Nepal's economic growth to drop to 3.4 per cent: World Bank

Nepal is expected to see drop in economic growth to 3.4 per cent from expected 5 per cent in the current fiscal year, though the country has begun to recover after the loss of life and economic devastation from the April 25 and May 12 earthquakes, according to the World Bank.
"From an expected 5 per cent, Gross Domestic Product (GDP) growth is expected to drop to 3.4 percent this year," it said. "But the economic growth will tick up to 3.7 per cent in 2016," the multilateral institution said in its twice-a-year 'South Asia Economic Focus' published today. "Although macroeconomic fundamentals remain strong, weak execution of public investment slows down both infrastructure development and post-disaster reconstruction."
However, the World Bank is hopeful that many South Asian countries show potential for accelerated growth in the short to medium term. The transition in Afghanistan, the earthquakes in Nepal, and revisions to national accounts in Sri Lanka, has resulted in all three countries experiencing slower growth than previously expected, it added. "Led by a resilient India, South Asia is expected to maintain its lead as the fastest-growing region in the world, with economic growth forecasted to accelerate from 7 per cent in 2015 to 7.4 per cent in 2016," the report stated.
But the positive performance hinges on solid growth in services, domestic consumption, and a gradual rise of investments. Limited exposure to the financial turmoil and an improved external position have given most South Asian countries important policy space, it added.
Given India's weight in the region, its performance greatly influences the projections for South Asia as a whole. Improved investor sentiment and resilience to external shocks are expected to increase India's growth rate to 7.5 per cent in fiscal year 2015 and further to 7.8 per cent in the fiscal year 2016.
"While the region is now in a position of strength, structural constraints holding back export and investment growth do persist," World Bank South Asia chief economist Martin Rama said, adding that to keep the momentum and accelerate job creation, governments should enact reforms easing infrastructure bottlenecks and paving the way to greater competitiveness. "Fiscal space remains limited while financial sector vulnerabilities persist."
Thanks to low food and commodity prices, as well as a slowdown in the growth of administered prices, inflationary pressures have eased markedly in South Asia, it added. "Yet the pace of disinflation varies depending on the price index considered. Revisions to national accounts, together with new comparable data on purchasing power around the world, also raise questions regarding the measurement of prices in the region."
According to the report, South Asia could actually have cheaper prices, faster growth and bigger economies than previously thought.
Rapid growth has not yet translated into significantly higher government revenue generation and improved fiscal balances. Budget deficits are expected to remain at 6.5 percent of GDP in 2015, the highest among all developing regions. Tax collection remains well below estimates, and has even deteriorated across major South Asian economies."
"Mobilising revenue is critical for the region to develop its infrastructure and deliver better social services, while creating a financial cushion to address potential shocks in the
future," World Bank South Asia vice president Annette Dixon said, adding that in some cases introducing and rolling out modern tax instruments holds the key to higher revenue, but containing exemptions and special regimes are crucial across most of the region.

IFC appoints White Lotus as fund manager of Business Oxygen

IFC, a member of the World Bank Group, has appointed White Lotus Centre as fund manager for Business Oxygen, its SME ventures fund in Nepal.
White Lotus will make equity investments in Nepal's high-growth small and medium enterprises (SMEs), helping them achieve their potential and create more jobs.
Business Oxygen is Nepal's first private-equity fund. IFC has committed $7 million to this $14 million sector-agnostic fund. The fund combines risk capital financing with advisory support to help investee small and medium enterprises develop fundamental financial systems, quality-assurance standards, and corporate governance frameworks.
Chairman of White Lotus, Siddhant Raj Pandey, after signing the agreement said, "Despite the challenges posed by this year's earthquake, there is significant potential for SMEs in Nepal. White Lotus will develop a robust portfolio of investee firms that will become a strong contributor to Nepal's commercial growth."
SMEs are a vital component of Nepal's economy. They employ 1.75 million people and account for 22 per cent of the country's GDP. There are an estimated 111,442 operational SMEs, out of which 63 per cent were registered over the last decade.
Improved access to finance is essential for growth of these SMEs. Only 39 per cent of firms in the micro, small, and medium enterprise segment have adequate access to finance, compared to 78 per cent of large enterprises. Business Oxygen is designed to address this challenge.
"Business Oxygen's ability to provide risk capital to SMEs in Nepal provides a vital solution for firms too small or too new for traditional commercial bank financing," said IFC's country manager for Bangladesh, Nepal, and Bhutan Wendy Jo Werner. "The fund is unique because it provides equity and also advisory to catalyze the growth of small businesses."
Similarly, Tracy Washington, SME Ventures' programme manager, on the ocaasion, said that White Lotus will play an important role in developing the private equity sector in Nepal. "We look forward to supporting the team as it demonstrates that new funds, even in challenging markets, can achieve promising results," she added.
Business Oxygen is part of IFC's SME Ventures programme, which supports the creation of risk capital funds in fragile, frontier, and post-conflict markets. With four funds covering six countries, SME Ventures is expanding to new markets where the need for risk capital remains high and potential for growth makes private equity an effective market solution.

Nepal 3rd most competitive economy in South Asia

Nepal has improved its score in Global Competitiveness Index (GCI), becoming third most competitive economy in South Asia, according to a report.
According to the Global Competitiveness Report 2015-2016 published globally today by World Economic Forum, Nepal ranked 100 – with a score of 3.9 – among 140 economies in the world. With improved score, Nepal is the third most competitive counry for investment in South Asia. The more the score – measured from 1 to 7 – the more competitive is the economy.
With score of 3.8, Nepal was ranked 102 in the Global Competitiveness Report 2014-2015, among 144 economies in the world, the report said, adding that the macroeconomic environment, and health and education – two of the 12 pillars that gauge the competitiveness of the economy – have improved. "Nepal ranks among the factor-driven countries," said country coordinator for the report Prof Dr Ramesh Chandra Chitrakar.
India (55) is the most competitive economy followed by Sri Lanka (68) and Nepal (100) in South Asia. Bhutan ranks 105, Bangladesh is in 107th position and Pakistan ranks 126 in the index.
The set of institutions, policies, and factors determine the level of productivity of a country. The level of productivity, in turn, sets the level of prosperity that can be earned by an economy, Chitrakar added.
The ranking – based on the assessment of 140 economies on parameters such as infrastructure and institutions, macroeconomic environment, health and education, among others – claimed that quality of Nepal's institutions has also improved apart from macro-economic environment, health and education.
However, Nepal needs to improve its technological readiness and efficiency enhancers to graduate to the efficiency-driven economy from current-factor driven economy, he said, adding that the graduation of Nepal to developing country by 2022 will also be determined by the increased competence. "The report encourages the government to fix policy, institutions, and factors to make the economy more competitive or productive that can propel economic growth."
Switzerland, Singapore and the US are the top three ranked economies, unchanged from the previous year, according to the report. Three Asian countries – Singapore, Japan and Hong Kong – are in the top ten ranking of the report. Likewise, in Asia, Malaysia ranked 18th, up two places, Indonesia ranked 37th, down three notches, while Thailand ranked 32nd, down one position.
The report also stated that emerging and developing Asia is the world's fastest-growing region since 2005 but it will retain for medium term. "The region accounts for some 30 per cent of global GDP, with China alone accounting for 16 per cent," it reported, adding that ASEAN bloc is performing well, but no countries in SAARC is above the rank of 50.

Government concerned over Indian blockade

Nepal has officially showed concern over 'India-imposed blockade' since last four days that has made the lives of Nepalis hard.
Foreign Ministry today – releasing a press note – said that the government is concerned over 'undue delay on the movement and clearance of cargo vehicles resulting in significant decrease in the flow of essential goods to Nepal from India via different border checkpoints for last few days.'
"It decreased flow has been noted particularly since September 23, whereas the security situation in Tarai has remained the same for more than a month and now has been improving gradually,” the ministry said in a statement.
Minister for Health and Population Khaga Raj Adhikari – who is officiating foreign
minister in an absence of foreign minister Mahendra Pandey – during his meeting with ambassador of India to Nepal at the Foreign Ministry in Singha Durbar yesterday, had informed about the fact and requested for necessary cooperation from Indian government for early release of cargo vehicles stuck at border checkpoints on the Indian side, according to the ministry.
A handful of vehicles – with perishable goods – were allowed to enter Nepal through Mechi and Dhangadhi check point. "Due to the blockade, Nepalis have begun to feel shortage of daily supplies on the eve of festive season,” the ministry said, further adding that as many as 29 cargo vehicles carrying perishable goods had managed to enter Nepal yesterday and the day before through Bhairahawa checkpoint.
The ministry also informed that 17 cargo vehicles, including three with petroleum products, through Mechi checkpoint and 25 cargo vehicles, including 20 with petroleum products, through Dhangadhi check point could enter Nepal, today.
"The situation of supply, however, has not improved ever since," it said, adding, "Not a single cargo vehicle could enter Nepal through Biratnagar, Birgunj, Bhairahawa, Krishnanagar and Nepalgunj checkpoints until 5 pm today."
India has – showing its displeasure over promulgation of constitution through Constituent Assembly (CA) on September 20 – blocked cargo vehicles, including petroleum products, despite agreement to supply petroleum products to Nepal Oil Corporation (NOC) by Indian Oil Corporation (IOC), the sole supplier of petroleum products to Nepal. India sent a 7-point recommendation to add in the constitution, which Nepali leaders rejected. The Indian bureaucracy has taken the issue as its prestige issue and entered into ego-war with a tiny landlocked neighbour Nepal.
"Hundreds of vehicles carrying petroleum products and other essential goods are awaiting clearance to enter Nepal on the Indian side of the border,” the statement added, “Tankers have not been filled up with petroleum products."
Large number of vehicles have not been allowed to enter the Indian side and due to which people in Nepali side have begun to feel shortage of daily supplies on the eve of festive season, the statement further read. "Given the friendly relations existing between the two countries, Nepal sincerely hopes that the India will take all necessary steps at the earliest to ensure uninterrupted entry of vehicles carrying essential supplies, including petroleum products, to Nepal as before. It also reiterated that there would not be any problem inside the Nepali territory for the transport vehicles and their personnel since arrangements are already in place for their security.
Though not permitting transit right to a landlocked country like Nepal is a breach of freedom of transit rights of landlocked countries. If India continues to impose embargo on Nepal, Nepal can lodge complaints in the multilateral trade mechanism as it is the right of landlocked country. The transit and free supply of consumables is Nepal’s right and India should facilitate it without any hindrance, according to the multilateral and bilateral agreement.

ADB to double annual climate financing to $6 billion by 2020

Asian Development Bank (ADB) president Takehiko Nakao today announced that ADB will double its annual climate financing to $6 billion by 2020, up from the current $3 billion. ADB's spending on tackling climate change will rise to around 30 per cent of its overall financing by the end of this decade.
ADB's announcement comes against the backdrop of a promise by developed countries to mobilize $100 billion every year from 2020 to counter climate change in developing countries.
Out of the $6 billion, $4 billion will be dedicated to mitigation through scaling up support for renewable energy, energy efficiency, sustainable transport, and building smart cities. The $2 billion will be for adaptation through more resilient infrastructure, climate-smart agriculture, and better preparation for climate-related disasters," ADB said in a press statement.
ADB's doubling of climate financing reflects its strategic priorities as well as the increase in its overall financing capacity by up to 50 per cent due to more efficient use of its balance sheet by combining the equities of its Ordinary Capital Resources and Asian Development Fund (concessional finance window) in 2017.
"World leaders gathering in New York this weekend will commit to achieving 17 historic Sustainable Development Goals (SDGs) by 2030 and ADB stands ready to be an important part of global efforts to finance these goals," Nakao said, adding that nowhere is tackling climate change more critical than in Asia and the Pacific, where rising sea levels, melting glaciers, and weather extremes like floods and droughts are damaging livelihoods and taking far too many lives.
SDG 13 specifically calls for urgent action to combat climate change and its impacts. Also, mitigating and adapting to a changing climate are key to most of the other goals including ending poverty, achieving food and water security, providing access to energy, and building sustainable cities.
Later this year, at the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP21) in Paris, the international community is expected to finalize a new global climate agreement and the way to finance it.
In addition to scaling up its own climate financing, ADB will continue to explore new and innovative co-financing opportunities with public and private partners. For example, ADB will seek to mobilise concessional financing from the Green Climate Fund, which is becoming operational, for ADB's adaptation projects in poorer countries. ADB will tap institutional investment through private equity funds like the ADB-sponsored Asia Climate Partners. ADB will also issue more green bonds as an important source of funding for its climate operations.
Nakao stressed the importance of technology in tackling climate change, and said that ADB will adjust its procurement systems in order to facilitate the integration of cleaner and more advanced technology into its projects. ADB will also strengthen partnerships with centers of excellence across the world to provide its member countries with cutting-edge knowledge and expertise on climate change.

Government working on to reopen Tatopani, Rasuwagadhi customs

The government has started preparation to reopen the customs with the northern neighbour China due to problem on the southern border.
The two customs offices along Nepal-China border – Tatopani and Rasuwagadi – have not been operational since the April 25 earthquake. But the unrest in Tarai for the past one-and-a-half months and fresh 'blockade' enforced by India has forced the government to expedite the process to reopen the two customs offices on China border. "The festive season next month has also forced the government," according to Ministry of Supplies.
The Chinese government is positive about reopening both the customs offices by October 15," secretary at the Ministry of Commerce and Supplies Naindra Prasad Upadhyay told a parliamentary committee on commerce today morning. "We had discussion with the Chinese officials yesterday too," he said, adding that the northern neighbour is ready to help Nepalis get enough supplies for festivities. The festivals – Dashain and Tihar – fall in the last week of October and the first half of November this year.
The unrest created by the Tarai-Madhes parties and India's 'blockade' is sure to make the lives of Nepalis hard – also due to hike in rices of essential supplies – during the festivities.
The agitating Tarai-Madhesh parties today disrupted supplies from the southern plains to pile pressure on the government. However, they forgot that the blockade will only widen their distance with Kathmandu and other region, as their protest will create shortage before the festivals.
Likewise, India has also halted more than 1,000 oil tankers and trucks with essential supplies from entering Nepal to express its dissatisfaction with political parties who didn't take Indian recommendations for the constitution.
Though India's Ministry of External Affairs has said that the Indian government has not prescribed any recommendations, the Indian media published New Delhi's 7-point recommendations to Nepal government.
According to customs officials, around 1,500 oil tankers from India used to enter Nepal every day from the Jogbani Customs Office. But there has been no movement for the past three days, creating shortage in Nepal. Long queues have started forming at petrol pumps as people rush to fill tanks of their bikes and cars fearing prolonged shortage.
Meanwhile, Nepal Oil Corporation (NOC) has also requested people to use public vehicles to lessen demand for petroleum products.
Due to the disturbance in southern plains – where there are major customs points – since more than last one and half months, revenue mobilisation has plunged by 35 per cent in Bhadra – the second month of the current fiscal year 2015-16, according to the Department of Customs.

Ghale announces candidacy for NRNA president for second term

The incumbent president of Non-Resident Nepalese Association (NRNA) Shesh Ghale has announced his candidacy for the post of president for second term.
Addressing a meeting in London yesterday late evening, Ghale said that he is contesting for the presidential post in the 7th NRNA Global Conference to be held in Kathmandu from October 14 to 17 due to pressure from his friends. "There are many unfinished jobs," he said, adding that his continuation will help complete many unfinished jobs started by him.

On the occasion, Ghale, one of the successful businessmen and Australia-based billionaire, said that Nepal is passing through hard times after the devastating earthquakes and subsequent aftershocks. "Nepal needs to carry out reconstruction works effectively," he said, adding that the pending issue of migrant Nepali workers, knowledge and skill transfer, and construction of NRNA building are some of the unfinished jobs that need to be completed.
Thanking the government for providing citizenship to NRNs through new constitution, he said that the ball is now on the court of NRNs. "Now, it is the turn of NRNs to prove that we care for our motherland," he added.
Since its establishment, NRNA had been lobbying for dual citizenship. Though NRNs claim to have invested heavily in Nepal, there are only a few who have invested in their motherland.

Ghale, along with founding president Upendra Mahato, former president Jiba Lamichhane, incumbent vice president Bhawan Bhatta, and a couple of NRNs have invested in Nepal. Ghale is building a five-star hotel in Kathmandu. Prime Minister Sushil Koirala had laid foundation stone of the 17-storey five-star Sheraton Kathmandu Hotel in October last year.

The hotel is being built with investment of Rs 8 billion. The hotel, which is expected to come into operation in February 2018, is being built by MIT Group Holdings Nepal – a member of the Ghale Group of Companies – which has diverse businesses in Australia and other countries.
Ghale has also been appointed Nepal's special envoy for reconstruction in the aftermath of the devastating earthquakes that floored down thousands of houses, infrastructures and heritage sites.