. Digital technology exists to help us to know what is happening in the world and making better informed decisions about how-to live-in harmony with our rich but fragile ecosystems.

Take wildlife trade for example. Much has changed since the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) came into force in the early 1970s to prevent the world’s commercially traded wildlife species from becoming extinct. Back then, many people were unaware of many of the species in faraway places, or how their purchasing decisions may have reverberating effects on them.

“Over time, we have become collectively better educated about the need to preserve the multitude of species on our planet,” he said, adding that many understand why it’s important to conserve biodiversity to ensure future generations can also benefit from nature. 

CITES regulates and controls trade in various species of animals and plants, according to their status in the wild, with strict restrictions against commercial trade in endangered species while allowing a controlled and monitored approach for others.

The process to regulate the export or import requires both transparency and rigour at the borders to allow legal trade to proceed while preventing illicit wildlife trade.

However, for many countries – exporters and importers alike – border control may still be a human-intensive process and the paperwork to process the transfer of species from one territory to another is done by hand.

As countries implement the national single window approach for trade controls in general, some countries are digitalising this process. The recent Covid-19 pandemic has also posed challenges for in-person trade processes, which also accelerated countries looking into the automation of trade permitting.

While dematerialisation often implies a reduction in time and simplification of trade processes, the use of technology also improves the quality of risk assessment and inspection by the border agencies, including customs, helping combat illegal trade in wildlife specimens.

But how does this work in practice? Consider a customs officer presented with an animal or plant that appears to be exotic, maybe a protected species. How do they know that the certificate accompanying the animal or plant in front of them is legal or that the species being traded is the same as the one the paperwork claims it to be?

Since many countries currently rely on traditional paper-based means to process permits, human error can creep in, allowing the fraudulent trade in endangered species.

But an electronic permit system linked to a customs management system can help customs officers, importers and exporters ensure the right species are traded in the right quantities.

It facilitates coordination between customs and the Management Authority – the government agency responsible for CITES matters. Furthermore, the data generated from the electronic permit systems allows accurate reporting of trade in CITES-listed species, allowing informed decision making for sustainable, legal and traceable trade.

“Today, the 183 countries and the EU that are Parties to CITES are looking into the electronic permit system, and exploring solutions that would be cost-effective and interoperable among countries, which helps customs officers spot illegal attempts to trade in protected species and enforce applicable international trade laws,” he added.

One such solution is the eCITES@ASYCUDA base solution. Developed by the CITES Secretariat and the UN Conference on Trade and Development’s ASYCUDA programme, the system allows a streamlined and automated flow of CITES trade from permit application, review, issuance to border validation; meaning the trade in regulated animals and plants is done in a legal, traceable and sustainable manner in the country.

In Sri Lanka, which was the first country to implement eCITES@ASYCUDA base solution, the piloting of the digital permitting solution has increased annual approval rates for such permits by 17 per cent from 2020 to 2021. This shows that the system is facilitating legal trade, while helping curb illicit trade, and therefore boosting the conservation of CITES-listed species in Sri Lanka.

The average processing time for permits in Sri Lanka has also fallen from 120 hours in 2020 to 39 hours today. Adopting such a digital solution also provides better data for improved analysis and monitoring. Prior to the roll-out of the solution in 2020, no statistics were available.

Beyond Sri Lanka, the system is also being piloted in Mozambique, where similar improvements are foreseen, as well as a few other countries that have embarked in testing the system.

Global problems require global solutions

Fundamentally, the more countries around the world that use electronic permitting solutions, the more sustainable international trade in wildlife species can be. And the greater the level of protection for endangered species globally.

Global problems require global solutions and international cooperation is essential for the conservation of certain wild animal and plant species against overexploitation through international trade.

Digital systems can also facilitate the exchange of electronic permits and information across borders, improving international cooperation, increasing transparency and preventing the use of fraudulent permits.

Such a system would particularly be useful in developing countries, which are home to many valuable and threatened species, but may not have adequate staff for permitting and border controls, and need access to systems that are efficient and effective as they fight the criminals seeking to bypass those controls.

The international community has an important role to play in testing and moving towards innovative technological solutions that are available to all countries, so that we improve the conservation and sustainable use of our natural resources together, while leaving no one behind.

As the UN Secretary-General has said several times, our health and the health of the natural world – and indeed, our planet – are all intricately linked.

Using digital solutions to support nature conservation is fundamentally an act of human interest and at the same time, our responsibility to leave a healthy planet for future generations.

Growth of private schools fails to close widening gap between richer and poorer students

According to a report, increase in private educational institutions in Nepal has failed to bridge the gaps between the richest and poorest.

The report launched today at an event at Institute for Integrated Development Studies (IIDS) in Kathmandu also provides a comprehensive and invaluable analysis of the role of non-state actors in the education system of Nepal, and across South Asia. Produced by UNESCO’s Global Education Monitoring Report and Institute for Integrated Development Studies (IIDS) Nepal, the study ‘Who Loses, Who Chooses,’ reveals the inequalities in education experience and learning outcomes which have resulted from a rapid growth in the private education sector.

There has been rapid growth in access to education in Nepal in recent decades. If late enrollment is included, 95 per cent of children reached the last year of primary school, meaning Nepal almost achieved universal primary completion within a generation. As across the whole of South Asia, where private education has grown faster than any other region, much of this expansion has been in privately provided schools. Half of children in pre-primary and one quarter of students in primary and secondary education in Nepal attend privately funded schools, according to the report.

But the report warns that education quality is suffering. Learning levels are growing more slowly in South Asia than in the rest of the world, it reads, adding that only 39 per cent have minimum proficiency skills in reading by the end of grade 5 in Nepal. The report also calls for greater oversight of the quality of all schools by the government, whether schools are state or non-state provided. It notes the prevalence of unregistered madrasas and Buddhist and Hindu schools in Nepal. “Up to 3,000 madrasas may be operating unregistered,” it adds.

“Governments need to collaborate with the range of private and other non-state schools and universities in Nepal to ensure fruitful regulations and financing across the full system,” GEM Report senior policy analyst Priyadarshani Joshi, said on the occasion.

The report acknowledges that Nepal and India prohibit profit making in education in the country. However, it notes that the rise of private education has increased financial burdens on households all the same. Household incomes currently account for 63 per cent of total spending in pre-primary education. Due to stigma regarding the quality of state education, individuals are more likely to invest in and support private industries. The report finds that in two districts, even the ‘best’ public schools struggled to attract students from wealthier backgrounds.

Growing competition in the labour market has also resulted in an increase in the demand for private tutoring, adds the report, citing that the positive example in Nepal of regulations on tutoring for other countries in the region, including the quota for tutoring for marginalised groups, the caps on fees and the necessity of a government permission for private tutoring classes to be established. Nonetheless, as with tutoring across the whole region, the report warns about the practice continuing to widen education gaps between the richest and poorest.

The also recommended five policies to enhance the quality and equity of education in South Asia:

1. Fulfil the commitment to make 1 year pre-primary and 12 years primary and secondary education free. Most countries in the region are not nearly reaching the necessary minimum funding to ensure free access to education.

2. Set quality standards that apply to all state and non-state education institutions and improve state capacity to ensure their implementation. Governments should work to establish universal standards for quality of education in both state and non-state schools to promote more equitable outcomes for all learners. Governments should dedicate funding to frequent school inspections and assessments to ensure parity across sectors.

3. Establish common monitoring and support processes that apply to all state and non-state institutions through a system of clear and standardised regulations on teacher training, curriculum, and testing. This will help to ensure that students in all education systems receive a more equitable education.

4. Facilitate the spread of innovation through the education system for the common good.

Mistrust between governments and non-state actors has negatively impacted both standardisation and student performance. Governments should recognise good practices used by non-state actors and work to incorporate them into public education systems.

5. Maintain the transparency, inclusivity, and integrity of public education policy processes. Open communication between all actors should be prioritised, with the common goal of increasing education quality and access of all learners at the heart of discussions.

Share transactions to be suspended only for 15 days

After the investors’ pressure, the regulatory authority of the capital market has decided to shorten the duration of suspension of share transactions of companies in the process of merger and acquisition (M&A) to only 15 days.

The Securities Board of Nepal (Sebon) today issued a directive clearly mentioning that the share transactions will be suspended for a maximum of 15 working days for the completion of the M&A process that include re-registration of securities, dematerialisation and listing of securities.

The directives has formed a unified policy for all companies listed in the secondary market with the new directives, though there was a policy for trading suspension only for banks and financial institutions (BFIs) earlier.

Enforcing the directive from today, Sebon has maintained that the share transaction will be suspended for a maximum of 15 working days after the unified entity starts joint business transaction.

Investors have been suffering as they had to wait for a longer period of time for buying and selling of shares – especially the BFIs shares – that are in M&A process. As the Sebon scrapped the provision to hold share transactions of the companies, which enter the process for M&A, the new rule will give some respite to the investors, who were unable to purchase and sell their stakes for a long time until the unification process completed.

The regulator has given 15 days also for re-registration, reconciliation, dematerialisation and listing of the shares for post unification.

Earlier, the central bank has authorised Sebon to decide on the suspension of share trading of BFIs opting for M&A. Amending the Regulation for Merger and Acquisition of Banks and Financial Institutions 2073 last month – according to the announcement in the Monetary Policy for the current fiscal year – the central bank has given the right to decide on the suspension of share trading to Sebon. 

The central bank has become flexible after increasing complaints that the suspension of share trading in the secondary market for a long time during M&A adversely affected the investors.

ADB to invest over Rs 10 billion in nuts and fruits farming

The Asian Development Bank (ADB) is investing over Rs 10 billion for cultivation of nuts and fruits in the hilly area project.

The ADB will be providing grants of Rs 1.30 billion, while Rs 7.39 billion will be provided in concessional loans, according to the agreement signed by ADB country director Arnaud Cauchois and finance secretary Krishna Hari Pushkar today at the Finance Ministry, according to a press note issued by the Finance Ministry.

Likewise, the ADB will be funding Rs 1.17 billion from the Global Agriculture and Food Security Programme, it reads, adding that the government will invest Rs 1.88 billion, and the programme is expected to benefit 30,000 households from Province 1, Bagmati Province, Karnali Province and Sudurpaschim Province, mainly through the development of around 10,000 hectares of climate-resilient fruit and nut orchard.

The annual demand for walnuts and fruits that has been increasing in the past years in the country is met by the imports as the domestic production has been low. 

The commercial farming of fruits and nuts in Nepal remains marginal and the abandonment of cultivable land in hilly areas is increasing as people are switching to other off-farm employment and relying on external remittances. “In this context, the project will help to take an advantage of the country's favourable agro-climatic conditions to product quality horticulture crops and will support the government the government's declaration of the 2016-2026 Fruit Decade," said finance secretary Pushkar, after signing the agreement.

The agreement is a key part of the ADB's overall efforts to address potential risks on food, ADB country director Cauchois said adding that the ADB will support improving the livelihood and climate resilience of horticulture farmers in the hilly areas of the five provinces of Nepal through the project.

Migration can boost South Asia’s recovery and support long-term development

As South Asia reels from the impacts of unprecedented economic shocks, migration can boost its recovery and support long-term development, says the World Bank in its latest regional economic update.

‘Coping with Shocks: Migration and the Road to Resilience’ is the subject of a two-day conference that opened today in Kathmandu, organised by the Institute for Integrated Development Studies (IIDS) and the World Bank (WB), according to the multilateral development partner. The conference provides academics and researchers a platform to discuss the current situation, challenges and advancements related to migration in South Asia.

Migration drives economic growth as it allows people to move to where they are more productive. International migrants from Bangladesh, Nepal, Pakistan, and Sri Lanka, who work in the Gulf states, for example, earn up to five times what they would at home and help generate some of the largest remittance inflows in the world. Nepal derives an estimated 20 per cent of its income from remittance inflows, and in Bangladesh and Pakistan, remittance revenue accounts for 6 per cent and 8 per cent equivalent of their GDP, respectively. Migration also allows people to adjust to local economic shocks, such as extreme-weather disasters, to which South Asia’s rural poor are highly vulnerable, the report adds.

“While migration has numerous economic benefits, the costs of moving such as credit constraints, lack of information, and labor market frictions prevent them from being fully realized,” said secretary at the Ministry of Labour, Employment, and Social Security Eaknarayan Aryal, addressing the conference. “Nepal and countries across South Asia must work to facilitate labour mobility as doing so is vital to the region’s recovery and resilience to future shocks,” he added.

Poor South Asian migrants, many of whom hold temporary jobs in the informal sector, face several challenges such as precarious labour market conditions, visas tied to employment, and limited access to social protection. The Covid-19 pandemic exposed their long-standing vulnerabilities as they were disproportionately affected by restrictions to movement. However, the later phase of the pandemic has highlighted the crucial role migration can play in facilitating recovery. Survey data from the report suggests that in late 2021 and early 2022, migration flows are associated with movement from areas hit hard by the pandemic to those that were not, thus helping equilibrate demand and supply of labor in the aftermath of the Covid-19 shock. In Nepal, by late 2021, migrants were 13 percentage points more likely to be employed than those who did not migrate after facing job loss during the early months of the pandemic.

“Migration is picking up again in South Asia, but remains slow and uneven, raising concerns that the pandemic shock has had long-term impacts on the costs and frictions associated with it,” said World Bank chief economist for South Asia Hans Timmer, on the occasion. “Policymakers must address these often-prohibitive costs and frictions and incorporate measures to de-risk migration.”

The report offers several recommendations on cutting the high costs of migration, including drawing bilateral and multilateral agreements, strengthening the remittance infrastructure, and offering information and training programmes to help potential migrants make better decisions about moving. It also offers recommendations on de-risking migration through means such as more flexible visa policies, mechanisms to support migrant workers during shocks, and social protection programmes.

“South Asia is the largest beneficiary of remittance in the world,” IIDS executive chair Dr. Biswash Gauchan said, adding that remittance has played a central role in alleviating poverty, coping with economic shocks, and making substantial progress toward sustainable development goals in Nepal. “However, the socioeconomic and political cost of migration is also very high in the country where a substantial number of the working-age population has gone abroad in search of employment.”

Countries could cut emissions by 70 per cent by 2050

Investing an average of 1.4 per cent of GDP annually could reduce emissions in developing countries by as much as 70 per cent by 2050 and boost resilience, according to a new report from the World Bank Group.

The analysis, ‘Climate and Development: An Agenda for Action’, compiles and harmonises results from the Bank Group’s Country Climate and Development Reports, covering over 20 countries that account for 34 per cent of the world’s greenhouse gas (GHG) emissions. It also shows that investment needs are markedly higher in lower-income countries which are more vulnerable to climate risk, often exceeding 5 per cent of GDP. These countries will need increased amounts of concessional finance and grants to manage climate change impacts and develop along a low-carbon path.

The report draws from the richness of the individual country reports and highlights lessons for countries on integrating climate and development objectives. It finds that this approach to climate action can help them manage the negative impacts of climate change, while generating positive impacts on GDP and economic growth, and delivering critical development outcomes such as reducing poverty. The key conditions for success include impactful reforms, improved allocation of public resources, higher mobilisation of private capital, and significant financial support from the international community.

“Achieving climate and development objectives must go hand in hand,” said World Bank Group President David Malpass. “Climate action is a key global public good, requiring significant new financing from the global community and mechanisms for inflows,” he said, adding, ”Well prioritised and sequenced climate actions, strong participation of the private sector, substantial international support and a just transition are critical components for impact.”

The report also notes that while all countries have to increase their climate action, high income countries with their greater responsibility for emissions need to lead the way with deeper and more rapid decarbonisation, as well as increased financial support to lower income countries.

Major current and future emitters in the developing world also have a key role to play for the world to achieve the goals of the Paris Agreement. The report also examines the technologies and innovations needed for lower carbon intensity production of electricity, steel, cement, and manufacturing, and how the world will build green and efficient supply chains for a sustainable future.

Country Climate and Development Reports combine the best available data, models, and tools and aim to provide policymakers with immediate and actionable recommendations to guide climate and development decisions today. They are a core element of the World Bank Group’s Climate Change Action Plan, which outlines how the WBG will support climate action in developing countries.

Countries need to prioritize and sequence key investments and policy reforms, according to the report. These will deliver multiple benefits. And emission reductions can deliver immediate development outcomes such as reduced vulnerability to fossil fuel price volatility, improved trade balances and enhanced energy security, and better air quality and related positive health impacts. Early action can also avoid locking countries into high emitting infrastructure and systems, which will be costly or even impossible to transform in the future.

This analysis covers over 20 countries including: Argentina, Bangladesh, Burkina Faso, Cameroon, Chad, China, Arab Republic of Egypt, Ghana, Iraq, Jordan, Kazakhstan, Malawi, Mali, Mauritania, Morocco, Nepal, Niger, Pakistan, Peru, Philippines, Rwanda, South Africa, Türkiye, and Vietnam. The findings from these analyses will inform Bank Group engagements with public and private sector clients and will feed into the Bank Group’s own country engagement frameworks and operational portfolio.

नयाँ स्टक एक्सचेन्ज थप्ने प्रक्रिया स्थगित

नेपाल धितोपत्र बोर्डले सर्वोच्च अदालतको अल्पकालिन अन्तरिम आदेशपछि सुरु गरेको ब्रोकर र स्टक थप गर्ने प्रक्रिया तत्कालका लागि स्थगित गरेको छ । सर्वोच्चको आदेशअनुसार बोर्डले तत्कालका लागि लाइसेन्स प्रक्रिया स्थागित गरेको जनाएको छ । 

बोर्डले आवेदन माग गरेको मंगलबार अन्तिम दिनमा प्रक्रिया स्थगित गरेको हो । बोर्डले धितोपत्र ब्रोकरका लागि ३० दिन र स्टक एकस्चेन्जका लागि ४५ दिन समय दिएको थियो । बोर्डले ब्रोकरका लागि दिएको ३० दिनको समय असोज ३१ गतेभित्र ४५ नयाँ कम्पनीले धितोपत्र दलाल कम्पनीको लाइसेन्सका लागि बोर्डमा आवेदन दिएका थिए ।

सर्वोच्च अदालतले ४ कात्तिकमा न्यायाधिश तिलप्रसाद श्रेष्ठको एकल इजलासले नयाँ स्टक एक्सचेन्ज र ब्रोकर थप गर्ने प्रक्रियाविरुद्ध परेको रिटमा सुनुवाइ गर्दै तत्काल प्रक्रिया रोक्ने र दुवै पक्षको छलफलपछि मात्र उपयुक्त निर्णय लिने गरी अल्पकालिन अन्तरिम आदेश दिएको थियो । 

चुनावअगाडि आर्थिक चलखेल गर्न बोर्डले नियमावली संशोधन गरेर लाइसेन्स दिन सुरु गरेको आरोपमा अधिवक्ता दीपकविक्रम मिश्रले रिट दायर गरेका थिए । संशोधित नियमावलीको कार्यान्वयन तत्काल रोकिनुपर्ने भन्दै अदालत पुगेका मिश्रले प्रधानमन्त्री तथा मन्त्रीपरिषद्को कार्यालय, अर्थ मन्त्रालय, नेपाल धितोपत्र बोर्ड, नेपाल स्टक एक्सचेन्ज लिमिटेडलाई प्रतिवादी बनाउँदै १ कात्तिकमा सर्वोच्चमा रिट दायर गरेका थिए ।

बोर्डले सोही आदेशको पालना गर्दै मंगलबार लाइसेन्स प्रक्रिया रोकेको जनाएको छ । धितोपत्र बोर्डले धितोपत्र बजार सञ्चालन नियमावली २०६४ र धितोपत्र व्यवसायी नियमावली २०६४ संशोधन गरी नयाँ लाइसेन्स दिने प्रक्रिया सुरु गरेको थियो । त्यसका लागि धितोपत्र बोर्डले गत असोज २ गते आवेदन मागेको थियो ।