Nefport 49 - Local Economic Development Special

ISSUE 49

|

JUNE 2022

Local Economic Development Special

Nepal Factsheet 1

Province 1

2 Madhesh Province 3 Bagmati Province 4 Gandaki Province

7

6

5 Lumbini Province 6 Karnali Province 7 Sudurpashchim Province

4 5

3 2

1

KEY ECONOMIC INDICATORS GDP (Preliminary estimate for 2020/21)** GNI (PPP) **** Gross Capital Formation (% of GDP) (2020/21)** HDI * Rank *

USD 39.7 billion

GDP growth rate (forecast)***

3.90%

USD 4,060

Inflation (Mid Oct 2021/22) **

7.28%

37.50% 0.602 142

Agriculture Sector *****

23.90%

Industry Sector *****

14.30%

Service Sector (2020) *****

61.80%

*HDI figure from Human Development Report of the UNDP -2020 **Based on NRB's current Macroeconomic and Financial Situation of Nepal based on three months data of 2021-22 ***Asian Development Bank, Asian Development Outlook Update(ADOU) 2021 ****Based on World Bank data *****Based on Ministry of Finance Economic Survey 2078/79

Contents NEPAL FACTSHEET 2 EDITORIAL 5

1

GENERAL OVERVIEW 6 Political Overview

7

International Economy

11

2

MACROECONOMIC OVERVIEW

3

SECTORAL REVIEW 27

14

Agriculture and Livestock 31 Energy and Environment 34 Infrastructure and Real Estate 39 Information and Communication Technology 42 Education 45 Health

49

Tourism 51

4

MARKET REVIEW 55 Financial Market

56

Capital Market 60

5

SPECIAL SECTION: LOCAL ECONOMIC DEVELOPMENT 62 ENDNOTES 71

4

Issue 49: June 2022 Publisher: Nepal Economic Forum Website: www.nepaleconomicforum.org P.O Box 7025, Krishna Galli, Lalitpur – 3 Nepal Phone: +977 1 554-8400 Email: info@nepaleconomicforum.org Contributors: Aarya Rijal Ashish Gupta Nasala Maharjan Pragati Karki Sakshee Singh Sayas D Joshi Sneha Shrestha Sugam Nanda Bajracharya External Contributors: Pradyumna Prasad Upadhyay, Chief Administrative Officer, Janakpurdham Sub-Metro City, Government of Nepal Samridhi Pant, Coordinator at Nepal Economic Forum Saroj Nepal, National Programme Coordinator, United Nations Capital Development Fund (UNCDF) Design & Layout: Thuprai Solutions support@thuprai.com This issue of nefport takes into account news updates from to 1 March to 31 May 2022.

The USD conversion rate for this issue is NPR 122.08 to a dollar, the quarterly average for this issue.

Reproduction is authorised provided the source is acknowledged.

The views and opinions expressed in the article/publication are those of the author(s) and do not necessarily reflect the official opinion of Nepal Economic Forum. Neither the organisation nor any person acting on their behalf may be held responsible for the use which may be made of the information contained therein.

Executive Board Members: Alpa B. Shakya Chandni Singh Shayasta Tuladhar Sudip Bhaju Sujeev Shakya Advisory Board: Arnico Panday Kul Chandra Gautam Mahendra Krishna Shrestha Prativa Pandey Shraddha Gautam Sneh Rajbhandari Senior Distinguished Fellows: Bibhakar Shakya Giuseppe Savino Suman Basnet Senior Fellows: Amish Raj Mulmi Apekshya Shah Ashraya Dixit Diva Shrestha Mark Perrin

NEFPORT ISSUE 49 – JUNE 2022

Editorial This election season, changes long overdue in the Nepali political arena have come to fruition and hope has been rekindled. With many independent candidates and youth taking the center stage of the elections, the megalomaniacs in Kathmandu, be it the political parties or bureaucrats, have been taken by surprise. Similarly, the power of social media has also been exhibited in this process whereby election campaigns were more focused and targeted to audience to demonstrate the candidate’s eligibility. The efficiency of the electoral process, in particular the vote counting process was a frustrating wait as it took two weeks to complete.

Despite recommendations from former election commissioners who saw through some of the teething problems encountered during elections, it was business as usual. Many countries have opted for electronic voting and so should Nepal.

On the economy too, it was the budget season, so parliamentarians were busy discussing the government policies for the upcoming budget. This year’s budget although was large by size, has prioritized some of the pending reforms on investment and business climate such as lowering the investment ceiling, using automatic route for investments, increasing export subsidy, launching production and promotion program and rebates to industries on electricity charges among others. With the agenda of economic growth being demonstrated as the key to success of to winning the local level elections for the political parties, these plans may not come as a surprise as a stage-setting for the upcoming federal elections.

Nevertheless, the economy shall benefit from these plans, if implemented.

As federalization takes it full swing with the election season, it has been proven that economic growth and development is what people have been seeking out of their representatives. Hence, this edition of nefport is focused on local economic development. We would like to thank the contributors to our special section, Pradyumna Prasad Upadhyay, Samridhi Pant, and Saroj Nepal for their valuable contributions to this edition of nefport.

We are excited and humbled to let you know that our next issue of nefport, September issue, will be the 50th issue of nefport. If you have any suggestions or collaboration proposals for that, please feel free to reach out to us at info@ nepaleconomicforum.org.

Sujeev Shakya Chair, Nepal Economic Forum

5

6

1

DOCKING NEPAL’S ECONOMIC ANALYSIS

General Overview

NEFPORT ISSUE 49 – JUNE 2022

Political Overview Nepal held its second local government elections since federalization on May 13, 2022. Elections were held in six metropolitan cities, 11 sub-metropolitans, 276 municipalities, and 460 rural municipalities. The Nepali Congress Party agreed to form an electoral alliance with its coalition partners, the Communist Party of Nepal-Maoist Centre, the Communist Party of Nepal-Unified Socialist, the Janata Samajbadi Party, and the Rastriya Janamorcha Party and were successful in reclaiming seats held by the Communist Party of Nepal-United Marxist-Leninist (CPNUML) in several constituencies. Moreover, the CPN-UML finally ended its obstruction of the parliament as the 11th session of the House of Representatives started. Likewise, the Government of Nepal presented its policies and programs for the upcoming fiscal year 2022/23.

EXECUTIVE UPDATES Dhiraj Pratap Singh Appointed as the New Inspector General of Police The government on May 1, 2022, promoted Additional Inspector General (AIG) Dhiraj Pratap Singh as the new Inspector General of Nepal Police. Despite regulations stating that the appointment of the IGP shall be based on merit and seniority, the Council of Ministers appointed Singh, who ranked third in the police department after Bishwa Raj Pokharel and Sahakul Bahadur Thapa.5 Subsequently, AIG Bishwa Raj Pokharel filed a petition at the Supreme Court against the

government’s decision.7 However, the Supreme Court refused to issue an interim order of the writ petition, stirring further controversy.6 Modi Comes on a One-Day Visit to Nepal On May 16, 2022, the Indian Prime Minister, Narendra Modi arrived on his first official visit to Nepal after being re-elected as the prime minister in 2019, at the invitation of Prime Minister, Sher Bahadur Deuba. Modi paid an official visit to Lumbini, the birthplace of Gautam Buddha to attend a special ceremony on the auspicious occasion of the 2566th Buddha Jayanti. The two

FACTSHEET

Index

Rank

Score

Economic Freedom Index 2021

148

49.71

Fragile States Index 2021

51

82.22

Corruption Index 2022

117

333

prime ministers participated in prayer at the Mayadevi Temple, laid the foundation stone for the construction of a center for Buddhist culture and heritage at the Monastic Zone in Lumbini, and addressed the special ceremony organized at the Lumbini International Buddhist Meditation Center.7 Likewise, six Memorandums of Understanding (MoU) were signed between Nepal and India during the visit.

MoU between Indian Council of Cultural Relations (ICCR) and Lumbini Buddhist University on the establishment of Dr. Ambedkar Chair for Buddhist Studies, MoU between ICCR and Tribhuvan University, and ICCR and Kathmandu University on

7

8

DOCKING NEPAL’S ECONOMIC ANALYSIS

the establishment of ICCR Chair of Indian Studies were signed.

Similarly, an MoU for collaboration between Kathmandu University and the Indian Institute of Technology Madras (IIT-M) for a joint degree program at the Master’s level was signed. Lastly, an agreement between SJVN Ltd and Nepal Electricity Authority (NEA) for the Development and implementation of the Arun-4 Hydropower Project was signed.8 India Appoints Naveen Srivastava as its New Ambassador to Nepal The Indian Ministry of External Affairs on May 17, 2022, appointed Naveen Srivastava as the new envoy for Nepal. Srivastava, who worked as an additional secretary, handling the East Asia desk at the Ministry of External Affairs, is succeeding Vinay Kumar Kwatra, who completed his Nepal assignment in April 2022 after he was appointed as the Foreign Secretary.9 Srivastava is known to have a strong understanding of China, and his experience is expected to come in handy in Kathmandu in view of China’s increasing influence over Nepal.

He was also present at the IndiaChina military chiefs meeting in May last year to diffuse the situation following border clashes in the Galwan region. According to the Ministry, he will begin his new duty in Kathmandu shortly.10 Nepal Makes Progress in Press Freedom Index Nepal has made significant progress in the latest Press Freedom Index. Nepal is ranked 76th out of 180 countries in the World Press Freedom Index

released on May 3, 2022, by Reporters Without Borders. Nepal was ranked 106th last year. India, on the other hand, dropped to the 150th place in 2022 from the 142nd place last year, according to the Index. Pakistan has also plummeted to the 157th place.

Norway, Denmark, and Sweden were ranked first, second, and third place, respectively. Similarly, Estonia, Finland, Ireland, Portugal, and Costa Rica, meanwhile, are ranked fourth, fifth, sixth, seventh, and eighth on the Index, respectively. China, Syria, Iraq, North Korea, Iran, Cuba, and Myanmar are registered as the countries with the least degree of press freedom.11 The Government of Nepal’s Policies and Programs Presented President, Bidya Devi Bhandari presented the Government of Nepal’s policies and programs for the next fiscal year 2022/23 during the joint meeting of the House of Representatives (HoR) and National Assembly on May 24, 2022.12 The government plans to focus on substituting imports, boosting domestic production, and expediting progressive development in the upcoming fiscal year. As per the policies and programs, the government has decided not to allocate a budget for projects that have not been recommended by the National Planning Commission.

The government has also planned to announce the “Nepali Production and Consumption Growth Campaign Decade” to expand the market for Nepali products and increase domestic consumption.13 Similarly, the government has also sought to

bring social media sites under the country’s legal and tax systems.14 Likewise, the creation of skills and employment e-directory, as well as skills and entrepreneurship development training programs have been planned to provide support for domestic and foreign employment opportunities.

LEGISLATIVE UPDATES 10th Session of the House of Representatives Prorogued President, Bidya Devi Bhandari, on the recommendation of the government, prorogued the 10th session of the parliament starting March 16, 2022. The 10th session that commenced on December 14, 2021, largely remained dysfunctional due to the continuous obstructions by the main opposition CPN-UML. The parliament that was in session for 92 days only held 11 meetings and accomplished two tasks: the endorsement of the Millennium Challenge Corporation (MCC) Nepal Compact and the formation of an 11-member impeachment recommendation committee to study the allegations against Chief Justice Cholendra SJB Rana. The federal parliament got prorogued a day before it was scheduled to hold deliberations on the impeachment motion against Chief Justice Rana.15 UML Withdraws its Monthslong House Obstruction The main opposition, CPN-UML has stopped its obstruction of the House of Representatives, which it had been keeping up for the past eight months. Since September 8, 2021, the party had been obstructing both the

NEFPORT ISSUE 49 – JUNE 2022

upper and lower houses of the federal parliament, protesting Speaker Agni Sapkota's decision to not dismiss 14 of its legislators who had joined the CPN-Unified Socialist. The party, however, decided to withdraw the House obstruction on May 17, 2022, when the 11th session of the federal parliament began. The party stated that it changed the scope of the protest because the House needed to genuinely discuss major issues grappling the country such as the current economic crisis and inflation.16 Pre-budget Discussion Commences The House of Representatives on Wednesday started a prebudget discussion after the presentation of the principles and priorities for the new budget.

Minister for Finance, Janardan Sharma on Tuesday presented the principles and priorities for the Fiscal Year 2022-23. The cross-party lawmakers took part in the deliberations on the first day suggesting the government devise the budget to provide relief to the people, overcome the economic crisis and decrease the inflation.

JUDICIARY UPDATES Supreme Court Upholds the Decision to Remand Mohammad Aftab Alam in Judicial Custody The Supreme Court has upheld the earlier rulings of the Rautahat District Court and Birgunj Bench of Janakpur High Court to remand former minister and Nepali Congress leader Mohammad Aftab Alam in custody until the

final verdict is given. Alam is accused of massacring 23 of his cadres by throwing them in a brick kiln in 2008. Alam was arrested in October 2019 for his involvement in a bombing and killing of his cadres who were injured when the bomb accidentally went off in Fradahawa, Rautahat on April 9, 2008. The district court in November 2019 decided to remand him in judicial custody.17

ELECTION UPDATES 260,000 Security Personnel Mobilized for the Local Elections As per the Ministry of Home Affairs, 260,000 security persons were allotted to prove security in the local level elections held on May 13. Among them, 100 thousand Myadi (temporary) police, over 65,000 Nepal Police personnel, over 32,000-Armed Police Force (APF) personnel, and 71,000 Nepali Army personnel were mobilized for security during the elections.18 Voting Concludes with Close to 64% Turnout The voting for the local elections concluded largely peacefully on May 13 with the voter turnout standing close to 64%. As per the Election Commission, some 38% among 17,733,723 eligible voters did not vote in the second local level elections, while voter turnout in the Kathmandu Metropolitan City was merely around 50%.

Voting was completed in 752 local levels on May 13, with polling in Maharajgunj Municipality in Kapilvastu being postponed to May 17, following the demise of a deputy mayoral candidate. Vote

counting officially started on May 13 itself in most local levels but moved at a sluggish pace.19 The voting in 44 polling booths of 28 local levels in 17 districts was canceled following clashes and tensions.20 Balendra Shah Becomes Kathmandu’s Mayor Independent candidate, Balendra Shah has been declared the Mayor of Kathmandu Metropolitan City.

The Election Commission on May 27 officially declared Shah the mayor. Popularly known as Balen, the 32-year-old Balendra Shah is a rapper and structural engineer by profession. Shah garnered 61,767 votes to beat Sirjana Singh of the Nepali Congress by 23,426 votes in the final counting results of the local level elections held on May 13. Singh secured 38,341 votes. Similarly, Keshav Sthapit from the CPN-UML secured 38,117 votes. Likewise, Sunita Dangol from the CPN-UML claimed victory as the Deputy Mayor with 68,612 votes.21 Nepali Congress Bags Local Polls The Nepali Congress swept the local level elections of Nepal with the party bagging the mayoral positions in 329 local levels out of 753 local levels.

The main opposition CPN-UML secured second position by winning 205 mayoral positions.

Similarly, the CPN-Maoist Centre won mayoral posts in 121 local levels.22 Independent candidates emerged victorious in local levels including major cities like Kathmandu Metropolitan City, Dharan Sub-Metropolitan City, Dhangadhi Sub-Metropolitan City and Janakpur Sub-Metropolitan

9

10

DOCKING NEPAL’S ECONOMIC ANALYSIS

City.23 The local elections saw 81% of new faces being elected as mayors of local governments.

Almost 45% of the mayors of the 753 local bodies had contested

for re-election. Only 142 out of 341 mayors of local bodies who sought re-election have been re-elected. According to the results, 62 candidates from the

Nepali Congress, 46 from the CPN-UML and 21 from the CPNMaoist Center were re-elected as mayors.24

Outlook Although Nepal's established parties fought among themselves in the recent local elections, independent candidates won mayor positions in key cities such as Kathmandu, Dharan, Janakpur, and Dhangadi. This represented a considerable shift, indicating dissatisfaction with opportunistic coalition politics that pitted common candidates against one other, as well as a rejection of conventional parties that have failed to deliver on their promises time and again. While the number of independent candidates being elected is not that significant, the recent election results of the local level elections have given an impression that the status quo of the existing political system in Nepal can be broken. With the local polls over, the country would now be gearing up for the federal elections due in November/December this year. The performance of the major political parties in the local elections has indicated that the likelihood of any single party garnering majority in the upcoming elections might be low.

NEFPORT ISSUE 49 – JUNE 2022

International Economy

FACTSHEET World GDP growth (2022)

3.6%25 Global trade growth (2022)

As the global economy is gradually recovering from the supply constraints in the aftermath of the COVID-19 pandemic, the war breaking out in Ukraine further poses risks and uncertainty on the post-pandemic global recovery. Among many international institutions, the International Monetary Fund (IMF) has reduced its global growth forecast for 2022 to 3.6%, citing the adverse impacts of the war. Amid sanction by the United States of America (USA) and the European Union (EU) on Russian exports, prices of energy and food grains have touched an all-time high, leading to increasing pressure on global inflation level. Major central banks around the world have started to shift from ultra-loose policy to tightening policy to curb inflationary pressure, therefore hindering global growth. Although the flow of remittance shows a positive trend, the World Trade Organization (WTO) expects sub-optimal growth in global trade, due to strict lockdown measures imposed in China as coronavirus cases persists, consequently limiting trade.

GLOBAL EVENTS UPDATES Russia Declares War on Ukraine Russian President, Vladimir Putin announced special military operation in Ukraine on February 24, 2022. Following the announcement, the United States (US) and the European Union (EU) has imposed sweeping sanctions on Russia. The sanctions are aimed at hobbling the Russian economy to exert pressure to end the conflict. Measures include limiting trade, banning transactions with Russia's central bank, barring access to the

international payments system (SWIFT), and cutting off access to Russia’s foreign currency reserves.27 The sanction led to the depreciation of the Ruble and the loss in value of the Russian stock market. It also led to a record high in prices of global crude oil and major commodities, such as wheat and fertilizer.28 The G7 countries stated, that the sanctions were beginning to have the intended impact on the Russian economy.29 However, the ban on Russian energy export has led to pressure on global inflation levels.30 Additionally, The USA and the EU have imposed

2.7%26

new sets of sanctions including ban on Russian media channels,31 and a complete ban oil imports from Russian to the EU region.32

COVID-19 Lockdown Hits China A new wave of the coronavirus infection has hit China since April 2022, with the number of cases rising in major cities like Beijing and Shanghai. To curb the infection, the authorities have adopted the ‘Zero COVID-19 Policy’, imposing strict lockdown measures in the cities.33 It has hampered China’s growth rate in the first quarter, as the Chinese economy grew by just 4.8% against the target of 5.5%.34 The lockdown has exacerbated the situation by disrupting the global supply chains, as manufacturing activities suffer due to the deadlock. The closure of major ports of the country has resulted in lower global trade, thereby resulting in a shortage of commodities across the globe and fueling global inflation.35

ECONOMIC CRISIS UPDATES Humanitarian Crisis in Sri Lanka The current situation in Sri-Lanka started as an economic crisis, which turned into a political turmoil and is moving towards

11

12

DOCKING NEPAL’S ECONOMIC ANALYSIS

becoming a humanitarian crisis, considering the country does not have enough foreign exchange reserves to import essential commodities.

SriLanka has officially defaulted on its loan payment.36 The island nation’s debt soared to over USD 50 billion (NPR 6.10 trillion),37 resulting in twin deficits – a budget deficit along with depleting foreign exchange reserves. Sri-Lanka currently has less than USD 50 million (NPR 6.10 billion)38 of foreign currency reserves remaining.

The crisis has been attributed to economic mismanagement, as the government implemented populist policies such as cutting taxes and banning the use of chemical fertilizers, while the tourism industry was still looming low in the aftermath of the pandemic.39 The International Monetary Fund (IMF) is in talks with the Sri-Lankan government to approve a grant worth USD 3 billion (NPR 366 billion)40 to support the economy. Similarly, the World Bank has granted USD 600 million (NPR 73 billion)41 as assistance. Meanwhile, major bilateral partners such as India and China have extended their support worth USD 3 billion (NPR 366 billion) and USD 76 million (NPR 9.2 billion), respectively to help the country make payment for essential imports.42 Pakistan’s Economy on the Brink While Pakistan suffers from political chaos as NoConfidence Motion was passed against Prime Minister Imran Khan in the parliament, citing mismanagement of nation’s economy.43 Pakistan’s foreign exchange reserve dropped to

USD 6.6 billion (NPR 806 billion), which was USD 12.6 billion (NPR 1.5 trillion) in February 2022. The current level of foreign exchange reserve is enough to cover only one month of imports. The new government hopes to get an enhanced International Monetary Fund (IMF) package worth USD 8 billion (NPR 977 billion) and fresh short-term loans from China and Saudi Arabia. Pakistan’s existing bilateral credit from Saudi Arabia and China stands at USD 4.2 billion (NPR 513 billion) and USD 4.3 billion (NPR 524 billion), respectively.44 Similarly, the debt to GDP ratio increasing to 71.3% and the expectation of a doubledigit inflation rate has led to record high interest rates of its sovereign bonds.45 This has resulted in a deteriorating investment environment as highlighted by the World Bank’s Development Update report.46 As global prices of essential commodities remain high, the situation in Pakistan may deteriorate in the future as its economy shows trends similar to those of Sri-Lanka.

POLICY UPDATES US’s Federal Reserve (Fed) Raises Interest Rates as Inflation Hits The Federal Reserve (Fed), the United States’ central bank announced a hike in its policy rate by 50 basis points in early May 2022.47 It is first rate hike amidst the COVID-19 pandemic.

The Fed’s new target policy range of 0.75% to 1% was deemed necessary as inflation in the US reached a 40-year high. The Chair of the Fed, Jerome Powell highlighted that the rise in rate was necessary as inflation touched

three times the Fed’s target and was hitting the pockets of the common public. The rise in the rate has led to increased volatility in the US’s stock markets, as stock indices continued to decline amid global uncertainty and increasing inflationary expectation.48 Central banks around the world have responded by a subsequent rate hike as to avoid capital flight towards the US and prevent currency depreciation.49 Such polices to curb inflationary pressure is expected to have a negative impact on the prospects of post-pandemic global recovery. Therefore, global growth and trade is expected to remain sub-optimal in the medium term.

Central African Republic Accepts Crypto Currency as a Legal Tender On April 27, 2022, the Central African Republic (CAR) became the second country after El Salvador to adopt bitcoin as a legal tender. It was incited by the urge to circumvent inflationary pressure and to move away from colonial era currency mechanism which made their economies dependent on other countries.

The IMF Executive Board stressed that there are large legal risks associated with the use of the bitcoin that would impact financial stability, integrity, consumer protection and transparency.50 Since cryptocurrencies are based on de-centralized mechanisms, it might limit the ability of central banks to control the economy.

The governments adopting cryptocurrencies may also face challenge as taxes would have to be paid in crypto assets while expenditure would be made in local currency.

NEFPORT ISSUE 49 – JUNE 2022

KEY HIGHLIGHTS OF INTERNATIONAL ECONOMIC REPORTS

middle income countries, as production activities remain depressed amid lower-thanexpected growth in demand.

TRADE AGREEMENTS UPDATE

Record Flow of Remittance

The India-Australia Economic Cooperation and Trade Agreement signed in early April 2022, kickstarted India’s run-on Free Trade Agreement (FTA). The two sides aim to double their two-way trade volume to USD 50 billion (NPR 6.1 trillion).55 Further, an agreement between the United Arab Emirates (UAE) and India in April 2022 strengthened the economic ties between the countries as the agreement aims to increase trade to USD 100 billion (NPR 12.2 trillion).56 India is also keen on securing deals with the European Union (EU) and the United Kingdom (UK) in the near future. Talks with EU are to be held in June 2022 and is expected to be completed by 2024.57 Negotiations with the UK are under way as both sides agreed to sign a Memorandum of Understanding (MoU) to establish a task force to increase crossindustry collaborations and push the UK-India Free Trade Agreement over the line.58 The recent FTAs are the reflection of India’s ambitious plan to secure an export of USD 1 trillion (NPR 122 trillion) by 2030.59

India on Free Trade Agreement Spree

War Slows Global Recovery The International Monetary Fund lowered the outlook for the world economy for 2022 and 2023, citing Russia’s war on Ukraine that disrupted global commerce, pushed up oil prices, threatened food supplies and increased uncertainty heightened by the coronavirus and its variants. The global lender cut its forecast for global growth to 3.6% this year, a steep fall from 6.1% last year and the 4.4% growth it had projected for 2022 back in January. The IMF also projected the world economy to grow by 3.6% in 2023, slightly lower than the 3.8% it forecasted in January 2022.51 The forecast incorporates rise in global inflation which has triggered policy rate hikes by various central banks around the world.

Additionally, The WTO predicts that global trade would grow between 2.7% to 3% as against 4.7% predicted earlier.52 The sub-optimal growth may trigger economic crisis in low to lower-

Officially recorded remittance inflows to low and middleincome countries (LMICs) are expected to increase by 4.2% in 2022 to reach USD 630 billion (NPR 77 trillion). This follows a record recovery of 8.6% in flow of remittance to LMICs in 2021. During the same period, remittance inflows saw strong gains in Latin America and the Caribbean (25.3%), Sub-Saharan Africa (14.1%), Europe and Central Asia (7.8%), the Middle East and North Africa (7.6%), and South Asia (6.9%). However, remittances to East Asia and the Pacific fell by 3.3% in 2021 following a drop of 7.3% in 2020.

Globally, the average cost of sending USD 200 (NPR 24,416) was 6% in the fourth quarter of 2021, double the SDG target of 3%.53 Lowering remittance fees by 2% points would potentially translate to USD 12 billion (NPR 1.5 trillion) of annual savings for international migrants from LMICs.54

Outlook As the conflict between Ukraine and Russia continues and the persistent threat of COVID-19 outbreaks still remain, the global supply chain is expected to be constrained in the coming months.

The global inflationary pressure is expected to linger due to high price of crude oil and essential food grains. The probability of increased food insecurity persists as Russia and Ukraine accounts for 30% of global wheat supply and India recently moved to ban export of its surplus wheat. This could lead to an increase in incidents of hunger and poverty in the wheat importing countries. Furthermore, as central banks in major economies have started to shift from expansionary policies, adopted during the pandemic, towards tightening credit policy. Therefore, the global liquidity position is expected to tighten resulting in lower-than-expected global trade and economic growth.

13

14

2

DOCKING NEPAL’S ECONOMIC ANALYSIS

Macroeconomic Overview

NEFPORT ISSUE 49 – JUNE 2022

Macroeconomic Overview The review period presents a bleak picture of the Nepali economy with surging inflation, a marginal decrease in remittance inflows, continued trade deficit, imbalanced trade volume, and depleting foreign exchange reserves.

The inflation rising at an exponential rate, exceeding 7%, decreasing foreign grants, and imposing an import ban on selected luxury items are some of the concerning issues of the review period that have the potential to depress overall demand in the country. Despite such dismal scenario, it is encouraging to see the number of Nepali workers seeking foreign employment revive, as this will most likely convert into remittance inflows in the following months, providing some relief to the economy.

Gross Domestic Product (GDP) The nine months’ data ending mid-April 2022 of FY 2021/22 was published by the Nepal Rastra Bank (NRB) as ‘Current Macroeconomic and Financial Situation’ on 11 May 2022.

Figure 1 GDP at current prices over the years (in NPR billion)

Source: Current Macroeconomic and Financial Situation Table, 2021/22

According to the report, the GDP at current prices stand at NPR 4.85 trillion (USD 39.74 billion) in the ninth month of the current FY 2020/21 in comparison to NPR 4266.3 billion (USD 34.94 billion) in the corresponding period of the last FY 2020/21.60 Despite the

FACTSHEET Particulars

Amount/ Percentage

GDP at current prices

NPR 4851.6 billion

Year-on-year CPI

7.28%

Food and beverage CPI

7.40%

Non-food and service

7.18%

Net Foreign Direct Investment

NPR 16.51 billion

Foreign Grants

NPR 6.85 billion

Foreign Loans

NPR 103.99 billion

Remittance inflows

NPR 724.7 billion

Gross foreign exchange reserves

NPR 1167.92 billion

Total Domestic Debt

NPR 876.53 billion

Government expenditure

NPR 794.26 billion

Government revenue

NPR 683.87 billion

Total exports

NPR 160.57 billion

Total imports

NPR 1466.66 billion

Total trade balance (NPR 1306.1 billion) Total Foreign Trade

NPR 1627.23 billion

Current Account

(NPR 512.71 billion)

Balance of Payment (NPR 268.26 billion )

15

16

DOCKING NEPAL’S ECONOMIC ANALYSIS

Figure 2 Year-onyear Consumer Price Inflation (CPI) index of first six months over three consecutive FY (in percentage)

Source: Current Macroeconomic and Financial Situation of Nepal (ending mid-April 2022)

onset of COVID-19 and several political and international feuds affecting the economic activities nationwide, there has been a surge of 13.71% since the last FY 2020/21.

the data released by the NRB, the year-on-year CPI stood at 7.28% in the ninth month of FY 2021/22 compared to 3.10% in the corresponding period of the previous FY 2020/21.61

Further, the Nepali economy is expected to grow by 3.9% (at market prices) in the upcoming FY 2022 from an estimated 2.3% growth in FY 2021/22 as per the Asian Development Outlook 2022, released by the Asian Development Bank (ADB) on 6 April 2022.

The inflation rate in Nepal has been on a gradual rise due to the pandemic-induced closure of markets and the Russia-Ukraine war over the past few months.

Apart from these reasons, the local elections in 2022 were conducted on 13 May 2022.

During the elections, demands for consumer goods (especially food items) surge as most political parties and campaigners generally spend huge amounts of money in the market, resulting in a price hike. In mid-March

Inflation The average inflation rate is measured by the Consumer Price Inflation (CPI). As per Table 1 Food and Non-food Consumer Price Index over three consecutive periods (in percentage) Source: Current Macroeconomic and Financial Situation of Nepal (ending mid-April 2022)

2022, two months before the elections, the inflation reached a 67-month high at 7.14%, raising huge concerns as any level higher than 7%, is considered above the central bank’s upper tolerance and has the potential to dampen the overall demand in the country.62 Although the Election Commission had set the spending limit at NPR 750,000 (USD 6143.51) for candidates contesting for chiefs and deputy chiefs of metropolitan cities, NPR 550,000 (USD 4505.24) for same positions at sub-metropolises, NPR 450,000 (USD 3686.11) for municipalities and NPR 350,000 (USD 2866.97) for rural municipalities, it was reported

Headings

Mar/Apr 2021

Feb/Mar 2022

Mar/Apr 2022

Food and beverage

3.49

7.51

7.40

Non-food and service

2.79

6.84

7.18

NEFPORT ISSUE 49 – JUNE 2022

that the actual amount spent was more than the limits.63 Such increased spending caused high inflationary pressure during the review period and exacerbated the woes of the low-income and middle-income groups the most. In light of this situation and possibly due to the RussiaUkraine war, a report titled ‘South Asia Economic Focus Reshaping Norms: A New Way Forward’ released by the World Bank stated that the soaring inflation can deplete Nepal’s economic growth by an estimated 0.2% and 0.6% in the current FY 2021/22 and upcoming FY 2022/23 respectively.64 A series of monthly changes that have occurred in the CPI index over three consecutive corresponding periods has been shown in Figure 2 along with a linear forecast till the end of FY 2021/22.

Consumption of Goods and Services The Consumer Price Index is a measurement to calculate the weighted average price of a basket of consumer goods and services.65 The basket of goods refers to a fixed set of consumer products and services whose prices are evaluated regularly.66 Table 1 shows the pattern of consumption over a series of three consecutive periods.

The changes in the consumer price index during the review period have been attributed to the rise in food and beverage inflation from 3.49% in March/April of 2021 to 7.40% in March/April 2022. Within food and beverage, the price of ghee and oil, milk

products and eggs, pulses and legumes, and tobacco products sub-groups rose 28.36%, 11.56%, 10.53%, and 8.91%, respectively on a year-on-year basis.

Likewise, the review period also witnessed an increase in the non-food and service inflation, represented by a rise from 2.79% to 7.18% in March/April 2022. Under this, the prices of transportation, education, and miscellaneous goods and services rose by 20.16%, 8.79%, and 8.17%, respectively on a yearon-year basis.67 Some of the reasons behind such an increment in consumer prices across sectors can be attributed to supply chain disturbances, high petroleum prices, rising transportation fares, shipping charges, and the Russia-Ukraine war. For instance, the government implemented an auto pricing mechanism from 3 April 2022 on transport fares, requiring carriers to hike the fuel surcharge if diesel prices rise by more than 5% and decrease it if diesel prices drop.

Following this, several articles about the diesel price surcharge have noted that the Nepal Oil Corporation, the state-owned oil monopoly, has revised the price of diesel 18 times in the last 12 months.68 As of May 2022, the price of petrol, diesel, and kerosene hiked by NPR 10 per liter each in 2-3 months to reach NPR 170 (USD 1.39), NPR 153 (USD 1.25), and NPR 153 (USD 1.25) per liter, respectively in accordance to the government's new auto pricing mechanism.69 Experts from this the Consumer Rights Investigation Forum believe that such high costs of diesel are

reflected in the form of inflation in the market as it leads to a hike in all essential food and beverage costs.70 However, the Asian Development Bank (ADB) has forecasted the inflation to average around 6.5% in FY 2022/23 and marginally decline to 6.2% in FY 2023/24.71

FINANCE STATUS Investments In the review period, the net Foreign Direct Investment (FDI) increased by 33.7% to reach NPR 16.51 billion (USD 0.13 billion) in the mid-month ending April in FY 2021/22 from NPR 12.35 billion (USD 101.16 million) in the corresponding period of the previous FY 2020/21.72 The 33.65% increment in FDI is due to the rise in investment pledges during the review period. As per the Department of Industry (DoI), the FDI commitments increased 27.85% year-on-year as of midApril 2022, with further facilitation of possibly creating 9,256 jobs, all of which can contribute towards economic growth.73 Such an increase in FDI will help support the growing debt/ liquidity pressure and depleting foreign exchange reserves of the country. It will also help make the private sector of the country more competitive.

However, there are several issues such as difficulty in land acquisition to set up factories in Nepal, lapses in facilitating investment, fraudulent activities, and others. As a result, appropriate policies and execution of such policies are required to address these issues.

Moreover, due to the negative

17

18

DOCKING NEPAL’S ECONOMIC ANALYSIS

balance of payments and declining exchange reserves, NRB directed all banks and financial institutions on 4 April 2022 not to issue a letter of credit (especially for the import of non-essential items like private vehicles).

Following this, the government also banned the import of 10 goods, which it considers luxury or non-essential, in a bid to stop the country’s foreign exchange reserves from further depleting.74 The ban is expected to last until mid-July 2022. Hence, there are avenues of investment in the industries of these banned products/areas but subsidies and encouraging policies are still needed.

hospitals, namely – Nepal-Korea Friendship Municipality Hospital at Bhaktapur, Nuwakot District Hospital at Trishuli, and Tikapur Hospital at Sudurpashchim.

Besides this, the Korea International Cooperation Agency (KOICA), Nepal, has also been implementing projects related to the environment, climate change, waste management, and others at the Bhaktapur Cancer Hospital.

Such a move to extend support in different parts of the country is a praiseworthy achievement in line with Nepal’s decentralization efforts.

Figure 3. below depicts the change in net foreign direct investments in Nepal in three consecutive FYs.

The Swiss Agency for Development and Cooperation (SDC) and United Nations Capital Development Fund (UNCDF) partnered to provide aid for helping around 4,000 micro, small and medium enterprises (MSMEs) in Nepal. The aid is aimed at helping the MSMEs digitize their operations.76 At least 60% of the MSMEs are womenowned businesses, indicating how a majority of such businesses will get the much-needed financial support and digital literacy training to increase their sales and ultimately contribute to the

FOREIGN AID Bilateral and Multilateral Aid Korea Supplies Equipment for Hospital Waste Management The Republic of Korea handed over NPR 4.1 million (USD 0.03 million) worth of equipment to Nepal to manage its hospital waste.75 The aid was provided to three Figure 3 Net foreign direct investments in Nepal for four consecutive FY (in NPR billion)

Source: Current Macroeconomic and Financial Situation of Nepal (ending mid-April 2022)

UNCDF and SDC Extend Aid Targeting MSMEs

country’s economic growth.

Moreover, Nepali e-commerce companies like Sastodeal and Thulo are likely to get performance-based grants and technical assistance as well, all of which are a part of the larger goal of digitizing the marketplace and increasing their accessibility. The grants will also cover boosting the sales of such e-commerce companies in rural areas of Nepal.77 World Bank Provides Aid to Help COVID-19-hit Unemployed Groups The World Bank provided USD 120 million (NPR 14.64 billion) to the Youth Employment Transformation Initiative (YETI) project in September 2019 to support the Government of Nepal in improving its employment services and transforming the labor market.78 However, given the disruption in the labor market due to the pandemic, the World Bank reallocated USD 23 million (NPR 2.80 billion) from the YETI project to directly support the unemployed poor of the country.

The reallocation was possible by activating the Contingency Emergency Response Component (CERC) of the YETI project.79

NEFPORT ISSUE 49 – JUNE 2022

Through this reallocation, around 64,000 unemployed individuals, especially those affected by COVID-19, are expected to get temporary employment and recover their living standards.

World Bank Discontinues Aid for Two Projects The World Bank (WB) had provided aid for two transmission line projects, namely – 400kV Hetauda-Dhalkebar-Inaruwa and 220kV Hetauda-BharatpurBardaghat. The projects started in 2011 and were targeted to be completed by 2016. However, even after extending deadlines several times, there were continued delays in their completion, leading to WB discontinuing the aid for the projects.80 Constructing such energy infrastructure could have been one of the significant developments in infrastructure upgradation in Nepal but since the projects had gone through several rounds of deadline extensions and were still unable to meet their targets, the WB decided to discontinue providing aid to the said projects. When this issue came to the forefront, officials and experts from the Transmission Directorate at Nepal Electricity Authority claimed that project delays are not a surprise in the country.81 Such an attitude towards development projects needs critical attention.

Moreover, surveys and studies to study the issues behind the project extensions and delays should be focused upon. As of now, the main challenges include land acquisition delays, forest clearance delays, local issues, legal issues and overrun of costs.

Against this background, Nepal’s

newly signed USD 500 million (NPR 61.04 billion) Millennium Challenge Corporation (MCC) grant consists of constructing multiple transmission projects.

The transmission lines under the MCC grant are likely to pass through 30 municipalities in 10 districts among many others.82 Since it is a time-bound aid program with a span of five years of completion, the government, as well as the parties involved in the project, should focus on exploring possible issues, and prepare a plan to address them time as they come.

PROJECT/PROGRAMSPECIFIC AID Japan and Government of Nepal Sign Agreement for Water Supply Project The Government of Japan provided grant assistance of NPR 2.7 billion (USD 22.11 million) to the Government of Nepal for the implementation of the ‘Improvement of Water Supply in Biratnagar’ project.83 The grant assistance will be utilized in the project that envisions renovating and expanding the water supply facilities at Biratnagar and ultimately improving the living standards of people in that area. Moreover, the project will also help construct new deep wells and water purification facilities targeting around 100,000 people in the area.84 The Government of Japan envisages that water supply is one of the most vital and critical aspects of development and socio-economic wellbeing, and hence, is working towards helping Nepal achieve such endeavors.

World Bank Provides Loan for ‘Finance for growth’ Program On May 4, 2022, the Nepali government agreed to get a loan of USD 150 million (NPR 18.31 billion) from the World Bank to strengthen its financial sector by bolstering stability, diversifying financial solutions, and increasing access to finance in Nepal.85 This operation is also known as “Finance for Growth” and it will help to stabilize finance and banking sectors that have been impacted by COVID-19. The operation will also support various initiatives such as commercial borrowing, and financial literacy to improve the function of the financial sector to support private sector-led growth.86 USAID and Government of Nepal Sign Agreement for New Developments Under a new agreement named ‘Development Objective Agreement’, USAID provided USD 659 million (NPR 80.45 billion) support to Nepal to help the country in its goal to graduate to a middle-income country. The agreement will be valid for five years and will focus on areas such as sustainable development, strengthened democratic governance, enterprise-driven economic growth, and increased resilience for vulnerable communities (to natural disasters and climate change).87 Further, the agreement will allow USAID to develop projects that suit the assistance purpose and will be conducted through a collaboration between the two governments.

19

20

DOCKING NEPAL’S ECONOMIC ANALYSIS

GRANTS AND CONCESSIONAL LOANS Asian Development Bank Extends Concessional Loan for the New International Airport in Nepal Nepal’s second international airport, the Gautam Buddha International Airport, was formally inaugurated on 16 May 2022 in Bhairahawa, marking a historic occasion that reflects Nepal’s decentralization efforts.

While the Nepali government allocated USD 48 million (NPR 5.85 billion) from its budget, the majority of the funds to construct the T2 terminal at the airport came from a USD 150 million (NPR 18.31 billion) concessional loan from the Asian Development Bank (ADB).

The contribution from ADB constitutes the largest funding package that any multilateral agency has stated to Nepal’s aviation sector to date.88 USD 60 million (NPR 7.32 billion) was used specifically for the terminal, while the remaining was used to build a parallel Figure 4 Foreign grants and loans over the last ten years (as % of nominal GDP at producers' prices)

Source: Current Macroeconomic and Financial Situation of Nepal (ending midApril 2022)

taxiway on the southern side of Tribhuvan International Airport, Nepal’s first international airport.

Tourism generated USD 2.05 billion (NPR 250.26 billion) in 2019, making up almost 7% of the country’s GDP. With the revival of the tourism sector, postCOVID-19, tourism’s contribution is expected to bounce back.

Thus, the construction of the new airport and its location being near Lumbini, the birthplace of Lord Gautam Buddha, is expected to play a crucial role in Nepal’s tourism economy as it has the potential to become a hub for international travel and tourism.89 Decreasing Foreign Grants and Increasing Foreign Loans Nepal has long been dependent on foreign grants and loans at concessional terms extended from bilateral/multilateral donors and international donor agencies. After Nepal’s graduation to a low middleincome country in July 2020, the maximum interest rate to be charged by multilateral

donors rose by 0.5%.90 With this, the share of the loan in foreign assistance has been gradually increasing as multilateral donors are reportedly giving up on providing grants.91 Figure 4 depicts the pattern of foreign grants and loans over the last ten FY. Against this backdrop, some experts from the central bank and Public Debt Management Office believe that there is a need for enacting policies that attract commercial loans for mega projects of national priority having commercial viability with a high financial rate of return, while others believe that there is no need to jump to get commercial loans.92 Overall, it is vital that even if the country takes such loans, the terms should be well examined before accepting them. Moreover, a very limited amount should be taken which has a higher rate of return than loan interest as debt sustainability is a sensitive and concerning issue, especially when the revenue generation is not enough to finance major development projects.

NEFPORT ISSUE 49 – JUNE 2022

Figure 5 Remittance inflows to Nepal in the ninth month of FY (in NPR billion)

Source: Current Macroeconomic and Financial Situation of Nepal (ending mid-April 2022)

REMITTANCE REMITTANCE INFLOWS AND MIGRANT WORKERS Decrease in Remittance Inflows by 0.6% The inflow of remittances to Nepal decreased by 0.6% to reach NPR 724.7 billion (USD 5.93 billion) in the ninth month of the current FY 2021/22 compared to NPR 729.2 billion (USD 5.97 billion) in the corresponding period of the previous fiscal year.93 Although there has been a slight decline in the remittance inflows, the amount sent home by migrant workers as well as the gradual revival of the country’s tourism Figure 6 Number of labor approvals in the last four FY (data of nine months of FY)

Source: Department of Foreign Employment

sector has altogether started to ease the pressure of depleting foreign exchange reserves.

The remittance inflows to Nepal were NPR 93.6 billion (USD 0.76 billion) from mid-March to midApril 2022 alone, which is a 2.57% increase from the previous month.94 A continued surge in the upcoming months can likely revive the country’s income.

Figure 5 depicts the trend of remittance inflows to Nepal in the ninth month of the last six FYs. Increase in the Number of Migrant Workers Seeking Labor Approval The number of Nepali workers,

including institutional and individual (new and legalized) workers, taking approval for foreign employment increased from 48,687 to 256,031 in nine months data of the current FY 2021/22 (ending mid-April 2022).95 The increase signifies a whopping 425.9% jump in the number of workers seeking employment abroad as most countries have relaxed lockdowns and COVID-19 restrictions.

Likewise, the number of Nepali workers seeking renewed entry approvals also increased by 199.9% to reach 206,629 in midApril 2022, against a decrease of 60.7% in the previous corresponding period.96 Figure 6

21

22

DOCKING NEPAL’S ECONOMIC ANALYSIS

S.N.

Country

Nine months (ending mid-April) 2019/20

2020/21

2021/22

Percent Change During Nine Months 2020/21

2021/22

Institutional and Individual (New and Legalized)

Table 2 Top 10 labor destinations of Nepali migrant workers in the last three FY Source: Department of Foreign Employment

1

Saudi Arabia

39279

15185

108447

-61.3

614.2

2

Qatar

29835

12206

63153

-59.1

417.4

3

UAE

52046

9990

41963

-80.8

320.1

4

Kuwait

8973

1

12002

-100.0

-

5

Bahrain

3305

2030

5885

-38.6

189.9

6

Romania

1930

1591

3270

-17.6

105.5

7

Oman

1995

1400

2881

-29.8

105.8

8

Cyprus

1447

674

2327

-53.4

245.3

9

South Korea*

3539

14

2274

-99.6

-

10

Maldives

887

811

2053

-8.6

153.1

shows the data on the same.

DESTINATION COUNTRIES Saudi Arabia and Qatar are Among the Top Destination Countries As per the data for nine months ending mid-April 2022, an increasing number of Nepali workers sought labor approvals for Saudi Arabia, Qatar, United Arab Emirates (UAE) among many others. Table 2 below shows the top 10 destination countries: The Government of Nepal Proposes Malaysia to Increase Remuneration During a meeting with the Minister for Home Affairs of Malaysia, the Government of Nepal proposed Malaysia to raise the minimum remuneration of Nepali workers, including increasing the monthly salary of a Nepali security guard to 3,000 Malaysian Ringgit.97 The Nepali government also requested Malaysia to provide better services and facilities for the Nepali workers. In addition,

Malaysia discussed making provisions for security guardrelated training in Nepal, making health and social security arrangements, and providing a 24-hour insurance facility.

As of the nine months data of current FY 2021/22, 547 individual/institutional bodies sought labor approval to go to Malaysia against several 66 in the previous review period.98 Such encouraging discussions can lead to the formulation of new policies in the labor sector of Malaysia, which can in turn encourage more migrant workers to seek employment there.

PLANS AND PROGRAMS TARGETED TOWARD MIGRANT WORKERS The Central Bank Sets a Limit for Domestic Remittances The central bank of Nepal, Nepal Rastra Bank (NRB), set a transaction limit of up to NPR 25,000 (USD 204.78) per day in domestic remittances on 2 March 2022.99 Following the new threshold,

licensed remit companies, subagents, and sub-representatives will now be allowed to remit NPR 25,000 (USD 204.78) in domestic remittance transactions per person per day from earlier NPR 100,000 (USD 819.13). However, the threshold is not applicable for transactions relating to banking services or any transactions entering Nepal from abroad.100 The said regulation of narrowing the scale for domestic remittances is in line with NRB’s policy commitments of pushing for higher financial literacy mentioned in its mid-term review of Monetary Policy 2078/79101 and to discourage the use of remittance intermediaries at the national level.102 If a person from Pokhara sends remittance amount of NPR 10,000 (USD 81.91) to a person in another part of country, for instance – Butwal, the remit companies charge at least NPR 100 (USD 0.819).103 Contrastingly, the maximum charge in a bank-transfer amounts to only NPR 8 (USD 0.065) through connectIPS.104 Hence, there will be more

NEFPORT ISSUE 49 – JUNE 2022

incentive for people to save some amount spent on the cost of remitting, and this will likely push them to use formal channels.

On the whole, it is a positive attempt to bring money into the formal channel to strengthen financial markets, particularly during a liquidity crisis, and to encourage consumers to safely and securely transact their money through banks or digital wallets. However, the government must ensure that a mechanism is in place to discourage the use of informal channels.

Interaction Program on Banking and Remittance Services held in New Delhi On 8 May 2022, the Embassy of Nepal in New Delhi partnered with the Everest Chamber of Commerce and Industries, Delhi, to conduct an interaction program titled ‘Banking and Remittance Services, ExportTrade and Investment Opportunity in Nepal’.105 During the program, the Ambassador of Nepal to India, Dr. Shankar Sharma, presented his remarks by highlighting

Figure 7 Gross Foreign Exchange Reserves of midApril of the last six consecutive years (in NPR billion)

Source: Current Macroeconomic and Financial Situation of Nepal (ending mid-April 2022)

the economic ties between Nepal and India. The program focused on encouraging Indian investors to invest in Nepal by citing favorable reasons for investing in Nepal such as a moderate climate, geographical proximity, availability of air and land transportation, language and cultural similarity, and close working relations between Nepali and Indian nationals. Moreover, Dr. Sharma also stressed the need to transfer remittances through a formal banking channel as it is safe, secure, simple, transparent, and provides a high-interest rate.

He further called for action from BFIs to facilitate the account opening processes by educating a larger mass. Many other experts from the banking and remittance sector presented their remarks on the importance of sending remittances through formal channels.

of unemployment and slacking economic activities that exacerbated among such returnee migrants, the European Union (EU) assisted three international organizations working in Nepal to collaborate on a project for their relief. The project was specifically aimed at supporting the skilling, re-skilling, and upskilling of returnee migrants, especially in agriculture, tourism, and construction sector.106 For this, the EU has funded Euro 1.99 million (NPR 265.24 million) to United Nations Development Programme (UNDP), International Labour Organization (ILO) Nepal, and International Organization for Migration (IOM) for the British Council managed ‘Dakchyata: TVET Practical Partnership’. The project, which will be in operation for 10 months, has targeted at least 1,500 people and has prioritized women returnee migrants.

European Union to Provide Support for Skill Development of Returnee Migrant Workers

Government Reserves

Due to the onset of the COVID-19 pandemic, several returnee migrants had to return to the country. Given the grave issue

According to the Current Macroeconomic and Financial Situation for nine months ending mid-April 2022, the gross foreign exchange reserves stood at NPR 1.17 trillion (USD 9.56 billion). This

23

24

DOCKING NEPAL’S ECONOMIC ANALYSIS

depicts a 16.5% decrease from NPR 1.4 trillion (USD 11.45 billion) in mid-July 2021.107 Out of the total reserves, the reserves held by the central bank, NRB, decreased 17.9% to NPR 1.02 trillion (USD 8.36 billion), whereas reserves held by BFIs decreased 5.1% to NPR 1.46 trillion (USD 1.19 billion) in midApril 2022. As per the central bank, the available foreign exchange reserves are enough to fund prospective merchandise imports of 7.4 months, and merchandise and services imports of 6.6 months.108 Overall, the reserves to GDP ratio stood at 21.9% in midApril 2022 in comparison to 33.5% in the corresponding period of the previous fiscal year.

The trend of the reserves in midTable 3 Government debt over the mid-month of the last two years (in NPR billion) Source: Current Macroeconomic and Financial Situation of Nepal (ending mid-April 2022)

Figure 8 Total domestic debt over the last three years (in NPR billion)

Source: Current Macroeconomic and Financial Situation of Nepal (ending mid-April 2022)

April of the last six years has been depicted in Figure 7.

year, indicating the vulnerability of the country in light of the liquidity crunch in the BFIs and depleting foreign exchange reserves.

Government Debt

Government Spending (Expenditure and Revenue)

The total outstanding domestic debt accumulated by the Government of Nepal can be divided into treasury bills, development bonds, citizen saving bonds, foreign employment bonds, and others through Nepal Rastra Bank (NRB), commercial banks, development banks, finance companies, and others.

In total, the total domestic debt stands at NPR 876.53 billion (USD 7.17 billion) in mid-April 2022 in comparison to NPR 697.42 billion (USD 5.71 billion) in mid-April 2021.109 This indicates a surge of 25.7% in the government debt in a

Particulars

According to the Financial Comptroller General Office (FCGO), the total government expenditure and revenue during the nine months of the current FY 2021/22 amounted to NPR 794.26 billion (USD 6.50 billion) and NPR 789.26 billion (USD 6.46 billion) respectively.110 The expenditure and revenue witnessed an increase of 15% and 15.04%, respectively in comparison to the corresponding period of the previous FY. This

2020/21 (in NPR billion) Mid-Jul

2021/22 (in NPR billion)

Mid-Apr

Mid-Jul

Mid-Apr

Total Domestic Debt

613.21

697.42

800.32

876.53

Nepal Rastra Bank

66.83

55.07

56.79

90.85

Commercial Banks

491.38

572.92

651.64

694.90

Development Banks

31.39

42.30

56.76

60.04

Finance Companies

12.62

16.87

22.44

18.40

Others

10.99

10.24

12.69

12.32

NEFPORT ISSUE 49 – JUNE 2022

Table 4 Government Spending (expenditures and revenue) during nine months of three fiscal years (in NPR billion) Source: Current Macroeconomic and Financial Situation of Nepal (ending mid-April 2022)

Particulars

2019/20 Total expenditure

Source: Current Macroeconomic and Financial Situation of Nepal (ending mid-April 2022)

2020/21

Percentage change

2021/22

2020/21

2021/22

675.81

690.47

794.26

2.2

15.0

495.43

527.05

625.50

6.4

18.7

05.59

105.84

103.79

0.2

-1.9

74.78

57.59

64.97

-23

12.8

Total revenue

590.64

683.87

789.26

15.8

15.4

Tax revenue

539.54

636.70

727.79

18

14.3

51.10

47.17

61.47

-7.7

30.3

Recurrent expenditure Capital expenditure Financial Management

Non-tax revenue

year the government expenditure increased by a greater percentage than last year’s 2.2%, while the revenue has remained in a similar position. Admittedly, the second local elections that was conducted on 13 May 2022 (which falls in the review period) might have increased the spending as campaigns require huge sums of money. In any case, revenue generation has not been strong in the review period, although it can be expected to increase due to efforts to collect taxes and stronger economic activity owing to the revival of tourism.

Figure 9 Government Spending (expenditures and revenue) during nine months of FY 2021/22 (in NPR billion)

Amount (in NPR billion)

Further, according to the World Bank’s April 2022 Nepal Development Update, the government expenditures are expected to rise in FY 2023 owing to the electoral spending, before falling in FY 2024 as COVID-19 related support programs are unwound and measures to reduce duplication of spending responsibilities across levels of government are enacted.111

TRADE STATUS Foreign Trade Scenario In terms of the foreign trade

scenario, the total foreign trade deficit reached NPR 1.3 trillion (USD 10.69 billion) in the ninth month of the FY 2021/22 (ending mid-April 2022) in comparison to NPR 1.02 trillion (USD 8.32 billion) in the same period of the previous year, indicating an increase in trade deficit by 28.5% against 12.5% in the previous year.

The share of export and import in total trade is 9.9% and 90.1% in mid-April 2022 in comparison to 7.9% and 92.1%, respectively.

This indicates a slight increase in exports and a decrease in imports. Figure 10 shows the trend of total foreign trade over

25

26

DOCKING NEPAL’S ECONOMIC ANALYSIS

Figure 10 Total foreign trade over nine months of last four FY (in NPR billion)

Source: Current Macroeconomic and Financial Situation of Nepal (ending mid-January 2022)

nine months of the last four fiscal years.

Top Imports and Exports According to the Current Macroeconomic and Financial Situation ending mid-April 2022, the merchandise exports increased by 69.4% to reach NPR 160.57 billion (USD 1.31 billion) in comparison to an increase of 20.2% in the corresponding period of the previous FY 2020/21.

Elaborating this, the exports to

Figure 11 Total imports, exports, and trade balance of the nine months ending mid-April over the last six FY (in NPR billion)

Source: Current Macroeconomic and Financial Situation of Nepal (ending mid-April 2022)

India and other countries rose by 86.9% and 25.5%, respectively.

Contrastingly, exports to China decreased by 21.8%. With this, the ratio of exports to India and other countries stands at 79.6% and 20.0%, respectively. Overall, the top five export commodities were soyabean oil (27%), palm oil (22.7%), polyester yarn and threads (4.3%), woolen carpet (4.3%), and jute goods (3.8%).

Likewise, according to the same report, the merchandise imports

increased by 32% to reach NPR 1.47 trillion (USD 12.01 billion) against an increase of 13.1% in the corresponding period of the previous FY 2020/21. In the case of imports, the imports from India, China, and other countries increased marginally by 24.4%, 28.6%, and 59.2%, respectively.

With this, India’s share in total imports reached 61.5% of the total imports in the review period, which is the highest, against 65.2% in the previous period.

Overall, the top five imports were

NEFPORT ISSUE 49 – JUNE 2022

petroleum products (14.9%), transport equipment and parts (6.9%), machinery parts (4.8%), medicine (4.3%), and crude soyabean oil (3.1%).

In the previous review periods, the increase in imports was majorly attributed to the growing demand for foreign goods amidst a recovering economy since the COVID-19 cases were considerably subsiding. In this review period, the imports continued to increase against simultaneous surging inflation and depleting reserves. In light of this situation, the government formally banned the imports of 10 goods, that it considers luxury of non-essential goods, in a bid to stop the situation from further exacerbating. The ban came into effect on 26 April 2022 and will last until mid-July 2022 (end of the current FY 2021/22).112 The ban was put into effect as per the provisions mentioned in the Export-Import (Control) Act 2013 (lgsf;L k}7f/L -lgoGq0f_ P] g @)!#_ which states that ‘The Government of Nepal may, if it

Figure 12 Total trade balance ending of nine months over the last six years (in NPR million)

Source: Current Macroeconomic and Financial Situation of Nepal (ending mid-April 2022)

deems it necessary to prohibit or control the export or import of any commodity in order to achieve the following objectives, prohibit the export or import of such commodity by the implied condition or for a specified period or impose a complete or quantitative restriction:’ to achieve the objective of ‘To protect the external financial position and balance of payments of the country by eliminating or preventing a serious downturn in the foreign exchange reserves or increasing the foreign exchange reserves which are at a very low level’. The import of all kinds of readymade liquor, readymade cigarettes and tobacco products, snacks, diamonds, mobile sets worth more than USD 600 (NPR 73,248), colored televisions over 32 inches, jeeps, cars, vans (except ambulances and hearses), motorcycles above 250 cc, all kinds of toys and playing cards have been banned.113 Although some experts claim that the move is short-sighted, the focus of the government has been on strengthening the local production base and increasing

agricultural output along with denting its revenue collection.

Overall, the market is in an uncertain situation and will only unfold in the coming days.

Balance of Trade Based on the Current Macroeconomic and Financial Situation (ending mid-April 2022) of FY 2021/22, the total trade balance deficit witnessed a 28.5% increase in the nine months of FY 2021/22 in comparison to an increase of 12.5% in the corresponding period of the previous fiscal year, suggesting widening trade deficit. The total trade balance figure stands at a negative NPR 1.31 trillion (USD 10.69 billion) because of higher imports than exports. The trade balance for the last six years (mid-April) is presented in Figure 12.

Balance of Payment As of the nine months of FY 2021/22 (ending mid-April 2022), the current account remained at a deficit of NPR 512.71 billion

27

28

DOCKING NEPAL’S ECONOMIC ANALYSIS

Figure 13 Balance of payment trend (of nine months) over the last three FY (in NPR billion)

Source: Current Macroeconomic and Financial Situation of Nepal (ending mid-April 2022)

(USD 4.19 billion) compared to a deficit of NPR 210.51 billion (USD 1.72 billion) in the corresponding period of the previous FY 2020/21.114 Likewise, the balance of payments (BOP) registered a deficit of NPR 268.26 billion (USD 2.19 billion) in the review period, whereas there was a surplus of NPR 42.54 billion (USD 0.34 billion) in the same period of last year.115 Figure 13 suggests that the BOP is in a weakening condition in comparison to the previous year, as clearly depicted by a deficit against surplus.

Exchange Rate Fluctuations Nepali currency visa-a-vis the USD depreciated 2.04% in midApril 2022, against an appreciation of 0.48% in mid-July 2021.116 Amid such fluctuations with the USD, Nepal’s currency being pegged to the Indian currency has given some respite and stability to Nepal. This is because, currently, advanced economies around the world are preparing to introduce

or have already introduced tightening monetary policies, due to which central banks in South Asia are expected to follow the same suit more or less.117 Tighter credit amid higher borrowing costs would possibly result in lower consumption and falling investments, which would exacerbate the current liquidity and foreign exchange issues in Nepal. However, on the brighter side, the effect on Nepal (and Bhutan) is likely to be small as Nepali currency is pegged with the Indian rupee and a large share of the trade is with India.118 Hence, although there will be steps taken towards gradual policy normalization, the impacts will likely not be harsh.

Gold/silver Updates According to the Federation of Nepal Gold and Silver Dealers’ Association, the price of gold decreased by NPR 500 per tola and stands at NPR 96,300 (USD 788.82) per tola as of

mid-May 2022.119 Besides, the import of gold increased from NPR 19.43 billion (USD 0.15 billion) to NPR 33.61 billion (USD 0.27 billion) in nine months of FY 2021/22, indicating a surge in imports by 72.9%. The share of gold imports in total imports is 2.3% which signifies its growing significance in the Nepali market.120 Likewise, the import of silver also increased from NPR 6.49 billion (USD 53.16 million) to NPR 15.47 billion (USD 126.72 million) in the same period, indicating an increase of 138.2% and occupying a share of 1.1% in the total imports of Nepal. However, silverware and pieces of jewelry also come under the top 20 commodities that Nepal exports and the exports for these increased by 48.7% in midApril 2022.121

NEFPORT ISSUE 49 – JUNE 2022

Figure 14 Amount of gold and silver imports in nine months of three FY (in NPR billion)

Source: Current Macroeconomic and Financial Situation of Nepal (ending mid-April 2022)

Outlook The macroeconomic indicators for the review period show that growth is currently mutilated due to a variety of factors including rising inflation, depleted foreign exchange reserves, and disruptions in trade flows, among others. The data and narratives portray a bleak picture, indicating that Nepal's foreign exchange reserves must be replenished as soon as possible. As a result, the strategy that has been implemented, i.e., imposing an import ban on luxury items, appears to be a questionable policy implemented without regulating the potential for smuggling of the same items, which could compound the problem. Furthermore, the policy's shortsightedness may not aid in the betterment of the macroeconomic situation.

Keeping this in mind, it's critical to redirect focus to other major sources of foreign currency revenues, particularly remittances. During the review period, the number of Nepali workers seeking a job overseas has increased. If bilateral agreements are extended to major destination countries (such as Malaysia) to promote a better working environment, fewer hassles in the labor approval procedure, formalization of channels, and more security, the sector will undoubtedly grow. Furthermore, other value additions can include easing the aid process and ensuring that projects supported by grant/ loan assistance are completed on time. The inability of the government to timely complete two of its World Bank-funded projects led to the retraction of funds from the two said projects in the review period, and more of such can dampen the economy and replenish it from aid/foreign currencies. As a result, greater emphasis should be placed on developing a more credible economy as well.

29

30

3

DOCKING NEPAL’S ECONOMIC ANALYSIS

Sectoral Review

NEFPORT ISSUE 49 – JUNE 2022

Agriculture and Livestock The delay in setting support prices of wheat has impacted the earnings of wheat cultivating farmers in the Terai region.

The support price of crops is fixed by the government each year which protects the farmers from the inconsistent price set by the traders. The wheat farmers have faced losses due to delays in the announcement of support prices.

Furthermore, the destruction of banana crops in Nijgadh due to storm has impacted 200 families. The Government of Nepal has signed deal with Government of India for the import of chemical fertilizer. The local level government in Raghuganga has taken initiative for the commercial cultivation of potatoes. Commercialization of apples in the Jumla district is also taking place with help from all three levels of government.

PRODUCTION UPDATES Banana Crops were Destroyed in Nijgadh After the Storm The heavy storm on April 29 created havoc in nine wards of Nijgadh by destroying ready to harvest banana crops. The storm destroyed 150 bighas 139out of 1,200 bighas of total planted bananas.140 Farmers lost their banana crops when the market price of bananas reached a historic high. The storm has affected 200 families in Nijgadh by destroying banana crops worth NPR 50 million (USD 409.567 thousand). Banana cultivation had been receiving some traction in the area as many people were switching from beekeeping to banana cultivation. Cultivation of banana on a commercial scale has become popular even among

people who have returned from foreign employment.

Nijgadh Municipality has started collecting data from all wards to create a relief package for farmers who do not have crop insurance.

Potato Cultivation in Group Raghuganga rural municipality in Myagdi district is promoting potato farming in groups by providing seeds, fertilizers, and technical assistance. The municipality predicts that group potato farming would aid in the systematic transformation to commercial potato farming in this area. Each farmer's group has signed an agreement with the rural municipality to cultivate potatoes on at least 200 ropani141 of the land plot and has received a grant worth NPR 3 million

FACTSHEET Agriculture sector contribution to GDP Support Price of Sugarcane Support Price of Medium Paddy Support Price of Wheat Support Price of Coarse paddy Contribution of Food Crop out of total agricultural production Contribution of Vegetables out of total agricultural production Contribution of cash crop out of total agricultural production Contribution of industrial crop out of total agricultural production Contribution of Fruits out of total agricultural production

Top four agricultural commodities exported in the last nine months (by value)

Top four agricultural commodities imported in the last nine months (by value)

Outstanding credit of banks and financial institutions in the agriculture sector Consumer Price Inflation in the review period (first nine months of 2021-22) in Kathmandu Valley Consumer Price Inflation in the review period (first nine months of 2021-22) in Terai Consumer Price Inflation in the review period (first nine months of 2021-22) in the Hilly region Consumer Price Inflation in the review period (first nine months of 2021-22) in the Mountain region

23.9%122 NPR 590 per quintal 123 NPR 2902 per quintal124 NPR 3165 per quintal125 NPR 2752 per quintal126 44.3%127 17.1%128 15.3%129

13.2%130

5.8%131 Soyabean Oil NPR 43.3082 billion132 Palm Oil NPR 36.385649 billion Juice NPR 4.04364 billion CardamonNPR 3.818096 billion Crude Soyabean Oil - NPR 45.654.95 billion133 Rice/ Paddy NPR 39.903898 billion Crude Palm Oil NPR 32.047857 billion Edible Oil NPR 17.08584 billion 16.9%134

6.25%135

7.61%136

7.79%137

8.25%138

31

32

DOCKING NEPAL’S ECONOMIC ANALYSIS

(USD 24.574 thousand) from the municipality.142

INPUT UPDATES Chemical Fertilizer The shortage of chemical fertilizer has been an ongoing issue in the agriculture sector in Nepal. Despite various efforts by the government, the shortage of fertilizers still prevails.

The agreement between the Government of Nepal and the Government of India for the purchase of chemical fertilizer can provide some ease to the ongoing shortage of fertilizers.

The five-year agreement with India would allow Nepal to purchase 150,000-210,000 metric tons of urea and DAP chemical fertilizers every year and in five years 935,000 metric tons of chemical fertilizer will be imported by Nepal. 143 Nepal has also imported 233 metric tons of urea chemical fertilizer from China.144 The import took place as part of the contract with Silk Market. According to the contract with Silk Market, 10,000 metric tons of chemical fertilizer is to be imported from China, out of which 1,500 metric tons had been imported for six months and 8,500 metric tons remaining to be imported for which the process has already begun.145

MARKET UPDATES Delay in the announcement of support price of wheat The delayed announcement of support prices by the government led to farmers selling their crops at a lower price. The wheat crops

in the terai region are harvested in mid-April and are not stored for a longer period as farmers must prepare for the next cycle which requires purchasing fertilizer and seeds of crops. Due to this, the farmers were forced to sell their crops at a cheaper price without taking advantage of the support price set by the government.

The support price of wheat was set at NPR 3,165 per quintal (USD 25.93) at the end of April by the government.146 The crops in Terai were already harvested and sold by the time the support prices were announced. It is estimated, the farmers in Banke, Baridya, Kailali, Kanchanpur, Dang, Rupandehi, Bara, Parsa, and Janakpur districts who have sold wheat are at a loss of NPR 400 per quintal (USD 3.28) compared to the support price fixed by the government.147 Apple Cultivation Becomes Commercial in Jumla Jumla is rising as one of the producers of apples in Nepal. With Jumla connected to the national road network, accessibility to markets has been easy for the farmers allowing them to increase their income. Previously, without the road connection farmers used to sell apples for NPR 5 per kg (USD 0.041), and with the road connection apples are selling at least NPR 70 per kg (USD 0.57).148 It is estimated, apple farmers can earn NPR 100,000 (USD 8.191 hundred) to NPR 500,000 (USD 4.1 thousand), annually. With the increase in income from apple cultivation along with the increase in the demand for fruits, farmers are investing substantial amounts towards commercial production.

Currently, local varieties of apples cover 3,450 hectares in Jumla.

Farmers are receiving support from all three-government levels.

A model apple orchard has been constructed on 19 hectares of land by farmers of Hiyakhola with the help of Malika Apple Production Framer's group and financial assistance from the Prime Minister Agriculture Modernization Project’s apple super zone and Tatopani rural municipality. Initiatives have been taken by various government offices at the local level to promote the commercial farming of apples. The District Agriculture Development office is offering apple saplings at a subsidised rate along with conducting apple pruning campaigns at the local level. Additionally, the provincial government provides financial aid for apple orchard construction, fencing, and irrigation.

EXPORT AND IMPORT OF AGRO-COMMODITIES UPDATES Karnali Becoming the Lead Exporter of Cereal Karnali region is becoming one of the major exporters of crops like foxtail millet, proso millet, Kali Marsi rice and buckwheat, and varieties of beans.149 The cultivation of foxtail millet has replaced the cultivation of rice and sweet potato in the region due to its new image of being health food, which is rich in calcium, causing a rise in the demand for it. Another crop that is gaining popularity is Kali Marsi.

Number of farmers growing Kali Marsi has been on the rise. In the previous year, 1,143 tons and 1,046 tons of Kali Marsi were cultivated

NEFPORT ISSUE 49 – JUNE 2022

in Kalikot and Mugu.150 Farmers in Sinja and Tatopani are cultivating Kali Marsi at a commercial level. Program to promote the commercialization of Kali Marsi have been implemented at the local level with the help of the Agriculture Development Office.

The crops grown in the Karnali are not only exported to the urban region within the country but also internationally. Last year, 15 tons of Kali Marsi rice grown in Jumla was exported to Canada.151 Farmers also earn a substantial amount through the sale of their crops within the country. Farmers selling their produce in urban markets receive higher prices.

In the local marketplaces, proso millet is sold at NPR 160 per kg (USD 1.31), foxtail millet is sold at NPR 150 per kg (USD1.23), and Marsi rice is sold at NPR 180 per

kg (USD 1.47). However, proso millet can be sold at NPR 250 per kg in Kathmandu, and Marsi rice can be sold at NPR 700 per kg (USD 5.73).152

agricultural product imported.

Nepal already has imported food grain worth NPR 60 billion (USD 491.480 million).155

Import of Fruits on the Rise

Food and Beverage Prices (CPI and WPI)

In the first nine months of the current fiscal year 2021/22, Nepal imported fresh and dry fruits worth more than NPR 11.7 billion (USD 95.838 million).153 Despite the agriculture sector contributing 25.8% to the GDP, Nepal uses a significant portion of its foreign currency for the import of agriculture production.

Although Nepal has arable land, much remains uncultivated. Out of the total cultivable land in Nepal, 7% remains uncultivated.154 Domestic production within the country appears to be insufficient when looking at the amount of

Nepal Rastra Bank’s monthly macroeconomic report showed that the food and beverage inflation has increased from 4.92% in the first six-month of the current fiscal year to 7.4% in the first nine months of the current fiscal year.156 The price of ghee and oil rose by 28.36% and pulses and legumes rose by 10.53% on a y-o-y basis.157 The main reason behind such inflation is the continuous rise in food prices.158 According to a report published by the World Bank, higher commodity prices are caused by the Russia Ukraine war.159

Outlook Government’s active initiative towards resolving the fertilizer crisis through signing a deal with the Government of India will have a positive impact on the agricultural production of the country. Fertilizer shortage has been a severe issue in Nepal. The timely availability of fertilizer before cultivation will help the farmer to boost their production. The increase in domestic production can decrease the import of agricultural products that can be cultivated within the country and provide some ease to the foreign reserve.

Commercial farming of agricultural products such as apples, various kinds of paddies, beans, millet, and buckwheat will allow farmers to increase their production which can be used to export and create self-sufficiency.

With an increase in agricultural production within the nation, inflation can be controlled as it reduces dependency on imported agricultural products which are vulnerable to various global issues. Thus, the government should invest in the commercialization of the agricultural sector, and coordination among three levels of government is required for effectiveness.

33

34

DOCKING NEPAL’S ECONOMIC ANALYSIS

Energy and Environment Despite the increase in the installed capacity of hydropower projects in the review period, the decrease in hydroelectricity production from Run-of-River projects during the dry season led to the increase in electricity imports from India. Meanwhile, the Government of Nepal has urged Indian firms to buy an additional 200 MW of surplus electricity in the upcoming monsoon season. The review period also saw Nepal signing an agreement with China for the development of a cross-border transmission line, as well as an agreement with India to expand energy trade under the Bangladesh Bhutan India Nepal (BBIN) framework. In terms of renewable energy, the Nepal Electricity Authority (NEA) lowered the maximum power purchase agreement rate for solar energy, which might discourage investors from investing in solar energy plants. Nevertheless, the review period saw fuel prices reach record highs.

POLLUTION AND EMISSIONS Segregation of Waste Made Mandatory by Kathmandu Metropolitan City Issuing a public notice, the Kathmandu Metropolitan City (KMC) has made it mandatory for households and businesses in the city to segregate biodegradable and nonbiodegradable waste while disposing them to garbage collectors. As per the KMC, two separate vehicles would be deployed to collect the two types of waste separately. If households fail to dispose the biodegradable and non-biodegradable waste separately, a cash penalty of NPR 500 (USD 4.09) would be levied. The new rule came into effect starting April 14, 2022.167

Similar kind of a rule was also implemented in August 2019, and piloting was conducted in wards 12, 18, and 21 of KMC.168 Back then, KMC had planned to collect biodegradable waste for four days (Sunday, Tuesday, Thursday, and Saturday) and non-biodegradable waste on Monday and Wednesday, every week. However, the authorities had failed to implement the rule effectively. This backdrop especially necessitates more detailed and effective planning and execution from the metropolitan this time around.

Garbage Piles up in Kathmandu Valley With the Sisdole landfill site in Nuwakot district full, waste management at all 18 local

FACTSHEET Total Petroleum Product Imports (Six months 2021/22)

(USD 1.79 billion)160 Peak Energy Demand (2021)

1482 MW161 Total Energy Generated

2205 MW162 Total Hydropower generated

2022 MW163 Total Solar Energy generated

49.76 MW164 % of households with access to electricity (2021)

94%165 Number of permits/license issued for energy generation

229166

levels in the Kathmandu Valley has been affected once again since May 8, 2022. According to the Kathmandu Metropolitan City, waste management in the valley was disrupted as space needed to be managed for more garbage at the Sisdole landfill site.169 Transportation of garbage to the landfill had been earlier affected since March due to obstructions from locals of Nuwakot, who had been demanding the construction of better roads in the Sisdole area.

The government had to mobilize security forces to escort garbage trucks to transport the garbage to the landfill site.170 Sisdole has been managing trash from the Kathmandu Valley for the past 15 years, even though the facility was only prepared for two years.

NEFPORT ISSUE 49 – JUNE 2022

PROJECTS AND PROGRAM World Bank Pulls Out of Transmission Line Projects The World Bank decided to stop funding two transmission line projects, the 400kV HetaudaDhalkebar-Inaruwa and the 220kV Hetauda-BharatpurBardaghat owing to ongoing delays and difficulties in building energy infrastructure in the country.171 As per officials at the Nepal Electricity Authority, the international funding agency was compelled to end its involvement in the projects after they were unable to move forward despite several deadline extensions.

The main bottlenecks for the completion of the transmission line projects were said to be land acquisition, forest clearance and the right of way.

According to the project office, the World Bank had promised USD 138 million (NPR 16.85 billion) for the two projects, with the whole project cost estimated at NPR 25 billion (USD 205 million), including counterpart funding from the Government of Nepal.

So far, almost NPR 13 billion (USD 106 million) has been invested.

With the World Bank opting out the of projects, the Government of Nepal would be bearing the entire remaining costs.172 NEA Invites Bids to Sell 200 MW of Electricity to India During the Monsoon The Nepal Electricity Authority invited bids from Indian companies for the sale of 200MW of surplus energy in the upcoming rainy season under the long-term power purchase

agreement modality. All open access consumers, regulated utilities, power distribution companies, and traders having valid trading licenses from the Central Electricity Regulatory Commission of India can participate in the bid.173 Nepal has received approval from India to sell a total of 364MW of electricity in the Indian market through a competitive process.

In November last year, NEA was allowed to sell 39MW of electricity from two hydropower projects—Trishuli (24MW) and Devighat (15MW).174 In early April this year, the Central Electricity Authority of India allowed the NEA to sell an additional 325MW of electricity generated from Kali Gandaki Hydropower Project (144MW), Middle Marsyangdi Hydropower Project (70MW) Marsyangdi Hydropower Project—all developed by the NEA, and Likhu 4 Hydropower Project (52.4MW) developed by the private sector.175 New Transmission Line Planned Along Postal Highway As an alternative to the 400kV transmission line being built along the East-West Highway, the Nepal Electricity Authority is planning to build a 400kV transmission line along the Postal Highway. The capacity of the proposed transmission line is 220kV, but it can be upgraded to 400kV if needed. According to the state-owned power utility, the proposed transmission line will serve as a backup to ensure electricity flow if the power line along the East-West Highway fails. The new transmission line, according to NEA officials, will benefit the increasing number

of industrial enterprises being established along the postal highway and provide a faster alternative to cross-border electricity exchange.176 Government Preparing Directive on Wheeling Charge The government is planning to issue a directive related to wheeling charges for leasing power transmission lines.

The Electricity Regulatory Commission (ERC) has informed that the necessary process has been taken forward to facilitate the private sector to trade electricity. As the private sector has not set up its transmission lines, it has to rely on governmentowned transmission lines. The state-owned Nepal Electricity Authority is currently involved in setting up transmission lines. The government has also established the National Grid Company, especially for this purpose. The directive will focus on the rental charges for the use of the government’s transmission lines by the private sector.177 This directive would facilitate private energy producers to gain access to the energy markets not only within Nepal but in neighboring countries like India and Bangladesh without increased investment in private transmission lines.

HYDROPOWER Foreign Companies Reluctant to Reinsure Hydropower Projects Due to an increase in natural disasters such as floods and landslides affecting hydropower plants, foreign reinsurance

35

36

DOCKING NEPAL’S ECONOMIC ANALYSIS

companies have been hesitant to reinsure Nepali hydropower projects. While small hydropower projects are relatively easier to cover for the companies since the Insurance Board has set a minimum premium for their insurance, large projects are more difficult to insure. Furthermore, as claims from hydropower and road projects have increased, insurers have found that reinsurance of road and hydropower projects has become a challenge.

Meanwhile, the Independent Power Producers Association of Nepal (IPPAN) has been protesting against the minimum insurance rate, which the Insurance Board set to control unhealthy competition amongst Nepali non-life insurers.178 HIDCL & NMB Bank to Finance 61.8 MW Upper Modi 'A' Project The 42 MW Upper Modi 'A' Hydropower Project, located at Annapurna Rural Municipality is being constructed by the Modi Jalvidyut Company. The project is being built with domestic financing from the NMB Bank and the Hydroelectricity Investment and Development Company (HIDCL). The Nepal Electricity Authority is also a major promoter of the project. NMB Bank, which has experience in financing 46 hydropower projects will be leading the Upper Modi ‘A’ project under a consortium agreement with HIDCL. The total investment for the project is estimated to be NPR 9.08 billion (USD 74.38 billion).179 710 MW of Electricity Added to the National Grid in a Past Year In the period between mid-April

2021 and mid-April 2022, 710 MW of hydroelectricity produced by 20 hydropower projects was added to Nepal’s National Grid. With this, the country’s total hydropower capacity has reached 2,150 MW. Out of this, the total contribution of the private sector is 1,452 MW.180 456 MW from the Upper Tamakoshi, 52.4 MW from the Likhu-IV project, 24.2 MW from the Likhu Khola- A project, 20 MW from the Lower Modi Khola project, 11 MW from the Khare Khola project, 25 MW from the Singati Khola project and 22.2 MW from the Upper Chaku Khola-A project were added during the one year. Moreover, 11 MW of electricity was added from solar power plants and sugar factories. However, during the monsoon season of 2021, Nepal lost 500 MW of electricity worth NPR 5 billion as the current domestic consumption amounted to only 1600 MW.181 Despite the government's efforts to expand local hydroelectricity use, it has failed due to a lack of infrastructure and other issues.

Furthermore, due to the decrease in production from Run-of-River projects during the dry season, Nepal had to import electricity from India to fulfill its domestic demand.

Nepal Electricity Authority Inks Deal with SJVN India to Develop Arun-4 Hydropower Project The Nepal Electricity Authority and the Satluj Jal Vidyut Nigam (SJVN) signed a memorandum of understanding (MoU) for the construction of the 490 MW semi-reservoir Arun-4 Hydropower Project on May 16, 2022, during the visit by the

Indian Prime Minister, Narendra Modi.182 The project is expected to cost NPR 79 billion (USD 647.11 million). The Nepal Electricity Authority will hold a 49% stake in the Arun-4 project, out of which 10% will be allocated to the local people affected by the project, while 15% will be issued to the general people.

According to NEA’s Managing Director, Kulman Ghising, the feasibility report of the project will be reviewed in the next 90 days, while the detailed project report and the environmental impact assessment report will be finalized in 18 months. Nepal will also be getting 21.9% of electricity from the project free of cost every month.183

TRADITIONAL ENERGY NOC Hikes Fuel Price, Petrol Price Reaches NPR 180 per liter The Nepal Oil Corporation (NOC) has increased the price of petroleum products for the second time in just over a week.

On May 22, 2022, the NOC hiked the price of petrol to NPR 180 (USD 1.47) per liter, the price of diesel and kerosene to NPR 163 (USD 1.34) per liter, and the price of cooking gas to NPR 1800 (USD 14.74) per cylinder.184 The state-owned monopoly on May 14, increased the price of petrol, diesel, and kerosene by NPR 10 (USD 0.08) per liter, setting the price of petrol at NPR 170 (USD 1.39) per liter. Similarly, the retail price of diesel and kerosene had been fixed at NPR 153 (USD 1.25) per liter.185 The NOC had earlier increased the price of petrol to NPR 160 (USD 1.31) and diesel and kerosene to NPR 143 (USD 1.17) on April 5. Similarly, the price of

NEFPORT ISSUE 49 – JUNE 2022

cooking gas had been increased

by NPR 25 (USD 0.20) per cylinder to NPR 1,600 (USD 13.11).

According to NOC, the price of aviation fuel had been increased

by NPR 5 (0.04) to NPR 156 (1.28) per liter for domestic aircraft, whereas the fuel for aircraft used in international flights rose by USD 50 (NPR 6,104) per kiloliter to USD 1,545 (NPR 188,613) as of April 2022. On March 16, the corporation hiked petrol prices to NPR 155 (USD 1.27) per liter, while diesel and kerosene prices were fixed at NPR 138 (USD 1.13) per liter.186

RENEWABLE ENERGY Construction of Plant with a Daily Capacity of 1000 Kg of Biogas in Final Stages Damak Sub-metropolis of Jhapa district with a joint investment with the Next Era Energy Company and the Alternative Energy Promotion Center is constructing a biogas plant that would have a daily capacity to produce 1,084 Kg of biogas, 10,000 Kg of organic manure, and 7,500 liters of liquid manure. As per Dorna Bahadur Thapa, Sanitation Chief of the metropolis, the construction of the plant has reached the final stage. Damak area produces about 20 tons of garbage daily, of which 15 tons are currently being collected. 66.52% of this is supposedly organic waste.

The city would segregate organic waste and decompose it for 15 days in a large tank. The biogas produced from the decomposed waste would be processed and distributed via gas cylinders. The construction of the structure is estimated to cost NPR 205.89 million (USD 1.68 million). Over

NPR 147 million (USD 1.20 million) would be invested in Next Era Energy Pvt. Ltd. while the Alternative Energy Promotion Center would be investing around NPR 58 million (USD 0.47 million).

The municipality has provided land for the construction of the structure.187 Nepal Electricity Authority lowers Power Purchase Agreement Rate for Solar Energy The Nepal Electricity Authority has reduced the power purchase agreement (PPA) rate for solar power projects by NPR 1.36 (USD 0.01) per unit. For the past three years, the NEA had fixed NPR 7.30 (USD 0.06) per unit as the PPA for solar plants. Now, the base rate has been fixed at a maximum of NPR 5.94 (USD 0.05) per unit.

The contractors participating in the open competition have to submit bids at rates lower than the base rate. Similarly, the NEA has set certain criteria for the companies participating in the PPA. The solar projects must now set up plants in places where the NEA directs them if they want to participate in the PPA. Such criteria have been set keeping in view the technical aspects such as the transmission lines of NEA and the areas where electricity is in demand.188

NEW DEVELOPMENTS Agreement Reached on a Cross-border Transmission Line with China An agreement between Nepal and China was reached during the visit by the Chinese Foreign Minister and State Counselor,

Wan Yi in March 2022, for the construction of the first cross-border transmission line.

Secretary for Energy, Water Resources, and Irrigation, Devendra Karki and Chinese Ambassador to Nepal, Hu Yanchi signed a cooperation agreement on the Nepal-China Power Grid Interconnection Feasibility Study. The construction of the 400 kV transmission line from Geelong County of China through Rasuwagadhi to Ratmate in Nuwakot would cost NPR 10 billion (USD 81.91 million). The project Chief Komal Nath Atreya stated that the Environmental Impact Assessment (EIA) report would be completed by August 2023. The completion of the transmission line would allow Nepal to trade up to 3000 MW of electricity with China.189 Nepal and India Agree to Expand Power Cooperation under the BBIN Framework Nepal and India have agreed to expand cooperation in the power and energy sector under the BBIN (Bangladesh, Bhutan, India, and Nepal) framework. The NepalIndia joint vision statement on power sector cooperation was unveiled on April 2, 2022, during the Prime Minister, Sher Bahadur Deuba’s visit to India. According to the vision statement, both sides will work on the joint development of power generation projects in Nepal and cross-border transmission infrastructure. Nepal and India also agreed on bi-directional power trade with appropriate access to electricity markets in both countries based on mutual benefits, market demand, and applicable domestic regulations.

37

38

DOCKING NEPAL’S ECONOMIC ANALYSIS

The two countries agreed on coordinating national grid operations and institutional sharing of the latest operational information, technology, and know-how.190 Kathmandu Valley’s Energy Demand Projected to Reach 3,100 MW by 2050 The NEA has projected the

Kathmandu Valley’s energy demand to reach 3,100 MW in the next three decades.

The NEA plans to address the need to develop a master plan for upgrading physical infrastructures to cope with rising power consumption. According to NEA’s Executive Director, Kulman Ghising, there is a need to upgrade existing infrastructure and develop new infrastructure

to meet future energy demand.

Transmission line construction is expected to cost around NPR 4050 billion (USD 327-409 million), according to the NEA. Within the Kathmandu Valley, the NEA is actively constructing 132KV and 220KV transmission lines. Apart from this, NEA is also planning to build a ring of transmission lines in the river corridors and hills around the Valley.191

Outlook The outlook of the energy sector looks favorable for the upcoming quarter, as the start of the monsoon season in Nepal would lead to increased electricity production from the run of river hydropower projects. With the installed capacity of hydropower reaching 2,150 MW and the peak domestic consumption standing at 1600 MW, Nepal would benefit from exporting the excess energy generated to India. While Nepal has already received approval from India to trade 364 MW of energy, the Government of Nepal has invited Indian firms to participate in an additional bid for 200 MW. Furthermore, the government preparing directives to allow private energy producers to use the NEA’s transmission lines to trade power would facilitate easier distribution and export of electricity. However, the increasing prices of petroleum products are still a matter of grave concern for the country, as it risks hyperinflation.

NEFPORT ISSUE 49 – JUNE 2022

Infrastructure and Real Estate The review period witnessed many major infrastructure projects coming into operation. The long awaited Melamchi Project, resumed water supply to fulfill demand for drinking water in the Kathmandu Valley. The Chobar Dry Port, build to help stimulate the foreign trade has also come into operation. Similarly, with the Gautam Buddha International Airport coming into operation, which will act as an alternate landing zone to Tribhuvan International Airport (TIA) and is expected to ease pressure from TIA. Infrastructural projects to improve connectivity with projects like Madan Bhandari highway and road upgrade at Dharke-Sitapaila section are also taking place.

Land Transaction and Revenue Collected According to the Department of Land Management, during the two months of the review

Figure 15 Total number of Land transaction and Land Revenue collected

Source: Department of Land Management and Archive

period, a total of 258,237 land transactions were made, and NPR 10.538 billion (USD 85.816 million) revenue was collected.

The total number of transactions decreased by 31%, whereas the

FACTSHEET Total Length of Road

33,871 km192 Black Topped Road

16,939 km 193 Graveled Road

8,111 km 194 Earthen Road

8,821 km195 Railway track construction

56 km 196 Track Bed construction

50.5 km197 Global Competitiveness Index Indicators (Quality of infrastructure) 2019

Rank 112, Score 51.8198

revenue collected decreased by 18% compared to last year's review period. In the previous year, the months of May and April had a drastic fall in terms of the number of land transactions and

39

40

DOCKING NEPAL’S ECONOMIC ANALYSIS

land revenue. In May 2021, only 1494 land transactions were made along with NPR 27,343,658 land revenue was collected. The fall in the number of land transactions and land revenue collected was caused by the implementation of a second lockdown to curb COVID-19 case.199 Madan Bhandari Highway Construction in Final Stage The construction of the 6 kmlong Madan Bhandari Highway from Khattar to Dhura Bazaar is on the final stage of completion.

The four years-long disputes regarding the mapping of the highway halted the construction work of the highway. The locals of Dhura Bazar Municipality-6 feared the construction of highways would displace them and requested the highway to be diverted. After the agreement to reduce the width of the highway from Siran to Khattar, work on the western section started, and so far, 95% of the work has been completed.200 Electric Public Transport to be Tested Sajha Yatayat Cooperative Public Transport Service has made a deal with China’s CHTC company worth USD 3.7 million (NPR 451.69 million) for the purchase of 40 battery-operated buses along with the 20 chargers of 90 kW, which would be able to charge the batteries of two buses simultaneously, within four hours.

Out of the 40 buses, three buses have already arrived Kathmandu and the rest of the buses will be arriving soon this year. Since the buses will be operating on renewable energy generated by

hydropower, it is said to address Nepal’s 3E’s Agenda: Energy Management, Environment Management and Economic Management. Despite the high cost of capital for electric buses, the shift is deemed costeffective. The main reason is that with battery-powered buses, the cost of fuel reduces and 50% of Sajha Yatayat's operating costs account for the fuel, spare parts, and maintenance.

Moreover, electric vehicles have lower maintenance cost which would decrease the overall operating cost.

Additionally, Sajha Yatayat is in talks with an India company for purchasing four small electric buses for operations within Lalitpur along with additional buses to follow later. The cooperative is also planning to add 12m electric buses for longdistance inter-province links.201 Chobhar Dry Port comes into operation Chobhar Dry Port came into formal operation in the first week of April 2022. Since its completion, the dry port was nonoperational for eight months due to unfinished internal work and delay in enactment of necessary law to operate the facility.202 The dry port occupies 11.77 hectares of land which is divided into two sections – export-import and domestic. The dry port provides custom clearance service to container trucks coming across the southern border. The dry port will provide ease the work for importers as they will be able to clear their goods at the Kathmandu Inland Clearance Depot.203

Road Upgrade at Dharke-Sitapaila Section The Department of Roads is scheduled to complete the Dharke-Sitapalia road section’s upgrade within the next two years. The upgrade work is divided into Dhading stretch for which Road Division Office in Nuwakot is responsible and Kathmandu stretch for which Division Road Office in Kathmandu is responsible. The upgrade work includes improvement in road widening, construction of retaining wall, roadside drainage, and blacktopping of 24-km Dharke-Sitapaila. The DharkeSitapaila section would be used as an alternative to the NaubiseNagdhunga road that connects Kathmandu to the rest of Nepal. 204 Melamchi Water Supply to Resume The long-awaited Melamchi Project has resumed water supply to the Kathmandu Valley after ten months. The project supplies water from the Melamchi river in Sindhupalchowk to the Kathmandu valley which was obstructed due to the collapse of structure at the source of water caused by the massive flood on June 15, 2021.205 The reconstruction of the Melamchi Drinking Water Project has resumed supply of water to the Kathmandu Valley. The water was transferred from the source to the tunnel and then sent to Sundarijal for water treatment for purification and transferred to 10 reservoirs tank to Kathmandu Upatyaka Khanepani Limited (KUKL) from which the drinking water is dispatched to houses.206

NEFPORT ISSUE 49 – JUNE 2022

Gautam Buddha International Airport in Operations Gautam Buddha International Airport (GBIA) has officially begun its domestic as well as international operations. It is expected to work at the same capacity as the Tribhuvan

International Airport (TIA).207 GBIA was designed to accommodate aircraft parking and serve as an alternate landing zone to TIA in case of an emergency. According to the spokesperson of the Civil Aviation Authority of Nepal (CAAN), the airport would make air travel easier and economical

as the aircraft would be using the same routes that was used pervious leading to reduced flight time and low-priced airfare.

It is also expected to provide direct employment for around 300 people.208

Outlook With various infrastructural projects taking place, it is important for the projects to be completed on time to serve its purpose along with avoiding cost of delay. The development of climate resilient infrastructure is needed in Nepal. A climate resilient infrastructure would be beneficial as it would reduce the risk of future loss of infrastructure as well as reduce the undirect costs of disruption. The transition towards electric vehicle for public transportation for sustainable future of Nepal through decreasing the carbon footprint is a great initiative. There is also a need for innovation in terms of infrastructure to manage waste produced by such transition. Evidently, Nepal’s infrastructure is moving towards better connectivity and sustainable alternatives.

41

42

DOCKING NEPAL’S ECONOMIC ANALYSIS

Information and Communication Technology

FACTSHEET Tele density

145.62%209 Internet data subscribers

36.99 million210 Number of smartphone users

28.34 million211 Internet Penetration

The review period witnessed the regulator, Nepal Telecommunications Authority (NTA), and the government take initiatives such as digital Know-Your-Customer (KYC), amending National Broadcasting rules etc. for improved digitalisation in the country. The market for telecommunications grew by 7.39% and the Internet Service Providers (ISPs) market grew by 41.28% in mid-February 2022 compared to mid-February 2021. The market shares held by ISPs and telecom providers remained relatively constant.

Electronic Know-YourCustomer to be Implemented

High Speed Connectivity in Everest Base Camp

Nepal Telecommunications Authority is preparing to implement a centralized biometric based Know Your Customer process by November 2022. The electronic know your customer (e-KYC) will require individuals to fill a form using their National ID. Once verified, this can be used in all telecommunications, banking, transport license and other sectors that require KYC. The e-KYC will simplify registration of new SIM cards and SIM swapping and will allow service providers to serve their customers in a secure and efficient way. The new system will also enable subscriber’s information sharing between telecommunications providers and NTA. 216

Ncell is planning to build Base Transceiver Stations (BTS) in at least five different locations in the Everest region to provide dedicated ultra-fast 4G connectivity. The Ministry of Forests and Environment has invited feedback on the Environment Impact Assessment (EIA) of the project. Around 27,495 users are expected to benefit from the service with each tower serving 5,499 users per hour. The service will be available 24/7 and four out of the five towers will be powered by solar energy.217 Amendment in National Broadcasting Rules The recent amendment to the National Broadcasting Rules

126.72%212 Average download speed of mobile internet connection

16.25 Mbps213 ICT goods import as a % of total import

3.1%214 Total Digital Payment Transaction

NPR 5.86 trillion on mid-Mar to mid-April215

requires Over The Top (OTT) platform, and internet television to obtain license before operation.

Such service providers are also required to maintain cache server within Nepal for storage of user information. OTT service providers are required to keep a record of programs transmitted by them for at least 60 days and make such records accessible to the Ministry of Communications and Information Technology.

Further, the content provided

by OTT are subject to age wise categorization, but no guideline on this has been provided.

The definition of OTT in the amendment is ambiguous and could include video streaming apps like TikTok and Facebook.218 Nepal Ranks Lower in Mobile Broadband Speed Nepal ranked 109 among 142

NEFPORT ISSUE 49 – JUNE 2022

Figure 16 Market Share of ISPs based on number of subscribers

(Source: NTA MIS Report Magh 2078 (mid-January to midFebruary 2022))

Figure 17 Market Share of Telephone Operators

(Source: NTA MIS Report Magh 2078 (mid-January to midFebruary 2022))

countries in May 2022 on the Speedtest Global Index’s mobile broadband speed category, a fall from previous year’s ranking of 88. The median download speed in Nepal increased from 15.39 Mbps in May 2021 to 16.45 Mbps in May 2022, while the median upload speed decreased from 10.85 Mbps in May 2021 to 10.35 Mbps in May 2022. Even though the price of 4G has dropped by more than 35% since 2017, Nepal’s internet is one of the most expensive in the region due to high taxes. 219

Internet Shutdown Avoided The Internet Service Providers’ Association of Nepal (ISPAN) had warned of internet service disruptions as they could not get foreign currencies to pay for bandwidth purchased from the Indian companies. Nepali ISPs have not paid their Indian upstream providers for 6 months since the government has not provided foreign currency recommendations to clear those dues. The Ministry of Communication and Information Technology has assured ISPAN that it will provide foreign currency

recommendation, therefore avoiding a potential shutdown.220 Import of Telecommunication Equipment The import of telecommunications and parts has reached NPR 45.29 billion (USD 370.98 million) in the first nine months of current fiscal year, representing a growth of 23.9% compared to the same period in the previous year.221 Despite the ban of import of mobile phones worth USD 600 and above, NPR 34 billion (USD 278.5 million) has been spent on importing mobile phones below

43

44

DOCKING NEPAL’S ECONOMIC ANALYSIS

Figure 18 Market Share of ISPs based on number of subscribers

(Source: NTA MIS Report Magh 2078 (mid-January to midFebruary 2022))

USD 600 in the first nine months of the current fiscal year.222 Data Breach in Government Websites The login data of over 4000 users were stolen after the websites of 37 different government agencies were hacked. The compromised websites include websites of Department of Inland Revenue, Bagmati Province, Ministry of Education, Prime Minister's Employment Program, Ministry of Federal Affairs and General Administration among others. The hackers accessed the government

sites, installed a new type of malware called “stealer” malware, and stole the personal details of 4,708 government employees.223 Investment in Digital Nepal Framework The government recently announced an investment of NPR 22 billion (USD 180.21 million) in the Digital Nepal Framework (DNF) with assistance from the World Bank. Of the amount, NPR 13 billion (USD 106.48 million) will be used for funding internet expansion in rural areas. The government has also planned to

provide Internet Service Providers (ISPs) financial incentives to develop weather-resistant highspeed broadband connectivity.

Similarly, the government plans to invest NPR 7.70 billion (USD 63.07 million) in e-governance, which would comprise of digital signatures, a cybersecurity regulatory framework, and an increased capacity of current data centres. The government has also planned to use the investment to buy international bandwidth in wholesale. In addition, the government has planned to provide communitybased digital education.224

Outlook The initiative of Ncell to install 4G towers in geographically challenging areas like the Everest region might encourage other service providers to focus on rural development. Installation of 4G towers in the Everest region will improve the reach of internet and contribute to the disaster risk management in the region by alerting communities regarding disasters for timely response. The establishment of a centralised biometric based e-KYC system will enable secure sharing of real time subscriber data among telecommunications operators. While the amendment to the National Broadcasting Rules was much awaited, the ambiguities within the rules might lead to its arbitrary application and might be used to restrict freedom of speech on video streaming sites. The significant investment in the Digital Nepal Framework is expected to improve access to internet and make the internet connection more reliable. As Nepal moves towards increased digitalisation, issues of data security and cyber security will become significantly important which is why a separate data protection legislation is required.

NEFPORT ISSUE 49 – JUNE 2022

Education As educational institutions gradually restored normal learning activities during the review period, authorities started to conduct physical examinations which had been due for the past two years due to the disruptions caused by the onset of COVID-19. Likewise, various local-level incentives such as digital learning and scholarship schemes were implemented to encourage students back to school. However, policies targeted at expanding technical and vocational education to each local level along with concept execution of model schools are of dire need. And only then can the capacity and capability of students through quality education can be enhanced. Moreover, the Ministry of Education, Science and Technology (MoEST) also directed all educational institutions to extend holidays to two days a week (Saturdays and Sundays), raising concerns among school administrations.

PROGRAMS Government to Take Over School Meal Program of WFP The World Food Program (WFP) has been managing a school meal program in Nepal for the past 45 years. The program managed by WFP is an in-kind program in which the agency delivers rice, lentil soup (daal), salt, and oil directly to schools.229 The program has had a positive effect on the learning outcomes of children through improved malnutrition status among children. The program will now be handed over to the Government of Nepal. WFP has already handed over the responsibility of 71 districts to the government since the government introduced its separate cash-based program in 2008. As a result, the World

Food Programme presently operates in only six districts, all of which will be transferred by 2024. However, the beneficiary is concerned that if the program is taken over by the government, it would transform to a cash-based program in which each student will be given NPR 15 (USD 0.122) every meal and NPR 20 (USD 0.163) in rural areas, implying a higher risk of the money being misappropriated.230 Transforming Education Through Model Schools The Asian Development Bank (ADB) is working with the Government of Nepal and other development partners to ensure the quality of education for children – especially at the secondary school level – through a Model School Program.231 With

FACTSHEET

Retention rate (Grade 1-8)

84.9%225 Net Enrolment rate

95.50%226 Literacy rate (15-24 years)

89.70%227 Community schools with internet facility

54%228

support from the ADB, more than 200 community schools have been upgraded to model schools.

Model School Program focuses on providing training to teachers, designing necessary curriculum, and providing relevant tools available to improve learning outcomes in Science, Mathematics and English.

The plan seeks to upgrade at least one public secondary school in each of Nepal's 753 municipalities to a model school.

The program is supported by eight development partners including ADB. ADB has pledged USD 120 million (NPR 982,962) for School Sector Development Programs (SSDP), of which USD 28 million (NPR 229,357) has been allocated for the model school program under resultsbased financing.232

45

46

DOCKING NEPAL’S ECONOMIC ANALYSIS

Scholarship for Married Women Raksirang rural municipality of Makwanpur district has rolled out a scholarship scheme for daughters-in-law to uplift the socio-economic status of the local populace. The scheme, ‘Buhari Chhatrabritti’, will provide NPR 30,000 (USD 246) to female applicants who qualify after meeting certain criteria.

The criteria for the application require the daughters-in-law to be above 20 years of age, provide an official marriage certificate, proof of enrollment at local institutions, and a recommendation letter from the school.233 According to the Mayor of Raksirang rural municipality, the Human Development Index (HDI) of Makwanpur is extremely low, as the rate of child marriage is 59.7%, which is one of the highest in the nation. The policy is expected to improve HDI along with the current state of female education in the district. However, the locals face a problem as it requires multiple paperwork and only limited applicants have been able to avail the facility.234 Alternative Energy Promotion Center Entices Students to Use Electronic Appliances The Government of Nepal is providing an electric induction stove free of cost to each student from the country’s remote areas who are staying in rented rooms in the Kathmandu Valley to pursue higher education. Issuing a public notice, the Alternative Energy Promotion Center (AEPC) has invited students pursuing Bachelor’s and Master’s from government and community institutions to apply for the

same. To avail of such a facility, a copy of the citizenship certificate, student identity card, and recommendation from the educational institute is requested.235 As per the Nepal Oil Corporation, the price of petroleum products, diesel and kerosene have hiked

by NPR 10 per liter each and stands at NPR 180 per liter and NPR 163 per liter, respectively.

Likewise, the price of LP gas for cooking has also increased by NPR 200 per cylinder and stands at NPR 1800 per cylinder as of 23 May 2022.236 Since the prices are increasing at an exponential rate in light of the 2022 local level elections as well as the ongoing Russia-Ukraine war, inflation in Nepal is soaring, which can cause difficulty in the standards of living of people. Considering this, the AEPC scheme has targeted providing some economic respite to the students considering the soaring prices of cooking gas and promoting the use of electric appliances for domestic use.237

POLICY Increasing Efficiency Concerns in the State of Small Schools As government agencies continue to provide educational services under the new federal structure, increasing number of students face the risk of school dropouts.

Education Sector Policy (202122) adopted by the Government of Nepal to improve efficiency and quality of education has mandated to close small schools and merge them into bigger schools.238 However, the result has not been achieved. In the past, such mergers have led to

the closure of small schools in remote communities of Nepal.

As a result, their schools are now further away, and students have to take longer journeys to reach their schools. Overall, access to education has become difficult as local schools are shut down, thus aggravating existing disparities.239 Technical Education Expanded to Include all Local Levels The Minister for Education, Science and Technology (MOEST), Devendra Poudel, informed that the government would expand the technical education to all 753 local levels.

Currently, only 660 districts have access to technical education.

As per the new expansion, the schools running technical classes would be established as centers of excellence and the technical education would be focused on building skill-based education for better livelihood.

The quality of education will be upheld to make graduates ready for the job market and encourage entrepreneur activities.

However, there is a dire need for cooperation of local governments to facilitate for infrastructure and logistical requirements for the implementation of the plan.240 Schools to Remain Closed on Sundays The Government of Nepal has decided to close public as well as private schools for two days a week (Saturdays and Sundays), effective from 16 May 2022. According to the Ministry of Education, Science and Technology (MoEST), a decision to this effect has already been

NEFPORT ISSUE 49 – JUNE 2022

taken, and both public and private schools have been directed to follow the decision. Such a decision was taken considering the increasing fuel prices and to relieve pressure from the dwindling foreign exchange reserve. However, private schools are reluctant to implement the policy, citing difficulty in completing the syllabus on time.

The government is also working on reducing the total 50-days holiday for winter and summer vacation to 25-days a year.241

EXAMINATION SEE Conducted After Halt of Two Years Disrupted for two consecutive years due to subsequent waves of coronavirus infection, students thronged to examination centers to attend the Secondary Education Examination (SEE), the final exam for their secondary level studies. The National Examination Board, the responsible authority to undertake the SEE, conducted the exam starting 22 April with students appearing in person.

As many as 514,967 students – 257,053 girls and 157,914 boys – from 11,615 schools attended SEE. Earlier, National Examination Board had recognized schools’ internal assessments of students for SEE results of two consecutive previous years (2076 and 2077 BS) due to the COVID-19 crisis.242

DIGITAL LEARNING Audiobooks in Community Schools Schools in the Myagdi district have provided audiobooks to all community schools to

ensure technology-friendly teaching-learning experience.

The audiobooks were provided to 33 community schools while focusing on basic education.

The scheme was launched under the theme, ‘Balbalikako Ichchhya, Prabidimaitri Sikshya’ (Technology-friendly education: Children’s dream).

The audiobooks are to be provided for technologically facilitating teaching up to Grade-5. The teachers stated that introduction of audiobooks would improve the learning outcome as it will provide innovative and entertaining ways of teaching. Such an initiative is also expected to attract those students who have discontinued schooling due to COVID-19 imposed lockdowns.243

KEY DEVELOPMENT Increasing Exodus of Nepali Students The demand and supply paradox in Nepal’s higher education is manifested by the increasing outflow of students, while educational institutions in the nation are unable to fulfill the approved seats. A statistic by the Ministry of Education, Science and Technology,244 reveals that during the last decade (2008-2019), about 400,000 students obtained noobjection certificates (NOC) from the ministry for university studies abroad. Students need the certificate to get foreign exchange to pay their tuition, travel, and accommodation costs.245 Preference to study in foreign universities continues despite the increasing availability of educational institutions in Nepal. A policy to enhance the

quality of education to meet the expectation of students going abroad can limit such migration and ease pressure on foreign exchange.

CURRICULUM Process to Integrate CTEVT and CEHRD Curriculums The process to integrate the curriculum developed by the Council for Technical Education and Vocational Training (CTEVT) and the Center for Education and Human Resource Development (CEHRD) started in a bid to assimilate curriculums into the technical education system under the Ministry of Education.

The initiative comes as a reaction to complaints that state that CTEVT and CEHRD have created and run different curriculums and technical programs for the same educational institution.246 The integrated curriculums are expected to bring uniformity in learning and teaching in technical and vocational education as there exists disparities and confusion among institutions in syllabus and quality of education. It will bring consistency in the quality of human resources in the labor market.

47

48

DOCKING NEPAL’S ECONOMIC ANALYSIS

Outlook The education sector of Nepal was severely affected due to the lockdown measures implemented after the onset of COVID-19. Although several educational institutions in the urban areas conducted online classes during the lockdowns, there was a steep a rise in rural-urban disparity, as the learning process for students in the remote region was halted due to limited digital access and poor infrastructure in the rural areas. Hence, the policy measures such as the ‘Education Sector Plan’ to improve the efficiency of community schools by merging small schools have only exacerbated the problems. It is because such programs have led to the closure of many schools located in remote regions, instead of focusing on uplifting the state of the schools. Such policy will worsen the access to education in remote regions, as locals will have to travel further to reach school, which will hamper progress towards the right to education.

On the other hand, the implementation of various programs and trainings focused on improving and developing skills can improve educational outcomes and the quality of human resources. To ripe the benefits of increasing skill in the labor force, opportunities within the nation should be created to utilize the enhanced capability. Given the current state of higher education, the exodus of students is expected to continue unless policy reforms enhance the quality of higher education to meet the expectation of students. Overall, policy and programs which aim to compensate for the lack of learning during lockdown are needed to prevent long-term negative consequences of the pandemic.

NEFPORT ISSUE 49 – JUNE 2022

Health

FACTSHEET Projected life expectancy in 2022

71.45 years247

With COVID-19 infections decreasing significantly, the review period saw government efforts focused on tackling issues in other aspects of the health sector.

Over 75% of the population have been vaccinated against COVID-19, yet children aged 5-11 years have been left out of the vaccination drive. Sudden weather changes have increased cases of seasonal diseases. Further efforts have been made in the maternal health sector to reach his year’s Sustainable Development Goals (SDGs).

MoHP to Support Production of Medicine at Low Cost The Ministry of Health and Population (MoHP) is preparing a proposal to support Nepal Drugs Limited in the production of at least 25 essential medicines at a low cost. Currently, Nepal Drug Limited only produces six essential drugs including paracetamol and oral rehydration solutions.

This proposal aims to address the issue of the unavailability of essential medicines in government health institutions.

The initiative is expected to help in controlling the market price of medicines as well.252 Government Health Insurance Fails to Retain Subscribers Despite the rapid expansion of government health insurance in all 77 districts, only 20% of the total population has subscribed to the scheme. The renewal rate of health insurance is less than 50%.253 The poor public response can be attributed to the quality of health services in healthcare centers affiliated with the scheme which lack medicines, trained healthcare providers,

and medical equipment. Further, the scheme operates as a social security program but is categorised as health insurance, which has confused the nonrefundable premiums when the services are not used.254 Cases of Seasonal Flu and Waterborne Diseases on the Rise Several hospitals and health institutions across the country have reported increased cases of diarrheal diseases, seasonal flu, and fever. In Kathmandu, Sukraraj Tropical and Infectious Disease Hospital have seen 15 to 20 patients suffering from diarrheal disease every day, while the number of patients at Kanti Children’s Hospital have increased by five times in the last month. Such cases are also common in remote areas such as in the Humla district where one-fourth of total patients are suffering from diarrheal diseases. This increase in seasonal diseases can be attributed to a rise in temperature, contaminated drinking water, food poisoning, and rising pollution.255

Projected birth rate in 2022

18.705 per 1000 people248 Projected death rate in 2022

6.264 per 1000 people249 Projected Infant Mortality rate in 2022

24.287 per 1000 live births250 Projected fertility rate in 2022

1.826 births per woman251

Possible Delay in COVID-19 Vaccines for Children The deteriorating economic conditions of Nepal evidenced by rising inflation and imports has been delaying the procurement and administration of the COVID-19 vaccine for children aged five to eleven years old. The Cabinet of Ministers had suggested exploring the possibility of securing vaccines via grant assistance and only procuring the shortfall.256 The vaccines through the COVAX scheme are expected to arrive from the last week of June 2022 in several consignments but the scheme is yet to give an official delivery date for these vaccines.257 Administration of COVID-19 Vaccines to be Resumed After Local Elections The government is set to administer over 3 million doses of Pfizer-BioNTech and Moderna vaccines after the local elections on 13 May 2022.258 As the vaccines only have a shelf life of 31 days, the vaccines could go to waste when the uptake is low, which was

49

50

DOCKING NEPAL’S ECONOMIC ANALYSIS

the case before local elections.

Currently, over 3.1 million doses of Pfizer-BioNTech and Moderna vaccines, and 4 million doses of Sinovac-CorornaVac are in stock.259 Further, the supply of 9.2 million doses of PfizerBioNTech vaccine provided by the COVAX scheme has been put on hold due to the lack of storage capacity.260 Import of Medicines Grow by 141.6% The import of medicines has reached NPR 62.36 billion (USD 510.81 million) in the first nine months of the current fiscal year, representing a growth of 141.6% compared to the same period in the previous year.261 Nepal also imported NPR 1.08 billion (USD 8.84 million) worth of facemasks and NPR 135 million (USD 1.1 million) worth of hand sanitizers in the first nine months of the current fiscal year. Among them, NPR 826 million (USD 6.76 million) of facemasks were imported from China, while NPR 109 million (USD 0.89 million) worth of sanitizers were imported from India.262

Whole Genome Sequencing of COVID-19 Variants Carried Out The Ministry of Health and Population (MoHP) has directed relevant agencies to send COVID-19 swab samples to National Public Health Laboratory for whole-genome sequencing.

The BA.2 sub-variant of Omicron which is responsible for most of the surge in new COVID-19 cases in India, has additional mutations and is effective at reinfecting people.263 As Nepal is expecting a rise in COVID-19 cases, wholegenome sequencing is being carried out regularly in five laboratories across the country, including the new one in Madhes Province, to track the severity and properties of the virus.264 Guidelines for Double Antenatal Care Visits To meet the Sustainable Development Goals (SDG) of reducing maternal mortality rate, the government has formulated new guidelines in line with World Health Organisation’s (WHO) recommendations to double

antenatal care visits from the upcoming fiscal year. A higher frequency of antenatal care visits is associated with less likelihood of stillbirths. Further, MoHP has informed the Ministry of Finance reagrding this new provision and recommended increasing the existing allowance of NPR 800 (USD 6.55) for four antenatal care visits from state-run health facilities.265 Case Backlogs Expected to Increase in Hospitals The recent decision of the government to introduce a twoday weekend policy is expected to delay scheduled surgeries in government hospitals. The waiting list for transplantation at government hospitals ranges from six months to a year, which will only increase after the implementation of the twoday weekend. Further, the new decision is expected to impact the revenue of hospitals as expensive medical equipment will not come into use as often.266

Outlook While the COVID-19 cases remained low in this review period, the increasing number of cases in India and recent crowds at local elections might lead to a rise in COVID-19 cases, in Nepal as well. It might be easier for authorities to control the possible rise in COVID-19 cases as various labs within the country are conducting whole-genome sequencing. The unseasonal weather conditions being experienced in Nepal will increase the number of patients infected with various seasonal diseases.

Along with the rise in seasonal diseases, the implementation of a two-day weekend will increase the backlog of cases in government hospitals, putting further pressure on our understaffed health care system. Given the significant rise in the import of medicines, the support of the government in producing essential medicines within the country will not just make Nepal more self-sufficient in medicines but also reduce our ballooning trade deficit.

NEFPORT ISSUE 49 – JUNE 2022

Tourism

FACTSHEET Contribution of tourism to GDP

3%267

Nepal’s tourism sector, which was greatly affected by the COIVD-19 pandemic, has finally begun to recover. While an increase in international tourist arrivals has been seen, it still remains below pre-pandemic levels. Policy support by government along with widening vaccine access and coverage provided a window of opportunity and created optimism for the revival of the tourism industry. With Nepal’s second international airport coming into operation and the increasing confidence among international travelers, the tourism sector is moving to resume normal operations while increasing capacity and employment. Throughout the COVID-19 pandemic period, Nepal’s domestic tourism has been supporting the country’s tourism industry. Furthermore, Nepal has been ranked 9th in the Asia-Travel-Index, which highlights the possibility of attracting foreign tourist as entrepreneurs continue to demand on easing immigration procedure to facilitate entry of tourist in Nepal.

TOURIST ARRIVALS Nepal Throws Doors Open for Tourists Nepal threw its doors wide open to tourists, removing all prearrival testing requirements for fully vaccinated travelers in a bid to recharge its stagnant tourism industry. The policy was introduced as all COVID-19 controls in Kathmandu Valley were lifted following a sharp drop in the infection rate. Travelers who have not been vaccinated or have received only one jab need to produce a negative RTPCR test result, not older than 72 hours. Such provisions supersede all previous rules, including the quarantine requirement

imposed by government.

However, incoming visitors are still required to fill out a travelers form issued by the COVID-19 Crisis Management Coordination Centre (CCMCC) at the point of entry.274 The tourism sector is expected to return to normal operation in the medium term.

Tourist Influx on the Rise The arrival rate of foreign tourists to Nepal has increased by 159.9% in April 2022 as compared to the corresponding period of the previous year. A total of 58,348 international visitors came to Nepal in April of 2022, while the number was 22,450 in April 2021.275 In April 2020, only 14 foreign tourists visited the

Contribution to Employment

20%268 Tourist arrival (till January 2022 - April 2022)

137,095269 Nepal's Asia-Travel-Ready Index Rank

9th270 Credit to tourism sector

NPR 24.4 billion271 Security market turnover

NPR 6.1 billion272 % Of FDI in tourism sector

20.5%273

country due to the spread of the COVID-19 pandemic, while a total of 109,399 visited Nepal in April of 2019.276 Although the arrival of tourists has been increasing lately, highlighting the recovery of Nepal’s tourism sector, it is still below prepandemic levels. The less than anticipated rise in arrivals can be attributed to rising global tensions and the recent outbreak of new COVID-19 variants in China.

Nepal Scores Mediocre on the Asia Travel-Ready Index Nepal scored 3.23 points (0 – 10; lower score indicates favorable conditions for tourism recovery) in the Asia’s Travelready (ATR) index calculated by the Economist Intelligence

51

52

DOCKING NEPAL’S ECONOMIC ANALYSIS

Unit (EIU), the analysis division of The Economist Group. The index assesses prospects for a recovery in tourism across Asian economies. Nepal ranked 9th out of 28 countries on the index, depicting the success of the policy measures taken by the Government of Nepal to facilitate tourists to visit the country.277 The index captures three factors that might affect the sentiments of the international tourists: vaccination coverage in the destination, the ease of travelling to the destination, and the quarantine requirements. Nepal’s poor score in vaccination coverage was the main factor for its sub-optimal performance in the index. A broad based and inclusive vaccination program in remote regions would lift the confidence of tourist to visit Nepal.

POLICIES AND REGULATIONS Hotels Scrap Uniform Pay System as Tourism Perks Up In light of positive prospects of tourism sector, the hostels have decided to scrap the uniform payout system. During the COVID-19 induced lockdowns, all hotel staff, from the front office staffs to general managers, were paid the same amount of salary due to the halt in tourist arrivals.

The policy was adopted by the Hotel Association Nepal starting April 2020 and was operational until March 2022. As per the system, employees in five-star and four-star were paid NPR 9,000 (USD 74) and 8,000 (USD 66), respectively. The policy was introduced as a relief measure to avoid layoff of employees in the tourism sector. As financial health

of hotels have started improving, hotel employees will now be paid according to their pay grade.278 Hike in Airport Tax to Impact Tourism The Civil Aviation Authority of Nepal (CAAN) has implemented the new Airport Service Charge Regulation 2022, which was approved by the Cabinet on April 13, 2022. As per the new regulation, the service charge for domestic passengers has been doubled, and that for international passenger has been tripled. The new rates are expected to be implemented starting June 2022. According to the new regulation posted on CAAN’s website, international travelers will have to pay NPR 3,000 (USD 24.57) as airport tax, up from NPR 1,000 (USD 8.19) previously. Furthermore, the tax break for passengers flying within South Asia has been eliminated.

Previously, in the spirit of regional solidarity, passengers flying out of Kathmandu to destinations in South Asia were charged only NPR 700 (USD 5.73). The fee hike is expected to hit the tourism industry just as it has started recovering from the COVID-19 pandemic.279 The increase in taxes and fees will eventually translate into higher air fare, leading to increased expenses for tourists visiting Nepal. It is anticipated to cause deterioration in the competitive advantage of Nepal as a budget friendly destination.

Tourism Entrepreneurs Urge Government to Facilitate Tourist Arrivals Tourism entrepreneurs have drawn the attention of the

Department of Immigration to facilitate the arrival of foreign tourists.280 The department issued a notice on April 19, 2022,281 requiring foreign tourist to carry at least USD 200 (NPR 24,146) to pay for the on-arrival visa service,282 citing that the one and only ATM at the Tribhuvan International Airport’s (TIA) immigration counter was not functional. The entrepreneurs expressed concern over the notice, highlighting the inconvenience and hassle tourists had to face subsequently.

However, with increasing criticism, additional ATMs have been added. Similarly, alternate payment methods have also been adopted. As the tourism sector gradually recovers after a long halt, such notices may lead to the tarnishing of Nepal’s image, thereby hindering revival of the sector.

Tracking System for Tourists to be Introduced The Ministry of Home Affairs is planning to put in place a tracking system for foreign citizens travelling to Nepal in a bid to ensure their safety and prevent them from engaging in illegal activities. According to the Home Administration Reform Action Plan 2022, the system will be operational within a year with the support of the Ministry of Culture, Tourism, and Civil Aviation. The tracking system aims to help authorities monitor the activities of foreigners visiting Nepal and thus control immigration offences. The tracking system will be linked to all the hotels in the Kathmandu valley to keep tabs on the activities of foreigners.

The hotels concerned will be

NEFPORT ISSUE 49 – JUNE 2022

required to scan the passports of their guests and upload them into the system.283

NEW DEVELOPMENTS Nepal’s Second International Airport Comes into Operation Despite challenges posed by the coronavirus pandemic, the construction of Nepal's Gautam Buddha International Airport (GBIA) has been completed.

Located 19 kilometers from the UNESCO World Heritage Site of Lumbini, the birthplace of Gautam Buddha, the GBIA is Nepal's second international airport. The GBIA is expected to serve 760,000 passengers by 2030, including 280,000 visitors to Lumbini. The newly built terminal, spread over 15,169 square meters, is ready to welcome passengers with a 3,000 meters long runway. Advanced navigational aids and airport lighting for safety and navigation have been installed, along with other equipment.284 The airport is expected to help facilitate the Bay of Bengal Initiative for MultiSectoral Technical and Economic Cooperation’s (BIMSTEC’s) objective of connecting major Buddhist destination among member country and promote religious tourism. Furthermore, it is expected to support the development of the local economy as the tourism sector flourishes in the region.

The Nepal Association of Tour and Travel Agents gets a New President The Nepal Association of Tour and Travel Agents (NATTA), the oldest umbrella organization of

tourism entrepreneurs in Nepal, elected Ramesh Thapa as its new president. NATTA’s 55th annual general meeting and 23rd election held in April 2022 saw Thapa defeat Binay Basnet for the post. Thapa is the proprietor of Thapa Monson Travels and Tours.

Similarly, Pramod Dhakal, Barun Mehta and Kumarmani Thapaliya have been elected senior vicepresident, vice-President and General Secretary of NATTA respectively. Yubika Bhandari, Raj Kumar Devkota and Gita Dhakal (Reju) were elected secretary, Treasurer and Joint Treasurer of the new executive committee of NATTA respectively.

Nepal Tourism Board and Federation of Nepalese Chambers of Commerce and Industry to Jointly Work on Promotion of Tourism The Nepal Tourism Board (NTB) and the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) have signed a Memorandum of Understanding (MoU) with the objective of cooperating in the promotion of tourism in the country. Chairman of NTB, Dr. Dhananjay Regmi highlighted how joint cooperation of public and private sector is needed to improve infrastructure and quality of service in tourism.

Mr. Shekar Golchha, President of FNCCI, proposed a vision to make the Bhairawaha Airport the cheapest and most accessible airport in the region. Further, a marketing strategy to promote Nepal as a tourism destination via digital media on international platforms was discussed.285

PROGRAMS, EVENTS AND CAMPAIGNS

The Tourism Recovery Steering Committee plans “Tourism Summit” The Tourism Recovery Steering Committee has planned to host a “Tourism Summit” in September 2022. According to the committee, tourism ministers from major countries contributing to Nepal’s tourism sector will be invited to the mega event. The 19-member panel formed by the government is headed by the Minister for Culture, Tourism and Civil Aviation Prem Ale. The event aims to formulate and implement plans for reviving the domestic tourism industry that has been bearing the brunt of the COVID-19 pandemic.286 The event also aims to contribute to marketing and attracting tourist from major source countries as the industry is gradually reeling towards normal operations.

Travel Mart Concluded The first Far West Travel Mart, organized with the goal of promoting existing and potential tourism products and activities of the Sudurpaschim Province (Far-West) of Nepal has come to an end concluded on April 10, 2022 in Dhangadhi city. The three-day mart, which started on April 8, 2022, was organized in accordance with Nepal Tourism Board’s (NTB) program to conduct ‘Provincial Travel Marts’ in each province with the sole intention of reviving tourism and promoting modern forms of tourism related services. More than 60 tour operators from India participated in the event.

The event also aimed to promote travel and tourism activities between Nepal and India.287

53

54

DOCKING NEPAL’S ECONOMIC ANALYSIS

Outlook While the total number of tourist arrivals is still below pre-pandemic levels, the gradual increase in the influx of tourists show a positive trend. Nevertheless, risks that have potential to derail the tourism recovery in 2022, persist. New virulent variants of COVID-19 similar to those that forced China to reintroduce restrictions, higher oil prices that translate into higher airfares, and elevated global prices that squeeze the purchasing power of consumers might affect tourist inflows to Nepal.

However, as tourists gain more confidence to travel again and restrictions are further eased, Nepal’s tourism sector is expected to have positive prospects in medium term. Nepal could also benefit by exploring new areas in tourism and finding modern tourism services which focus on experiences unique to Nepal. Moreover, encouraging domestic tourism along with tourism from India can provide a strong recovery for the tourism industry.

4 NEFPORT ISSUE 49 – JUNE 2022

Market Review

55

56

DOCKING NEPAL’S ECONOMIC ANALYSIS

Financial Market During this review periods, the fuel prices increased, resulting in inflation. The increased restrictions on imports, as well as on the use of foreign exchange, might ease the ongoing liquidity crisis and ease the pressure on the depleting foreign exchange reserve. However, it has added to the inflation, especially in food prices.

The net profit of commercial banks has been showing an upward trend. On one hand, while the deposits of commercial banks are increasing, deposit mobilization has not reached the required rate. On the other hand, the loans and advances of the commercial banks increased in the review period, implying that the investments in the economy are further increasing.

Third Quarter Performance Analysis of Commercial Banks As per the unaudited annual results of commercial banks of FY 2021/22, as shown in Table 5, the operating profit of commercial banks decreased by 0.97%, while the net profit grew by 3.65%.

In the first nine months of the FY 2021/22, Global IME Bank bagged the highest net profit of NPR 3.73 billion (USD 30.55 million), followed by NIC Asia and Nabil Bank. Civil Bank registered the lowest net profit of NPR 904.12 million (USD 7.21 million). Century Commercial Bank and Civil Bank had a whopping increase of 183.59% and 79.91% in their net profits. When we look at reserves and surplus, Nepal Bank held the highest amount of reserves of NPR 17.55 billion (USD 143.76 million) followed by the Rastriya Banijya Bank and the Nabil Bank with NPR 16.42 billion (USD 134.50 million)

and NPR 14.53 billion (USD 119.02 million), respectively. 10 banks fared more than the reserves and surplus industry average of NPR 7.15 billion (USD 58.57 million).

The deposits from customers saw a 12.27% rise compared to the corresponding period last year with the highest deposits being made at NIC Asia Bank, Global IME Bank and Rastriya Banijya Bank with NPR 296 billion (USD 2.42 billion), NPR 269 billion (USD 2.20 billion), and NPR 245 billion (USD 2.01 billion), respectively. Nepal Bangladesh Bank recorded the lowest deposits from customers with NPR 82.02 billion (USD 671.85 million). However, Kumari Bank had the highest increase in deposits of 29.53%. Global IME Bank holds the highest loan and advances portfolio of NPR 260.21 billion (USD 2.13 billion) followed

by NIC Asia Bank and Nabil Bank at NPR 257.70 billion (USD 2.11 billion) and NPR 221.99 billion (USD 1.82 billion), respectively. Nepal

FACTSHEET288

CPI

7.28% Total Deposits at BFIs

5.1% Gross foreign exchange reserves

USD 9.61 billion Buying Exchange Rate (per USD)

NPR 121.52 Weighted Average 91-day Treasury

7.58% Bills Rate Bangladesh Bank had the lowest credit disbursement of NPR 76.21 billion (USD 624.26 million).

Additionally, during the review period average Non-Performing Loans (NPL) stood at 1.27% as compared to 1.38% in the same period previous year. Furthermore, average cost of funds was 6.89% against 4.93% in the corresponding period previous year. Similarly, the average base rate stood at 9.03% during the review period, the highest being 10.11% of Sunrise Bank followed by Mega Bank at 10.10%.

Key Indicators Some of the key macroeconomic indicators as per the macroeconomic and financial situation report based on the ninth month data of the FY 2021/22 published by the Nepal Rastra Bank (NRB) are highlighted below:

16,120,461.45

9,075,844.00

9,553,909.00

Mega Bank

Civil Bank

Century Commercial Bank

14,405,904.83

13,940,359.10

18,620,627.76

348,875,399.15

Nepal Bank

Rastriya Banijya Bank

Agriculture Dev. Bank

Total

Public Sector Banks

11,327,377.33

12,708,704.00

Sanima Bank

18,366,706.00

Prabhu Bank

Prime Commercial Bank

NMB Bank

18,656,322.80

Citizens Bank International

10,118,892.81

14,200,974.01

Global IME Bank

Sunrise Bank

12,524,426.84

23,795,753.00

Siddhartha Bank

14,711,183.33

11,551,345.00

Kumari Bank

10,257,155.58

Laxmi Bank

11,564,005.37

Machhapuchchhre Bank

11,139,678.01

NIC Asia Bank

NCC Bank

8,114,313.00

3rd QTR

189,069,069.05

135,269,447.00

165,403,677.58

141,080,821.59

296,176,168.11

125,662,917.27

104,200,988.90

161,796,435.00

82,021,517.15

114,582,157.42

165,313,225.05

100,482,905.00

180,021,344.00

192,936,361.00

10,212,392.68

16,420,373.45

17,552,091.72

4,292,826.13

1,790,891.00

1,554,346.00

3,685,156.28

5,333,201.00

5,378,119.00

4,805,135.88

6,491,889.46

4,835,433.33

145,360,913.41

263,836,765.85

151,600,836.81

122,797,614.28

86,985,798.00

85,254,082.00

133,352,290.83

163,781,055.00

155,359,218.00

101,198,462.95

140,520,318.88

127,148,765.05

4,313,931,554.41 3,842,390,415.35

160,367,592.59

245,195,957.31

187,373,810.61

146,827,801.22

90,520,047.00

90,704,099.00

147,599,023.35

167,003,672.00

184,938,607.00

128,118,299.12

156,027,918.10

144,861,246.99

244,300,312.00

172,311,891.37

106,617,916.00

127,696,585.85

125,498,311.68

275,318,035.56

101,819,110.20

96,575,930.97

155,655,693.00

73,291,056.92

101,178,877.33

132,240,977.41

78,388,652.00

165,967,126.00

208,333,818.00

3rd QTR

234,229,948.00

FY 20/21

Deposit

FY 21/22

9,847,448.00 269,082,859.00

8,028,715.75

4,180,320.00

4,673,420.53

3,209,829.44

9,749,355.51

3,813,795.63

5,690,335.62

9,467,340.00

10,623,994.07

Everest Bank

Bank of Kathmandu

5,514,841.84

5,510,591.38

9,825,853.11

Nepal SBI Bank

7,542,270.37

5,826,414.00

14,351,133.00

14,531,721.00

Reserve & Surplus (reserves)

10,085,399.74

12,968,725.73

Himalayan Bank

Nepal Bangladesh Bank

9,429,454.00

Standard Chartered bank

18,4t

Paid-up Capital (share capital)

18,307,541.00

Bank

Nepal Investment Bank

Nabil Bank

(in 000)

257,679,192.37 131,172,797.86

7.58 12.42

147,473,020.86

10.68

10.32

4,015,995,492.54

177,959,819.79

(7.07)

12.27

168,802,191.85 208,194,800.24

23.60

137,244,622.33

143,712,751.00

1.97

19.57

177,924,735.00

19.04

83,936,172.00

121,617,848.17

87,022,777.00

154,667,379.65

11.04 26.60

6.39

132,173,855.22

13.93

4.06

177,374,293.49 260,209,629.00

9.72 10.14

155,933,556.07

116,883,685.37

23.42

128,925,693.00

102,918,573.26

7.90

26.87

143,284,675.00

3.95

29.53

108,475,189.41

150,412,975.72

76,209,215.88

78,585,961.00

28.19 25.01

11.91

165,210,726.00

8.47

13.25

221,989,356.00

3rd QTR

FY 21/22

12.43

% Change

3,421,846,668.61

145,940,978.29

177,870,982.10

127,929,821.94

114,064,362.14

73,667,616.00

77,364,340.00

133,003,518.57

134,303,788.00

148,272,490.00

93,826,220.32

128,852,641.48

108,922,213.09

222,905,604.00

153,055,395.15

102,855,443.00

129,041,585.79

112,574,996.13

247,643,478.00

88,591,502.53

92,779,270.83

120,375,538.00

66,271,808.67

95,924,123.74

121,565,802.84

61,957,579.00

156,092,371.00

186,193,198.00

3rd QTR

FY 20/21

Loans and Advances

17.36

21.94

17.05

31.95

20.32

18.13

8.49

10.88

7.01

20.00

29.62

20.03

21.35

16.74

15.89

25.35

20.84

16.52

4.05

31.94

10.93

19.03

14.99

13.08

23.73

26.84

5.84

19.23

% Change

71,658,629.00

2,796,700.63

3,374,941.65

2,612,781.48

2,255,561.81

1,479,178.00

1,303,873.00

2,999,249.01

2,560,636.00

3,785,384.00

1,813,254.76

3,899,885.51

2,190,450.81

5,175,667.00

3,020,392.84

1,266,783.00

2,576,811.36

2,223,269.14

5,113,400.15

1,912,942.69

1,150,634.68

2,166,792.00

1,394,228.58

1,846,716.28

1,997,802.62

2,332,879.00

3,625,913.00

4,782,500.00

3rd QTR

FY 21/22

72,359,035.59

2,934,235.55

4,424,541.53

3,439,366.82

2,641,411.31

472,944.00

681,059.00

2,770,203.21

3,056,487.00

3,617,618.00

1,680,107.03

4,033,956.39

1,970,702.04

5,038,285.00

2,983,944.19

1,813,495.00

2,596,776.36

1,944,723.93

4,395,654.15

1,551,978.48

1,674,512.01

2,153,420.00

2,288,535.41

1,252,515.54

1,880,171.64

1,693,071.00

4,128,513.00

5,240,808.00

3rd QTR

FY 20/21

Operating Profit

(0.97)

(4.69)

(23.72)

(24.03)

(14.61)

212.76

91.45

8.27

(16.22)

4.64

7.92

(3.32)

11.15

2.73

1.22

(30.15)

(0.77)

14.32

16.33

23.26

(31.29)

0.62

(39.08)

47.44

6.26

37.79

(12.17)

(8.74)

% Change

2,516,487.00

1,130,042.31

2,817,676.39

1,545,340.62

3,578,270.00

2,065,238.52

1,288,084.00

1,808,483.53

1,290,612.97

3,004,815.64

1,101,180.38

1,169,342.66

1,507,445.00

1,638,409.60

878,646.03

1,287,157.47

1,183,620.00

2,847,132.00

3,679,870.00

3rd QTR

FY 20/21

51,017,821.33

1,905,393.79

2,616,719.60

2,192,931.82

1,592,623.66

1,015,683.00

904,123.00

2,014,534.19

49,221,287.33

2,073,061.17

1,748,860.00

2,262,277.31

1,856,169.19

358,150.00

502,554.00

1,972,755.54

1,752,924.00 2,109,606.00

2,665,291.00

1,277,397.82

2,722,020.20

1,589,651.01

3,726,212.00

2,088,561.91

858,967.00

1,802,771.57

1,551,772.62

3,604,598.21

1,487,722.87

870,781.48

1,516,324.00

1,111,137.18

1,300,022.46

1,391,578.94

1,628,773.00

2,477,261.00

3,352,044.00

3rd QTR

FY 21/22

3.65

(8.09)

49.62

(3.07)

(14.20)

183.59

79.91

2.12

(16.91)

5.91

13.04

(3.39)

2.87

4.13

1.13

(33.31)

(0.32)

20.24

19.96

35.10

(25.53)

0.59

(32.18)

47.96

8.11

37.61

(12.99)

(8.91)

FY 21/22 FY 20/21

1.27

2.32

3.07

2.06

0.38

1.60

0.99

0.72

1.21

1.46

1.37

0.94

1.72

1.45

1.12

1.08

0.96

0.87

0.51

1.52

1.45

0.26

2.30

0.14

0.99

0.36

2.20

1.14

1.38

3.08

3.62

2.29

0.21

2.96

1.13

1.31

1.48

1.97

1.94

0.86

1.83

1.61

0.88

0.71

1.09

0.51

0.47

2.05

1.01

0.12

1.91

0.23

0.81

0.50

2.32

0.48

6.89

6.31

5.11

5.69

7.26

7.49

7.21

5.89

6.77

6.11

7.79

7.89

7.82

6.99

7.31

7.29

7.24

7.56

7.24

7.48

7.18

6.82

6.90

5.82

7.77

5.62

6.64

6.84

4.93

4.96

3.39

3.42

4.71

5.72

6.61

5.55

4.96

5.37

4.98

5.50

5.71

4.64

5.09

4.56

5.09

5.10

5.03

5.41

4.80

4.55

5.47

5.34

4.60

3.45

4.31

4.68

1.96

1.35

1.72

2.27

2.55

1.77

0.60

0.34

1.81

0.74

2.81

2.39

2.11

2.35

2.22

2.73

2.15

2.46

2.21

2.07

2.38

2.27

1.43

0.48

3.17

2.17

2.33

2.16

% Change

Cost of Fund (LCY)

3rd QTR 3rd QTR 3rd QTR 3rd QTR

FY 20/21

NPL (%)

% FY 21/22 Change

Net Profit (profit for the period)

Table 5: Second quarter results of commercial banks - unaudited as of FY 2021-22 (in NPR Thousands)

9.03

8.28

7.31

8.19

9.00

7.49

9.94

10.10

9.29

8.96

10.11

9.68

9.81

8.95

9.53

9.64

9.85

9.63

9.39

9.28

8.96

8.36

9.10

9.26

9.50

7.55

8.38

8.22

3rd QTR

FY 21/22

Base Rate (%)

58

DOCKING NEPAL’S ECONOMIC ANALYSIS

Deposit and Credit Mobilization The deposits at Banks and Financial Institutions (BFIs) increased by 5.1%, as compared to an increase of 13.7% in the corresponding period of previous year. Of total deposits, the share of demand, saving and fixed deposits stood at 8.7%, 28.7% and 56.1%, respectively. As of mid-April 2022, the share of institutional deposits in total deposit of BFIs stood at 38.6%, whereas last year it was 41.7% in the same period.

Similarly, private sector credit from BFIs increased 13.5% compared to a growth of 22.5% in the previous year. Private sector credit from commercial banks, development banks and finance companies increased 13.1%, 14.8% and 27.3%.

Loans of BFIs to agriculture sector, industrial sector, transportation, communication and public sectors, wholesale and retail sector, and service sector all increased by 16.9%, 9.7%, 10%, 16%, and 7.8%, respectively.

NPR 28.35 billion (USD 232.22 million) was through reverse repo auction and NPR 31.65 billion (USD 259.26 million) through deposit collection. In the previous year, it was NPR 303.29 billion (USD 2.48 billion) liquidity, of which NPR 109.54 billion (USD 897.28 million) was through reverse repo, and NPR 193.75 billion (USD 1.59 billion) through deposit collection auction.

Additionally, NRB injected a liquidity of NPR 203.09 billion (USD 1.66 billion) through the net purchase of USD 1.68 billion from foreign exchange market. Liquidity of NPR 324.92 billion (USD 2.66 billion) was injected through the net purchase of USD 2.75 billion in the previous year.

Foreign Exchange Reserves and Adequacy

Liquidity Management

In the review period, gross foreign exchange reserve stood at NPR 1167.92 billion (USD 9.57 billion), decreasing by 16.5% in mid-April 2022 from NPR 1399.03 billion (USD 11.46 billion) in mid-July 2021. Of the total foreign exchange reserves, reserves held by NRB fell by 17.9% to NPR 1021.45 billion (USD 8.37 billion) in mid-April 2022 from NPR 1244.63 billion (USD 10.19 billion) in mid-July 2021. Reserves held by BFIs other than NRB decreased by 5.1% to NPR 146.48 billion (USD 1.20 billion) in mid-April 2022 from NPR 154.39 billion (USD 1.26 billion) in midJuly 2021. The Indian currency’s share in total reserves stood at 24.3% in mid-April 2022.

In the review year, the central bank i.e., Nepal Rastra Bank (NRB) mopped up NPR 60 billion (USD 491.48 million) liquidity of which

Based on imports of nine months of FY 2021/22, the foreign exchange holdings of the banking sector are sufficient to cover the imports of

In terms of credit exposure, the term loan extended by BFIs increased by 17.6%, overdraft loan increased by 22.2%, and demand and working capital loan increased by 17.3%. In addition, real estate loan, which include residential personal loans, increased by 11.9%, while the trust receipt (import) decreased by 49.9% and margin nature loans decreased by 11%.

prospective merchandise for 7.4 months, and merchandise and service imports for 6.6 months.

The ratio of reserves-to-GDP, reserve-to-imports and reserveto-M2 were estimated to be 24.1%, 55.2% and 21.9% respectively in mid-April 2022.

Federal Government Expenditure and Revenue In the review period, the total expenditure of the federal government was NPR 794.26 billion (USD 6.51 billion) while the revenue mobilization stood at NPR 789.26 billion (USD 6.47 billion).

Money Supply In the review period, broad money (M2) increased 3.5%, compared to a 14.2% growth in the same period last year. In addition, M2 grew by 10.4% on a year-on year basis in the first nine months of 2021/22.

Interest Rates The weighted average 91-day treasury bill rate remained at 7.58% in mid-April 2022, as against 2.76% in the corresponding month a year ago. Furthermore, in mid-April 2022, the weighted average inter-bank transaction rate among commercial banks stood at 6.99% as against 2.03% a year ago. The weighted average inter-bank rate of BFIs, which is considered as operating target of the monetary policy, stood at 7% in the review month.

In addition, the average base rate of commercial banks stood at 9.17% in the nine months of 2021/22 from 6.90% a year ago.

Weighted average deposit rate and lending rate of commercial

NEFPORT ISSUE 49 – JUNE 2022

banks stood at 7.11% and 10.78% respectively in mid-April 2021/22, as compared to 4.79% and 8.61%, respectively a year ago in the same review period.

Balance of Payments The current account registered a deficit of NPR 512.71 billion (USD 4.20 billion) in the review period, compared to the current account deficit of NPR 210.51 billion (USD 1.72 billion) last year in the corresponding period.

The overall Balance of Payments remained at a deficit of NPR 268.26 billion (USD 2.20 billion), as compared to a surplus of NPR 42.54 billion (USD 348.46 million) in the previous year.

KEY DEVELOPMENTS Nepal’s Credit Rating in the Upcoming Fiscal Year289 President, Bidya Devi Bhandari presented the Nepali government’s plan to achieve economic growth and stability through a combination of fiscal and monetary policies. She announced

that economic potential and economic recovery programs will be introduced through which agriculture, transportation, information technology, industry, and other sectors will be promoted. The inflation will be kept within the required limits and the government will prioritize issues of conservation, utilization, and distribution of natural resources. The government aims to increase domestic production through industrialization through environment-friendly programs and a green economy through renewable energy.

Nepal Bans Imports of Luxury Goods as Forex Reserves Dwindle290 The government has formally banned import of 10 goods, which it considers luxury or non-essential, in a bid to stop the country’s foreign exchange reserves from further depleting.

The ban has come into effect and will last until mid-July 2022. The import of all kinds of readymade liquor, readymade cigarettes and tobacco products, snacks,

diamonds, mobile sets worth more than USD 600, color televisions over 32 inches, jeeps, cars, and vans (except ambulances and hearses, vehicles that carry dead bodies), motorcycles above 250 cc, all kinds of toys, and playing cards have been banned. Nepal has spent NPR 59.15 billion (USD 484.52 million) on import of these items alone since July of the current Fiscal Year.

Local Election Impact Bank Deposit291 The local level election, which was held on May 13, led to a decrease in the deposit collection in commercial banks of the country in the 10th month of the current fiscal year. The data provided by Nepal Bankers’ Association, the total deposits of 27 commercial banks decreased by NPR 19 billion (USD 155.64 million) between April 14 and May 13 to NPR 4.370 trillion (USD 37.96 billion). At the end of the ninth month of the current fiscal year, the total deposit of commercial banks had reached NPR 4.389 trillion (USD 35.95 billion).

Outlook During the review period, the banking system continued to face the liquidity crisis. On one hand, the inflow of remittances is increasing, however, still low. On the other hand, the tourism sector is showing positive trends now, which can ease the pressure on foreign exchange reserve in the coming days. The Government of Nepal has also introduced many directives to decrease imports and to ease the dwindling foreign exchange reserve, such as tightening of opening of letter of credit (LC) for imports. This might ease the widening Balance of Payment (BOP) deficit. However, it might also give a rise to illegal transactions and black market for the restricted products. Moreover, the number of BFIs branches reached 11,398 in mid-April 2022 from 10,683 in mid-July 2021, which shows financial access is steadily increasing. The budget for the next fiscal year is estimated to be published on May 29, 2022. The private sector has made many recommendations such as increasing subsidy to agricultural products, increasing tariff on rice and lentils, among others. If implemented, the total imports of Nepal might decrease, which might further ease the increasing BOP deficit of the country.

59

60

DOCKING NEPAL’S ECONOMIC ANALYSIS

Capital Market

FACTSHEET

During the review period, the secondary market has been on a bearish trend. The central bank increased the interest rate, which attracted capital funds from the capital market to the Banks and Financial Institutions (BFIs) as they offer higher rate of return and are risk free. Moreover, the increase in fuel prices and the increase in inflation has further aggravated the decreasing stock market. However, the commercial bank subindex performed well because they posted higher earnings this quarter compared to the previous quarter.

Secondary Market: During the review period, the NEPSE index decreased by 14.67%, closing at 2173.44 points. The total market

capitalization at the end of the review period amounted to NPR 3094.37 billion (USD 25.35 billion), while the total floated 2-Mar-22

Table 6 Key indicators.

Source: Nepal Stock Exchange (NEPSE)

Figure19 NEPSE Movement Index

Source: Nepal Stock Exchange (NEPSE)

NEPSE Index (mid-April, in points)

2415.3 Stock market capitalization (mid-Jan)

NPR 3426.11 billion Number of companies listed at NEPSE (mid-Jan)

229

market capitalization reached NPR 1098.59 billion (USD 8.99 billion). The most significant decrease was seen by the Others 30-May-22

% Change

NEPSE Index

2,547.04

2,173.44

(14.67%)

Sub-Indices Commercial Bank Development Bank Hydropower Finance Non-Life Insurance Others Hotels & Tourism Microfinance Mutual Fund Life Insurance Manufacturing & Processing

1,651.62 4,308.47 3,104.25 2,119.62 11,356.43 2,238.35 2,911.25 4,887.48 15.34 13,371.10 6,100.97

1,516.36 3,715.61 2,485.33 1,570.85 9,233.51 1,599.50 2,792.04 4,478.16 15.01 10,472.88 5,250.29

(8.19%) (13.76%) (19.94%) (25.89%) (18.69%) (28.54%) (4.09%) (8.37%) (2.15%) (21.68%) (13.94%)

NEFPORT ISSUE 49 – JUNE 2022

sub-index (28.54%), followed by the Finance sub-index (25.89%) and Life Insurance sub-index (21.68%).

Primary Market: During the review period, Initial Public Offerings (IPO) of multiple companies were approved292. IPO of Upakar Laghubitta Bittiya Sanstha Ltd, CYC Nepal Laghubitta Bittiya Sanstha Ltd, River Falls Power Ltd, Bindhyabasini Hydropower Development Co. Ltd, Dordi Khola Jalbidhyut Company Ltd, Himalayan Hydropower Limited, Upper Solu Hydro Electric Company, and Upper Hewakhola Hydropower Co. Ltd were approved by Securities Board of Nepal (SEBON).

proposal made by the board, the time of short-term investment should be made 180 days and only 6.5% capital gains tax should be levied on the income from such investment, compared to the current one-year period and 7% capital gain tax.

Himalayan General and Everest Insurance to Merge294

KEY DEVELOPMENTS

Himalayan General Insurance Company and Everest Insurance Company Limited have decided to merge. They signed a memorandum of understanding (MoU) to merge. As of now, Himalayan has a paid-up capital of NPR 1.17 billion (USD 9.58 million) and Everest has a paidup capital of NPR 1.25 billion (USD 10.24 million).

Some of the key developments that transpired in the financial market are as follows:

Five Companies Get the Approval from Insurance Board for Merger295

Sebon Proposes a Reduction in Capital Gains Tax293

The Insurance Board (IB) has given its in-principle approval to five insurance companies that have recently signed a merger Memorandum of Understanding (MoU). The IB has approved merger MoUs of five companies, including the mergers between

Securities Board of Nepal (Sebon) has proposed to reduce the capital gains tax on stock trading while presenting its suggestion for the next fiscal year. As per the

three life insurance companies and between two non-life insurance companies. Three life insurance companies – Prime Life Insurance, Gurans Life Insurance and Union Life Insurance Company have recently signed a merger MoU. Similarly, two non-life insurance companies – Himalayan General and Everest Insurance have also signed a merger MoU. Quota for Nepali Migrant Workers in IPOs to Come Into Effect in the Next Month (late-June)296 Securities Board of Nepal (Sebon) has said that arrangements will be made to allocate a quota for Nepalis workers living abroad in initial public offering (IPO) issuance within two months.

SEBON asks Nepse to Run the Stock Market on Friday Instead of Sunday297 The Securities Board of Nepal (SEBON) has asked Nepal Stock Exchange (NEPSE) to run the secondary market from Monday to Friday every week, given the two-day weekend announced by the government.

Outlook During the review period, the banking system continued to face the liquidity crisis as the Balance of Payment (BOP) deficit widened, and the inflow of remittances are still low. However, since the Government of Nepal is working on providing quota for foreign migrant workers in the upcoming IPOs, the inflow of remittance is expected to increase. The rising interest rate along with further tightening of credit, particularly margin lending, are not attracting funds to the secondary market. Until there is stronger evidence of market stability, the market is likely to maintain its current momentum with minor corrections. However, the proposal by Sebon to decrease capital gains tax, if implemented, might attract more funds to the secondary market and encourage long-term investment in the securities market. The result of the local elections might have an impact on the capital market in the coming days.

61

62

DOCKING NEPAL’S ECONOMIC ANALYSIS

5

Special Section

Local Economic Development

NEFPORT ISSUE 49 – JUNE 2022

Local Economic Development Local Economic Development (LED) is a type of economic development that allows and encourages residents to work together to achieve long-term economic growth and development, resulting in improved economic benefits and a higher quality of life at the local level.

Local development aims to maximize a given area's potential to improve its economic future and citizens' quality of life. Development at the local level is critical to national economic success, and it has become increasingly more important as global competition, population mobility, technological improvements, and the associated regional inequities and imbalances have developed. Effective local development may reduce disparities between rich and poor communities, increase the stock of locally produced jobs and enterprises, enhance information exchanges with investors and developers, and increase the consistency and confidence with which local economic initiatives are executed. This might lead to a more accurate assessment of local economic assets and differentiating advantages, as well as a more thorough strategy review.

Nepal's official local government system does not have a lengthy history. The Decentralization Act of 1982, which created the responsibility and power of local Panchayats (governing units) for the implementation of development activities at the local level, was introduced on November 21, 1982. Local units were also given responsibility for building development plans and projects. The Decentralization Act was replaced by the Local Self-Governance Act (LSGA) (1999) and the Local Self-Governance Regulation (2000). The LSGA (1999) laid forth a precise framework for decentralization by establishing distinct acts for each local government, such as the Village Development Committee Act (1991), Municipality Act (1991), and District Development Committee Act (1991). Since these local units enable devolution of authority, participatory planning procedures, community and private sector engagement, accountability, and public service delivery, these acts established a strong foundation for democracy at the grassroot level. However, with the introduction of Nepal's new constitution in 2015, the LSGA (1999) was abolished by the Local Government Operation Act of 2017. The Nepali Constitution (2015) recognizes the importance of local governments in granting unique rights.

Nepal as a country has diverse geographic demands, religious views, and ethnicities.

Considering these factors, different policies and strategies need to be implemented tailored to serve a variety of local economic development requirements.

LED promotes asset management efficiency and aids the private sector in mobilizing local resources, while decreasing public pressure to do nothing. Plans under local economic development interventions define sectoral policies for development programs and provide communities with more influence over their economic development. LED aids the local government in recognizing and weighing the economic strengths, weaknesses, opportunities, and dangers that face the community.

63

64

DOCKING NEPAL’S ECONOMIC ANALYSIS

Benefits of Effective Local Economic Development

Working with governmental authorities and agencies, private sector enterprises, non-profit organizations, and individuals is the best approach to achieving LED; each partner has a significant role to play. LED requires a significant amount of focus and effort, as well as significant resources and specialized skills. In addition, economic development at the local level would require widespread community support, government backing, and collaborations to be successful.

NEFPORT ISSUE 49 – JUNE 2022

Economic infrastructure for local economic development Pradyumna Prasad Upadhyay

Chief Administrative Officer, Janakpurdham Sub-Metro City, Government of Nepal

Poverty flourishes in areas where people lack skills, resources, and capacity. Societies that comprise of people who lack these characteristics become a poor society. Poor people remain in the state of poverty until there is an external effort to push them out. Efforts like improving education, access to health, creating employment, and increasing income are some of those external efforts that can help poor people graduate from poverty.

The local community feel comfortable while living under certain regular ways of life and generally resists change. To stir the community onto the path of development, investment in economic infrastructure must be locally focused. It is important to invest in good schools and build infrastructures for health institutions through publicprivate partnership.

Private sector investment needs to be encouraged by identifying local areas of comparative advantage to expand employment and maximize profits, while making more use of local skills and competencies.

It's observed that people become impoverished when they do not absorb the open resources provided to them

by nature. For instance, the existing rivers and canal systems cannot provide benefit to the communities residing along it unless they utilize it. Benefits of housing various mines in one’s country cannot be utilized or excavated unless concerted efforts are made.

Water originating in mountains cannot be consumed until purified and sold. The trees in the forests would decay if they wouldn’t be cut well in time. If herbs are not collected to be processed for medicines, they would go to waste. If infrastructures are not built to view our beautiful nature and mountains, we cannot earn from such places. In absence of roads and connected routes, transporting essential goods would be difficult and lead to poor market access.

In Nepal’s case, productive infrastructures at the local level are to be looked through the eyes of using these natural resources.

Therefore, while attracting investments, the infrastructures which utilize these resources by directly enhancing the livelihood of the local community should be considered priority.

Central planning ensures large employment and benefits many people, and the central budget generally looks for big projects with a wide range. Such

projects could be a hydropower project generating thousands of megawatts of electricity or the construction of a massive railway network; central planning does not focus on multiple small areas.

There are several areas where local development can occur where even the investors get an appropriate return on their investments.

Concrete and coherent policies can turn small farmlands into a large agricultural farm that utilizes modern technology with landpooling of agricultural lands done by the farmers’ group. State can provide policy support for environment friendly excavation and assist in the sale of local mineral resources. Additionally, policy incentives to set up industries can help purify and sell free flowing water resources.

In fact, these policy interventions coupled with infrastructural improvement would facilitate the stay, eating, and wandering of tourists in the region that would generate income for the local community.

Human civilization is now clustered in cities and towns.

Services and opportunities like education, health, employment, shopping, entertainment, electricity, and communication services are easily available in

65

66

DOCKING NEPAL’S ECONOMIC ANALYSIS

the cities. Urban infrastructure has earned a special place in development and the cities have also attracted more investment.

The construction of apartments has made possible the use of land efficiently as many people can reside in one building. For these reasons, investors are easily attracted to the increased activities in the markets and business centers.

Developed countries are on a path of rapid progress. New discoveries and innovations are being introduced. Various scientific discoveries have developed human civilization at an unprecedented speed.

Startups are growing day by day. Many sectors are emerging which have high potential for new discoveries. It is difficult to predict how the world will be in the next ten years. Even now, with the new discoveries of the

past decades have made various tasks easy and efficient through mobile phones, and more so in urban areas. Booking a taxi, ordering food, transferring money, shopping online, understanding routes, transacting shares, government enquiries and more are now easily accessible by our fingertips within seconds. There are infinite possibilities where companies can sell their services, no matter where they’re located.

Infrastructures that provide such services at the local level have high growth potential.

The current economic world is bound by facilities such as online network, service providers, sale of franchise and e-commerce.

People are using their comparative advantage to become rich.

Nepal’s comparative advantage is its natural resource abundance and young population. Nepali people are becoming more and

more capable to use the new inventions from the western world these days. Many of them have started earning by working for online jobs. Investing in a sector that is conducive to the mechanism of selling services online that would keep Nepal’s youth within the country will have good returns. Youths are Nepal’s demographic bonus now.

Policies which attract investments at local level from both public and private sectors to build economic infrastructures by utilizing the abundant natural resources would be an ideal route to take. These infrastructural developments and advancements, if strengthened, would prevent a large number of youths from going abroad which would ultimately remove impediments for Nepal to reach prosperity.

NEFPORT ISSUE 49 – JUNE 2022

Economic Clustering for Local Economic Development Samridhi Pant

Coordinator at Nepal Economic Forum

Economic clustering entails the phenomenon whereby firms of the same industry or interconnected businesses are concentrated in a certain geographic sphere. Some clusters also extend downstream to consumer channels as well as upstream to actors producing complementary products and services including institutions providing technical support such as universities, vocational training providers, and trade associations among others.

Commonly referred to as cluster development, economic clustering promotes the idea of maximizing the pool of available resources and creating a shared economic value. Some of the renowned global clusters are Silicon Valley, California Wine Cluster, and Hollywood, among others.

national and regional policies and significant investments, which in turn has boosted their innovation performance.

Research also shows that firms located in clusters are more likely be innovative, pay higher wages, and achieve greater productivity than firms that are geographically isolated, with few local linkages. This also leads to increased efficiency and quality via co-learning and close communication and networking.

When a cluster is formed, it also increases the investment in and usage of public or quasipublic goods. As a result, the attractiveness of the cluster for new firms is increased as it lowers the cumulative transaction cost, increases opportunities for sales, and accelerates cluster growth.

Cluster Development in Economic Growth Strategy

Cluster development is also a tool to create micro-regional centrums near lagging rural settlements. This foster balanced territorial development which is a key strategy for local economic development.

Moreover, economic clustering ensures sustainable management of shared resources creating shared economic value.

Sector-wise, whatever sector is chosen as the strength of the cluster, competitiveness can be increased by devising

The aggregation of interconnected businesses as a result of cluster development helps firms to boost their performance as it enhances competitiveness and innovations through sectoral specialization and cooperation.

Major economies such as China, Denmark, France, Germany, Japan, and South Korea have promoted clusters using

appropriate economic growth policies targeted toward the sector and the cluster.

Cluster Development in Nepal’s Context Nepal’s business environment until 2015 was governed by a centralized structure characterized by rapidly changing economic policies based on frequently changing governments, isolated efforts of economic development in different regions, difficulties in internal geography, and resultant weak state of infrastructure.

Currently, there are few clusters in Nepal relating to tourism, textile, apparel, business services, and agriculture, however poor marketing has disabled the creation of higher value demand.

Similarly, uncompetitive and scarce local suppliers aided by import dependency on technological aspects have led these clusters to function ineffectively.

Enabling Economic Clustering in the Local Economy of Nepal Post federalization, the Constitution has provided for the local levels to formulate local strategies and plans to develop their respective economies.

Some of them, being established

67

68

DOCKING NEPAL’S ECONOMIC ANALYSIS

market centers and equipped with good infrastructure took rapid leaps toward economic growth policies, while the newly formed local levels with a poor capacity for governance and infrastructure were unable to quickly adapt to the pace of economic growth. Although it is a positive sign that some activities are happening at each local level instead of null activities under a centralized structure, the uncoordinated efforts between each other have led to isolated efforts of development that are not necessarily productive and have led to duplication.

With the promotion of economic clustering with the help of partnerships between local levels and a sector-based growth approach, the effectiveness of local economic development strategies can be amplified.

Going by sectors, agriculture, which is the primary source of livelihood for the majority of the rural population, can be expanded across geographies by forming clusters thus increasing the volume of production and supply of the products. Even for high-value crops like cardamom, tea, and coffee, since the share of the total cultivated area is still small, the desired process of agricultural diversification is struggling to be noticed at

the aggregate level. If the local levels governing these areas collaborate to form clusters for the collective growth of the sector, the economic capacity of the region based on the sector would be strengthened. Once there is an increased volume of production, the local levels can work collectively to facilitate other aspects of the chain such as promoting investments in the processing of the products, establishing market connections and linkages to promote the sales of the product, and creating economic infrastructure that would help further strengthen the sector. Such pooled efforts will in turn have a symbiotic effect on the economic growth of the local levels and increase employment in the area.

As for the tourism sector, challenges such as poor marketing and positioning, inability to capture high-value demand, lack of incentives to support infrastructure and services, and poor innovation and adoption of poor practices have hampered the tourism cluster in Nepal. The local governments can coordinate to provide complementing services to key tourism destinations and work on marketing plans that can increase the length of stay of the tourists and generate ample

revenues. Similarly, investing in connecting infrastructure, consolidating subscale players to improve competitiveness, and providing low-cost financing incentives can be some of the policy tools to attract more firms to the cluster and strengthen the cluster.

While these interventions could have been taken in a centralized structure, the structure of federalization allows local levels to design the cluster based on their local capacity and needs rather than aligning with generalized national needs.

For this, coordination and collaboration must happen between multiple tiers of stakeholders. While the local bodies can themselves form joint partnerships to execute such strategies, having the provincial government in the loop can further strengthen the collaboration. Similarly, the collaboration between the public and private sectors would also be essential to form and strengthen the cluster since it is the private sector that would be operating in these clusters. Overall, economic clustering would be a win-win strategy for all the actors involved and would be beneficial for local economic development as well as national growth.

NEFPORT ISSUE 49 – JUNE 2022

Productivity - the Focus of Local Economic Development Saroj Nepal

National Programme Coordinator at United Nations Capital Development Fund (UNCDF)

The newly elected team at the municipalities of Nepal have two main tasks – provide effective public services to the people they serve and create jobs so that the young population stay back to drive the economy. Generating jobs at the local level requires the local governments to prepare a well-thought-out plan reflecting the vision of the new, young, and aspiring leaders.

After restructuring to federal governance structures, Nepal’s 753 local governments (293 urban and 460 rural municipalities) are not only powerful governance units but also resourceful. These bodies have substantial resources with reasonable fiscal transfers from the federal government and the constitutional rights to collect revenue in certain areas.

However, the power and the resources are not used optimally.

Nepal’s economy is largely dependent on agriculture and remittances.

Underutilized natural resources and high trade deficit is typical characteristics of the Nepali economy now.

We are aiming to graduate from the LDC status by 2026, which means that there won’t be preferential treatment of our export products in the western markets. Therefore, improving productivity of the sectors that

form the basis of our economy – agriculture, tourism, service industry, manufacturing, through policies and programmes of all three tiers of government is what we need desperately.

The productivity of economic activities lies on how effectively the factors of production (land, labour, and capital) are used. Productivity is a function determined by technical efficiency of the system and processes to convert inputs to output. A vast amount of research show that increased productivity leads to economic growth through business environment reform and value chain or market systems interventions. It helps in increasing labour productivity within economic sectors which is the main driver of economic growth. In our context, the business environment is unstable and risky, and there are a lot of gaps in the value chains of the sectors mentioned above – from local level production to selling it in local, national, and global markets. Therefore, to improve productivity, we need to make conducive policies and plans to nurture businesses by identifying gaps in the value chains and provide support to fill those. It is only through these interventions that the country will be able to create a business environment

that helps develop entrepreneurs and profitable businesses.

The municipalities should prepare their local economic development (LED) plan, which is to build the economic capacity of their area to improve their economic future and quality of life.

What Municipalities can do to Improve Productivity?

The municipalities, with the power and resources they have can actively work towards creating a business environment through supporting the value chains locally. They can form a large foundation of economic actors or establishments that can have a huge nation-wide impact, contributing to overall economic growth. This would require reorienting their focus towards local economic development (LED) by offering opportunities to gain efficiency in the system and process of the economic activities within their boundary.

It can be done broadly through three ways – Creating Infrastructure that Promote Value Chains and Enterprises: In the past five years, the municipalities have spent most of their development budget on infrastructure, which includes necessary roads as n

69

70

DOCKING NEPAL’S ECONOMIC ANALYSIS

well as unnecessary view towers.

There are only few examples of municipalities investing in warehouse or local irrigation schemes or marketplaces for agri-commodities.

Though local planning process is needbased, or demand driven, the articulation of demand is lacking or the intelligence to realize vision for development is not sufficient. Therefore, we are left with such infrastructures that do not contribute to improving productivity of economic sectors. A thorough analysis of potential economic activities as part of LED planning process can point out necessary infrastructure, both public and private. The municipalities can have financing plan which can be PPPs or blended finance approach based on the nature of the infrastructure.

Providing Business Support Services: In the past, very few municipalities had programs to facilitate in providing business support services such as market information, value chain analysis, business plan development, incubation to start ups etc.

None had thought of technology transfer or aggregating similar n

enterprises to create economies of scale within their area or organizing trainings and information exchange events.

Municipalities do not have full information of the economic establishments in their area, since from nearly a million economic establishments in the country, almost 50% are not registered anywhere. These large numbers of unregistered and informal enterprises face numerous problems including support services for business growth. The business registration modalities can be strengthened by involving municipalities and making it digitally enabled so that it can be linked with other support services.

De-risking Private Investments and Promoting Access to Finance to Enterprises: The credit infrastructure to support MSME growth, including credit guarantee mechanisms and insurance schemes are not well developed in Nepal. The venture capital financing is insufficient and there are stringent collateral requirements which limits growth of enterprises. The municipalities can help in providing guarantees on MSME loan in partnerships n

with banks and financial institutions for MSMEs that qualify.

Municipalities can also run challenge funds to attract and de-risk private sector investments in certain areas. These will require strong guidelines and bylaws to reduce fiduciary risks.

Improving productivity of private sector enterprises is based on research and development and innovation. It also requires attaining economies of scale and increasing investments in economic sectors. In Nepal’s context, municipalities can play a key role in nurturing businesses locally. However, it will require a paradigm shift in the way urban and rural municipalities function and deliver development outcomes locally. Local economic development can be promoted through a tailored approach in each municipality with a strategic plan. The plan should focus on improving productivity which relies on hardware support such as infrastructure, and software support through business support services and capital investments by attracting private sector through incentives.

NEFPORT ISSUE 49 – JUNE 2022

Endnotes 1.

https://www.heritage.org/index/country/nepal

2.

https://fragilestatesindex.org/global-data/

18.

3.

https://www.transparency.org/en/cpi/2021?gclid=CjwKCAiAyPyQBhB6EiwAFUuaktmt1-5UVpRco1WyHfONrow6vDmCSr5-_n1cTbNhSkXf6lVy0h2_mhoCdPEQAvD_BwE

“260 thousand security persons mobilized for local election”, Khabarhub, May 12, 2022. https://english.khabarhub. com/2022/12/251559/

19.

4.

“Dhiraj Pratap Singh appointed as Chief of Nepal Police”, Nepal News, May 1, 2022. https://www.nepalnews.com/s/capital/dhirajpratap-singh-appointed-as-chief-of-nepal-police

“Local polls witness 64 percent turnout”, The Himalayan Times, May 14, 2022. https://thehimalayantimes.com/nepal/local-pollswitness-64-per-cent-turnout

20.

“Voting taking place at nine polling centres”, The Himalayan Times, May 17, 2022. https://thehimalayantimes.com/nepal/voting-taking-place-at-nine-polling-centres

21.

“Balendra Shah is the new mayor of Kathmandu Metropolitan City”, The Kathmandu Post, May 26, 2022. https://kathmandupost. com/kathmandu/2022/05/26/balendra-shah-is-the-new-mayorof-kathmandu-metropolitan-city

22.

“Election Result Tracker”, ekantipur, May 29, 2022. https://election. ekantipur.com/party-map?lng=eng

23.

“Local elections: 385 independent candidates secure victory”, My Republica, May 28,2022. https://myrepublica.nagariknetwork.com/news/local-elections-385-independent-candidates-secure-victory/

24.

“More than half of the Palika chiefs were defeated”, Setopati, May 28, 2022. https://www.setopati.com/election/localelection/272465

25.

“War sets back global recovery”, World Economic Outlook April 2022, International Monetary Fund, 2022. https://www.imf.org/ en/Publications/WEO/Issues/2022/04/19/world-economic-outlook-april-2022

26.

“Crisis in Ukraine could slash global trade growth by half in 2022: WTO”, Business Standards, April 12, 2022. https://www.business-standard.com/article/international/crisis-in-ukraine-couldslash-global-trade-growth-by-half-in-2022-wto-122041200115_1. html

27.

Dean, Grace. “Sanction to Russia will cause ‘Significant’ long ter damage to it’s economy, the G7 says ”, Business Insider, April 21, 2022. https://www.businessinsider.com/russian-sanction-ukraine-putin-invasion-long-term-economic-impact-g7-2022-4

28.

“Commodity Market Outlook, April – October”, World Bank Report, 2022. https://openknowledge.worldbank.org/bitstream/handle/10986/37223/CMO-April-2022.pdf

29.

“From Coal To Ports, Sanctions On Russia And Their Impact”, NDTV India, April 09, 2022. https://www.ndtv.com/world-news/ sanctions-on-russia-russia-ukraine-war-from-coal-to-portssanctions-on-russia-and-their-impact-2873414

30.

“Globally, inflation is surging amid persistent pandemic disruptions and war in Ukraine”, The New York Times, May 10, 2022. https://www.nytimes.com/2022/04/12/business/global-inflation. html

31.

“New US Sanctions Hit Russia Banks, TV Stations”, VOA, May 08, 2022. https://www.voanews.com/a/new-us-sanctions-hit-russiabanks-tv-stations/6562972.html

32.

“European Union takes major step toward Russian oil ban, new sanctions”, Business Standards, May 05, 2022. https:// www.business-standard.com/article/international/europeanunion-takes-major-step-toward-russian-oil-ban-new-sanctions-122050500018_1.html

33.

Baptista, Eduardo and Tham, Enge. “'Stop asking why': Shanghai tightens COVID-19 lockdown, Beijing keeps testing”, Aol, May 09,

5.

6.

“AIG Bishwo Raj Pokharel files petition against government’s decision to appoint Singh as police chief”, The Kathmandu Post, May 2, 2022. https://kathmandupost.com/national/2022/05/02/aig-bishwo-raj-pokharel-files-petition-against-government-s-decisionto-appoint-singh-as-police-chief “Supreme Court refuses to issue stay order against IGP appointment”, Nepal Live Today, May 5, 2022. https://www.nepallivetoday. com/2022/05/05/supreme-court-refuses-to-issue-stay-orderagainst-igp-appointment/

7.

“Modi arrives in Lumbini”, The Kathmandu Post, May 16, 2022. https://kathmandupost.com/national/2022/05/16/modi-arrives-in-lumbini

8.

“Modi in Lumbini: Nepal India sign 6 agreements”, Online Khabar, May 16, 2022. https://english.onlinekhabar.com/lumbini-nepal-india-agreements.html

9.

“Naveen Srivastava appointed as the new Indian ambassador to Nepal”, The Himalayan Times, May 17, 2022. https://thehimalayantimes.com/kathmandu/naveen-srivastava-appointed-as-the-new-indian-ambassador-to-nepal

10.

“India appoints Naveen Srivastava as its new envoy to Nepal”, The Kathmandu Post, May 17, 2022. https://kathmandupost. com/national/2022/05/17/india-appoints-naveen-srivastava-as-its-new-ambassador-to-kathmandu-1652792646

11.

“Nepal progress in Freedom of Press Index”, The Himalayan Times, May 3, 2022. https://thehimalayantimes.com/nepal/nepal-progresses-in-freedom-of-press-index

12.

“Government policies and programmes presented in Federal Parliament”, The Himalayan Times”, May 24, 2022. https://thehimalayantimes.com/kathmandu/government-policies-and-programmes-presented-in-federal-parliament

13.

14.

15.

“Government to promote industrial production and electricity use”, The Kathmandu Post, May 25, 2022. https://kathmandupost. com/national/2022/05/25/government-to-promote-industrial-production-and-electricity-use “Government to bring social media under the purview of law and tax”, The Annapurna Express, May 24, 2022. https://theannapurnaexpress.com/news/government-to-bring-social-media-underthe-purview-of-law-and-tax-6091 “House is prorogued; questions arise over motion to impeach chief justice”, The Kathmandu Post, March 16, 2022. https://kathmandupost.com/national/2022/03/16/house-is-prorogued-questions-arise-over-motion-to-impeach-chief-justice

16.

“UML lifts House obstructions after eight months”, The Kathmandu Post. May 17, 2022. https://kathmandupost.com/national/2022/05/17/uml-lifts-house-obstructions-after-eight-months

17.

“Supreme Court upholds Rautahat court’s decision in Alam’s case”, Khabarhub, May 6, 2022. https://english.khabarhub. com/2022/06/250603/#:~:text=KATHMANDU%3A%20The%20 Supreme%20Court%20has,by%20keeping%20him%20in%20

custody.

71

72

DOCKING NEPAL’S ECONOMIC ANALYSIS

2022. https://www.aol.com/news/beijing-COVID-19-outbreakproves-stubborn-030351111-013839051.html 34.

49.

“Off-cycle move hints at more aggressive rate increases”, The Hindu, May 05, 2022. https://www.thehindu.com/business/Economy/off-cycle-move-hints-at-more-aggressive-rate-increases/ article65382283.ece

50.

Ghosh, Saptaparno. “Explained | Why countries like the Central African Republic are adopting cryptocurrencies as legal tender”, May 14, 2022. https://www.thehindu.com/news/international/ explained-why-countries-like-the-central-african-republic-are-adopting-cryptocurrencies-as-legal-tender/article65403858.ece

51.

“War sets back global recovery”, World Economic Outlook April 2022, International Monetary Fund, 2022. https://www.imf.org/ en/Publications/WEO/Issues/2022/04/19/world-economic-outlook-april-2022

52.

“Crisis in Ukraine could slash global trade growth by half in 2022: WTO”, Business Standards, April 12, 2022. https://www.business-standard.com/article/international/crisis-in-ukraine-couldslash-global-trade-growth-by-half-in-2022-wto-122041200115_1. html

53.

“Remittance Price Worldwide”, World Bank, 2015. https://remittanceprices.worldbank.org/en

54.

“Explained: What led to Sri Lanka’s economic crisis, and who’s helping?”, The Indian Express, May 19, 2022. https://indianexpress.com/article/explained/sri-lanka-economic-crisis-explained-7849208/

“Remittances to Reach $630 billion in 2022 with Record Flows into Ukraine”, World Bank, May 11, 2022. https://www.worldbank.org/en/ news/press-release/2022/05/11/remittances-to-reach-630-billion-in-2022-with-record-flows-into-ukraine

55.

Jayasinghe, Udita. “Exclusive-Sri Lanka To Seek $3 Billion To Stave Off Crisis -finance Minister”, International Business Times, April 09, 2022. https://www.ibtimes.com/exclusive-sri-lanka-seek-3billion-stave-crisis-finance-minister-3468104

Gunjan, Rounak. “India-Australia Trade Agreement: What The Two Countries Have Offered”, BQ Prime, April 28, 2022. https://www. bqprime.com/business/india-australia-trade-agreement-whatthe-two-countries-have-offered

56.

Francis, Krishna and Mallawarachi, Bharatha. “Sri Lanka to receive World Bank help to face economic crisis”, ABC News, April 22, 2022. https://abcnews.go.com/International/wireStory/sri-lankareceive-world-bank-face-economic-crisis-84245006

“India seeks to boost exports as UAE trade pact comes into force”, Onmanorama, May 02, 2022. https://www.onmanorama.com/ news/business/2022/05/02/india-seeks-to-boost-exports-asuae-trade-pact-comes-into-force.html

57.

“EU says looking at concluding free trade agreement with India by 2024”, Business Insider, April 29, 2022. https://www. business-standard.com/article/economy-policy/eu-indialooking-at-concluding-free-trade-agreement-by-2024-official-122042901380_1.html

58.

“New UK India Industry Taskforce launched to facilitate free trade deal”, The Economics Times, May 09, 2022. https://economictimes.indiatimes.com/news/economy/foreign-trade/new-uk-india-industry-taskforce-launched-to-facilitate-free-trade-deal/ articleshow/91437510.cms

59.

Issac, John. “India races to clinch free trade deals with GCC, EU, UK to meet $1t export goal”, Khaleej Times, April 17, 2022. https://www. msn.com/en-ae/money/news/india-races-to-clinch-free-tradedeals-with-gcc-eu-uk-to-meet-241t-export-goal/ar-AAWiHxQ

60.

‘Current Macroeconomic and Financial Situation (based on nine months’ data ending mid-April 2021/22)’, Nepal Rastra Bank, May 11, 2022, https://www.nrb.org.np/contents/uploads/2022/05/ Current-Macroeconomic-and-Financial-Situation-English-Based-on-Nine-Months-data-of-2021.22.pdf

61.

‘Current Macroeconomic and Financial Situation (based on nine months’ data ending mid-April 2021/22)’, Nepal Rastra Bank, May 11, 2022, https://www.nrb.org.np/contents/uploads/2022/05/ Current-Macroeconomic-and-Financial-Situation-English-Based-on-Nine-Months-data-of-2021.22.pdf

62.

Sangam Prasain & Krishana Prasain. ‘Rising inflation, slower growth stoke stagflation concerns’, The Kathmandu Post, April 14, 2022, https://kathmandupost.com/money/2022/04/14/ rising-inflation-slower-growth-stoke-stagflation-concerns#:~:text=Nepal's%20retail%20inflation%20galloped%20to,time%20 too%2C%20according%20to%20economists.

“China's GDP grew 4.8% in Q1 amid COVID-19-19 surge, missed 5.5% target”, Business Standards, April 18, 2022. https://www. business-standard.com/article/international/china-s-gdpgrew-4-8-in-q1-amid-COVID-19-19-surge-missed-5-5-target-122041800734_1.html

35.

“China's COVID-19 curbs disrupt global supply chains, add to inflation risks”, Business Standards, May 08, 2022. https://www. business-standard.com/article/international/china-s-COVID19-curbs-disrupt-global-supply-chains-add-to-inflationrisks-122050800068_1.html

36.

Jayasinghe, Udita and Pal, Alasdair. “Sri Lanka to default on debt, no money for fuel, minister says”, Reuters, May 18, 2022. https://www.reuters.com/world/asia-pacific/sri-lanka-defaultdebt-no-money-fuel-minister-says-2022-05-18/?utm_campaign=trueAnthem%3A%20Trending%20Content&utm_medium=trueAnthem&utm_source=facebook

37.

“Sri Lanka Total Gross External Debt”, Trading Economics, 2022. https://tradingeconomics.com/sri-lanka/external-debt

38.

Srinivasan, Meera. “Sri Lanka’s usable reserves now negligible, says Finance Minister”, The Hindu, May 04, 2022. https://www.thehindu. com/news/international/sri-lankas-usable-reserves-now-negligible-says-finance-minister/article65381941.ece

39.

40.

41.

42.

Srinivasan, Meera. “As Sri Lanka’s crisis deepens, India extends more assistance”, The Hindu, May03, 2022. https://www.thehindu. com/news/international/as-sri-lankas-crisis-deepens-india-extends-more-assistance/article65378999.ece

43.

“Pakistan PM Imran Khan gone after loosing no0confidence motion vote”, ALJazeera, April 09, 2022. https://www.aljazeera.com/ news/2022/4/9/pakistan-prime-minister-imran-khan-no-confidence-vote

44.

“Pakistan’s economy is on the brink”, News Trends, May 04, 2022. https://www.universalpersonality.com/pakistans-economy-is-onthe-brink/

45.

“Structural weakness of Pakistani economy driving away investors: Report”, Business Standards, May 03, 2022. https://www. business-standard.com/article/international/structural-weakness-of-pakistani-economy-driving-away-investors-report-122050300388_1.html

46.

47.

48.

fb277

“Pakistan govt's gross debt to be 71.3% of GDP in 2022: IMF projection”, Business Standards, April 02, 2022. https://www. business-standard.com/article/international/pakistan-govts-gross-debt-to-be-71-3-of-gdp-in-2022-imf-projection-122042200088_1.html “Fed lifts rates by half point, starts balance sheet reduction June 1”, Reuters, May 05, 2022. https://www.reuters.com/business/ finance/feds-racing-raise-rates-how-high-remains-an-openbid-2022-04-28/ “Stocks end rocky week with their 5th straight weekly decline”, Ap News, May 6, 2022. https://apnews.com/article/business-sydney-tokyo-hong-kong-asia-0b228b045439cfaea33837cb01e-

NEFPORT ISSUE 49 – JUNE 2022

63.

64.

65.

66.

67.

‘Maximum amount candidates can spend during election campaign’, Nepal news, May 1, 2022, https://www.nepalnews.com/s/ nation/what-is-the-maximum-amount-candidates-can-spendon-election-campaign

80.

‘South Asia Economic Focus Reshaping Norms: A New Way Forward’, The World Bank, April 13, 2022, https://openknowledge. worldbank.org/bitstream/handle/10986/37121/9781464818578. pdf?sequence=13&isAllowed=y

‘World Bank pulling out of transmission line projects shows challenges for MCC’, The Kathmandu Post, March 6, 2022, https://tkpo. st/35V8eoA

81.

Ibid

82.

‘Consumer Price Index (CPI) Definition and Formula’, Investopedia, accessed on August 19, 2021. Retrieved from- https://www. investopedia.com/terms/c/consumerpriceindex.asp#:~:text=The%20Consumer%20Price%20Index%20(CPI,of%20goods%20 and%20averaging%20them.

‘Electricity Transmission Project’, Millennium Challenge Account Nepal Development Board, Government of Nepal, accessed on May 10, 2022, https://mcanp.org/en/projects/project-areas/

83.

‘Japan provides grant assistance of Rs 2.7 bn to improve water supply in Biratnagar’, Republica Nepal, March 10, 2022, https:// myrepublica.nagariknetwork.com/news/japan-provides-grant-assistance-to-improve-water-supply-in-biratnagar/

84.

Ibid

85.

Republica, “WB providing USD 150 million to Nepal to strengthen financial sector stability,” Republica Nepal, May 4, 2022, https://myrepublica.nagariknetwork.com/news/wb-providing-usd-150-million-to-nepal-to-strengthen-financial-sector-stability/

86.

Ibid

87.

‘US provides Rs 79.71 billion grant to support Nepal’s graduation to middle-income country’, Nepal Live Today, May 5, 2022, https:// www.nepallivetoday.com/2022/05/05/us-provides-rs-79-71-billion-grant-to-support-nepals-graduation-to-middle-incomecountry/

88.

“Asian Development Bank approves $150m loan to upgrade two international airports in Nepal,” The Kathmandu Post, November 20, 2020, https://kathmandupost.com/money/2020/11/20/ asian-development-bank-approves-150m-loan-to-upgrade-two-international-airports-in-nepal#:~:text=The%20 Asian%20Development%20Bank%20has,civil%20aviation%20 sector%20so%20far.

89.

Ibid

90.

‘Climbing Higher: Toward a middle-income Nepal’, The World Bank, June 20, 2017, https://documents.worldbank.org/en/publication/documents-reports/documentdetail/358501495199225866/ climbing-higher-toward-a-middle-income-nepal

91.

‘Loans on commercial terms could greatly increase Nepal’s debt burden’, The Kathmandu Post, march 29, 2022, https://tkpo. st/36CrS9R

92.

Ibid

93.

‘Current Macroeconomic and Financial Situation (based on nine months’ data ending mid-April 2021/22)’, Nepal Rastra Bank, May 11, 2022, https://www.nrb.org.np/contents/uploads/2022/05/ Current-Macroeconomic-and-Financial-Situation-English-Based-on-Nine-Months-data-of-2021.22.pdf

94.

Ibid

95.

Ibid

96.

Ibid

97.

‘Nepal proposes Malaysia to increase minimum remuneration of Nepali migrant worker’, Khabarhub, April 30, 2022, https://english. khabarhub.com/2022/30/249631/

98.

‘Current Macroeconomic and Financial Situation (based on nine months’ data ending mid-April 2021/22)’, Nepal Rastra Bank, May 11, 2022, https://www.nrb.org.np/contents/uploads/2022/05/ Current-Macroeconomic-and-Financial-Situation-English-Based-on-Nine-Months-data-of-2021.22.pdf

99.

‘NRB Sets New Limit for Domestic Remittance, Rs.25,000 Per Day’, Techmandu, March 5, 2022, https://techmandu.com/nrb-new-limit-for-domestic-remittance/

Banton, Caroline. ‘Basket of Goods’, Investopedia, accessed on November 26, 2021. Retrieved from- https://www.investopedia. com/terms/b/basket_of_goods.asp#:~:text=What%20Is%20 a%20Basket%20of,basis%2C%20often%20monthly%20or%20 annually.&text=A%20basket%20of%20goods%20is,consumer%20 price%20index%20(CPI).

‘Current Macroeconomic and Financial Situation (based on nine months’ data ending mid-April 2021/22)’, Nepal Rastra Bank, May 11, 2022, https://www.nrb.org.np/contents/uploads/2022/05/ Current-Macroeconomic-and-Financial-Situation-English-Based-on-Nine-Months-data-of-2021.22.pdf

68.

‘Government hikes public transport and cargo fares, again’, The Kathmandu Post, May 17, 2022, https://kathmandupost.com/ national/2022/05/17/government-hikes-public-transport-andcargo-fares-again

69.

Department of Transport Management, Nepal, May 17, 2022, https://bit.ly/381zR0K

70.

Prasain, Krishana & Shrestha,Prithvi Man‘Inflation making life difficult for the poor and vulnerable’, The Kathmandu Post, May 16, 2022, https://kathmandupost.com/money/2022/05/16/inflation-making-life-difficult-for-the-poor-and-vulnerable

71.

‘ADB Forecasts Modest Economic Growth for Nepal in FY 2022’, Asian Development Bank, April 6, 2022, https://bit.ly/3PsOH1r

72.

‘Current Macroeconomic and Financial Situation (based on nine months’ data ending mid-April 2021/22)’, Nepal Rastra Bank, May 11, 2022, https://www.nrb.org.np/contents/uploads/2022/05/ Current-Macroeconomic-and-Financial-Situation-English-Based-on-Nine-Months-data-of-2021.22.pdf

73.

youth-employment-project-reallocated-to-help-unemployedpoor

Krishana Prasain. ‘Investment pledges up 28 percent to Rs 33 billion as of third quarter’, The Kathmandu Post, April 20, 2022, https://kathmandupost.com/money/2022/04/20/investmentpledges-up-28-percent-to-rs33-billion-as-of-third-quarter

74.

‘NRB puts ban on import of private vehicles’ Khabarhub, April 5, 2022, https://english.khabarhub.com/2022/05/245530/

75.

‘Korea provides equipment to manage hospital waste’, Republica Nepal, March 15, 2022, https://myrepublica.nagariknetwork.com/ news/korea-provides-equipment-to-manage-hospital-waste/

76.

‘SDC and UNCDF partner to empower 4,000 micro, small and medium enterprises in Nepal’, Nepal Live Today, May 10, 2022, https:// www.nepallivetoday.com/2022/05/10/sdc-and-uncdf-partnerto-empower-4000-micro-small-and-medium-enterprises-innepal/

77.

Ibid

78.

‘New World Bank Employment Project to Benefit 100,000 Youth’, The World Bank, September 12, 2019, https://www.worldbank.org/ en/news/press-release/2019/09/13/new-world-bank-employment-project-to-benefit-100000-youth

79.

‘$23 Million from World Bank-financed Youth Employment Project Reallocated to Help Unemployed Poor’, The World Bank, May 24, 2022, https://www.worldbank.org/en/news/press-release/2022/05/05/-23-million-from-world-bank-financed-

100. Ibid

73

74

DOCKING NEPAL’S ECONOMIC ANALYSIS

101.

102.

103.

‘Monetary Policy 2078/79: Mid Term Review’, Nepal Rastra Bank, February 17, 2022, https://www.nrb.org.np/ofg/monetary-policy2078-79-mid-term-review/

126.

ibid

127.

ibid

‘NRB Sets New Limit for Domestic Remittance, Rs.25,000 Per Day’, Techmandu, March 5, 2022, https://techmandu.com/nrb-new-limit-for-domestic-remittance/

128.

ibid

129.

ibid

130.

ibid

131.

ibid

132.

“Current Macroeconomic and Financial Situation Table based on nine months data of 2021-22”, NRB, May11, 2022, https://www.nrb. org.np/red/current-macroeconomic-and-financial-situation-tables-based-on-nine-months-data-of-2021-22/

133.

ibid

134.

ibid

135.

ibid

136.

ibid

137.

ibid

138.

ibid

139.

1 hectare= 3.954 bighas

140.

Sah, Laxmi, “Banana farmers in Nijgadh devastated after storm destroys their crops”, The Kathmandu Post, May 12, 2022 https:// kathmandupost.com/money/2022/05/12/banana-farmers-in-nijgadh-ruined-after-storm-destroys-their-crops

Sapkota, Radha. ‘Why did NRB reduce the daily per-person domestic remittance limit?’, Tech Sathi, March 3, 2022, https://techsathi.com/nrb-reduces-domestic-remittance-limit

104. Ibid 105.

106.

107.

‘Interaction on Banking and Remittance Services, Export-Trade and Investment held in New Delhi’, Khabarhub, May 10, 2022, https://english.khabarhub.com/2022/10/251218/ ‘Skills development of returnee migrant workers affected by pandemic’, Khabar hub, March 24, 2022, https://english.khabarhub. com/2022/24/243380/ ‘Current Macroeconomic and Financial Situation (based on nine months’ data ending mid-April 2021/22)’, Nepal Rastra Bank, May 11, 2022, https://www.nrb.org.np/contents/uploads/2022/05/ Current-Macroeconomic-and-Financial-Situation-English-Based-on-Nine-Months-data-of-2021.22.pdf

108.

Ibid

109.

Ibid

110.

Ibid

111.

‘Nepal Development Update’, The World Bank, April 13, 2022, https://documents1.worldbank.org/curated/en/099835004122242158/pdf/P1774360498cd407a09a4d0e5860fd8fc84.pdf

141.

142.

“Farmers opt for potato cultivation in group”, Khabarhub, March 18, 2022, https://english.khabarhub.com/2022/18/242156/

112.

‘Nepal Gazette’, Department of Printing, Ministry of Information and Communication Technology, April 26, 2022, http://rajpatra. dop.gov.np/welcome/book/?ref=24936

143.

113.

‘Nepal bans imports of luxury goods amid dwindling forex reserves’, The Kathmandu Post, April 27, 2022, https://kathmandupost.com/money/2022/04/27/nepal-bans-imports-of-luxurygoods-amid-dwindling-forex-reserves

“Nepal signs G2G agreement with India on chemical fertilizer import after efforts of 1.5 years”, Onlinekhabar, March 1, 2022, https:// english.onlinekhabar.com/nepal-india-g2g-chemical-fertiliser. html

144.

“232 metric tonnes of chemical fertilizer imported from China”, Onlinekhabar, March 24, 2022, https://english.onlinekhabar.com/ chemical-fertiliser-from-china.html

114.

‘Current Macroeconomic and Financial Situation (based on nine months’ data ending mid-April 2021/22)’, Nepal Rastra Bank, May 11, 2022, https://www.nrb.org.np/contents/uploads/2022/05/ Current-Macroeconomic-and-Financial-Situation-English-Based-on-Nine-Months-data-of-2021.22.pdf

145.

ibid

146.

“Government Announces Support Price of Wheat after Farmers Sell their Produce”, New Business Age, May 3, 2022, https://www. newbusinessage.com/Articles/view/15209

147.

ibid

148.

Devkota, LP,” Apple farmers in Jumla go commercial as sales jump”, The Kathmandu Post, March 12, 2022 https://kathmandupost.com/money/2022/03/12/apple-farmers-in-jumla-go-commercial-as-sales-jump

149.

Gautam, Krishna, “Karnali emerges in new avatar as exporter of cereals “, The Kathmandu Post, April 2, 2022, https://kathmandupost.com/money/2022/04/02/karnali-emerges-in-new-avatar-as-exporter-of-cereals

150.

ibid

151.

ibid

152.

ibid

153.

“Country imports fruits worth over Rs 11 billion while arable land remains uncultivated”, Khabarhub, April 25, 2022, https://english. khabarhub.com/2022/25/248881/

154.

ibid

155.

“Nepal Imported fruits worth over Rs 11 billion in the first nine months of current FY”, my Republica, April 25, 2022, https://myrepublica.nagariknetwork.com/news/nepal-imported-fruits-worthover-rs-11-billion-in-the-first-nine-months-of-current-fy/

115.

Ibid

116.

Ibid

117.

‘Nepal Development Update’, The World Bank, April 13, 2022, https://documents1.worldbank.org/curated/en/099835004122242158/pdf/P1774360498cd407a09a4d0e5860fd8fc84.pdf

118.

Ibid

119.

‘Gold price up Rs 500 per tola’, Khabar hub, May 19, 2022, https:// english.khabarhub.com/2022/19/253116/

120.

‘Current Macroeconomic and Financial Situation (based on nine months’ data ending mid-April 2021/22)’, Nepal Rastra Bank, May 11, 2022, https://www.nrb.org.np/contents/uploads/2022/05/ Current-Macroeconomic-and-Financial-Situation-English-Based-on-Nine-Months-data-of-2021.22.pdf

121.

Ibid

122.

“Economic Survey 2078-2079”, Ministry Finance, 2079

123.

ibid

124.

ibid

125.

ibid

1 hectare= 19.65 ropani

NEFPORT ISSUE 49 – JUNE 2022

156.

“Current Macroeconomic and Financial Situation of Nepal”, NRB, May, 2022, https://www.nrb.org.np/contents/uploads/2022/05/ Current-Macroeconomic-and-Financial-Situation-English-Based-on-Nine-Months-data-of-2021.22.pdf

New Business Age, May 9, 2022. https://www.newbusinessage. com/Articles/view/15240 178.

“Foreign Companies Reluctant to Reinsure Hydropower Projects”, New Business Age, March 7, 2022. https://www.newbusinessage. com/Articles/view/14886

157.

ibid

158.

Prasain, Sangam and Prasain, Krishana, “Rising inflation, slower growth stoke stagflation concerns”, The Kathmandu Post, April 15, 2022, https://kathmandupost.com/money/2022/04/14/rising-inflation-slower-growth-stoke-stagflation-concerns

179.

“NMB Bank, HIDCL sign term sheet to finance Upper Modi ‘A’ hyro project “, Nepal Live Today, April 14, 2022. https://www.nepallivetoday.com/2022/04/14/nmb-bank-hidcl-sign-term-sheet-to-finance-upper-modi-a-hyro-project/

159.

“South Asia Economic Focus Reshaping Norms: A New Way Forward”, World Bank, April 14, 2022 https://openknowledge.worldbank.org/handle/10986/37121

180.

160.

NRB Current macroeconomic and financial situation six month data 2021/22

“710 MW of electricity added to national grid in 2078 BS”, My Republica, April 13, 2022. https://myrepublica.nagariknetwork.com/ news/710-mw-of-electricity-added-to-national-grid-in-2078bs/

181.

https://myrepublica.nagariknetwork.com/news/nepal-wasted-electricity-worth-rs-5-billion-last-monsoon-owing-to-low-domestic-consumption/#:~:text=01%3A17%20 AM-,Nepal%20wasted%20electricity%20worth%20Rs%205%20 billion%20last,owing%20to%20low%20domestic%20consumption&text=KATHMANDU%2C%20May%208%3A%20Nepal%20 faced,in%20the%20next%20few%20weeks.

182.

“SJVN signs MoU for development of 490 MW Arun-4 project in Nepal”, Business Standard, May 16, 2022. https://www.business-standard.com/article/news-cm/sjvn-signs-mou-for-development-of-490-mw-arun-4-project-in-nepal-122051600977_1. html

183.

“NEA inks deal with SJVN India to build 679 MW Arun-4 Hydropower Project”, My Republica, May 16, 2022. https://myrepublica. nagariknetwork.com/news/nea-inks-deal-with-sjvn-india-tobuild-679-mw-arun-4-hydropower-project/

184.

2nd fuel price hike in 8 days: Petrol Rs 180, diesel Rs 163, cooking gas Rs 1800”, Online Khabar, May 23, 2022. https://english.onlinekhabar.com/2nd-fuel-price-hike-in-8-days.html

161.

Nepal Electricity Authority-Annual Report 2020/21

162.

Department of Electricity Development (January 2022)

163.

ibid

164.

ibid

165.

Nepal Electricity Authority-Annual Report 2020/21

166.

Department of Electricity Development (January 2022)

167.

“KMC makes it mandatory for locals to segregate biodegradable, non-biodegradable while disposing waste”, My Republica, April 14, 2022. https://myrepublica.nagariknetwork.com/news/ kmc-makes-it-mandatory-for-locals-to-segregate-biodegradable-and-non-biodegradable-while-disposing-household-waste/

168.

‘Waste segregation a must for every household in KMC’, The Himalayan Times, August 28, 2019. https://thehimalayantimes.com/ kathmandu/waste-segregation-a-must-for-every-householdin-kmc

169.

“Garbage piled yet again in Kathmandu Valley”, Nepal Live Today, May 10, 2022. https://www.nepallivetoday.com/2022/05/10/garbage-piled-yet-again-in-kathmandu-valley/

185.

“Fuel price hike: A litre of petrol, diesel or kerosene costs Rs 10 more”, Online Khabar, May 14, 2022. https://english.onlinekhabar. com/fuel-price-hike-petrol-diesel-nepal.html

170.

“Capital’s waste transported with security escorts”, The Rising Nepal, May 8, 2022. https://risingnepaldaily.com/news/10888

186.

Price History, May 15, 2022, Nepal Oil Corporation Limited. http:// noc.org.np/lpg

171.

“Hetauda-Dalkebar-Inaruwa Transmission line: Breach of loan agreement by World Bank”, ekantipur, March 4, 2022. hetonda-dalkeber-inruva broadcasting line : debt agreement breach by world bank - earth / commerce - kantipur news (ekantipur.com)

187.

“The Construction Of The Plant Which Will Produce 1000 Kg Of Biogas Daily Is In The Final Stage “, Urja Khabar, March 13, 2022. https://www.urjakhabar.com/news/130316665

188.

172.

World Bank pulling out of transmission line projects shows challenges for MCC”, The Kathmandu Post. March 6, 2022. https:// kathmandupost.com/national/2022/03/06/world-bank-pullingout-of-transmission-line-projects-shows-challenges-for-mcc

“NEA lowers purchase price of solar electricity”, The Kathmandu Post, March 15, 2022. https://kathmandupost.com/national/2022/03/15/nea-lowers-purchase-price-of-solar-electricity

189.

“Agreement on construction of Ratmate-Kerung transmission line”, Nepal News, March 27, 2022. https://nepalnews.com/s/ nation/agreement-on-construction-of-ratmate-kerung-transmission-line

190.

“Nepal, India agree to expand power cooperation under BBIN framework”, The Kathmandu Post, April 2, 2022. https://kathmandupost.com/national/2022/04/02/nepal-india-agree-to-expand-power-cooperation-under-bbin-framework

191.

“Kathmandu Valley’s energy demand projected to reach 3,100 MW by 2050”, My Republica, May 1, 2022. https://myrepublica. nagariknetwork.com/news/kathmandu-valley-s-energy-demand-projected-to-reach-3-100-mw-by-2050/#:~:text=Kathmandu%20Valley's%20energy%20demand%20projected%20 to%20reach%203%2C100%20MW%20by%202050,-Published%20On%3A%20May&text=KATHMANDU%2C%20May%20 1%3A%20Nepal%20Electricity,in%20the%20next%20three%20 decades.

192.

Economic Survey 2078/2079, Ministry of Finance, https://www. google.com/search?q=ministry+of+finance&oq=minstry+&aqs=chrome.1.69i57j0i10i131i433j0i10i433j46i10i131i175i199i433j0i10l2j46i10i175i199j0i10i131i433j0i10i433j0i10.2975j0j7&sourceid=-

173.

174.

“NEA invited bids to sell 200 MW electricity to India during monsoon”, My Republica, May 6, 2022. https://myrepublica.nagariknetwork.com/news/nea-invites-bids-to-sell-200-mw-electricityto-india-during-monsoon/ “Nepal to sell surplus electricity in India’s energy exchange market”, The Economic Times, November 3, 2021. https://economictimes.indiatimes.com/industry/energy/power/nepal-to-sell-surplus-electricity-in-indias-energy-exchange-market/articleshow/87507876.cms?from=mdr

175.

“Nepal gets approval to export 325 MW more power to India”, The Kathmandu Post, April 7, 2022. https://kathmandupost.com/money/2022/04/07/nepal-gets-approval-to-export-325mw-morepower-to-india

176.

“New transmission line planned along Postal Highway”, The Kathmandu Post, May 2, 2022. https://kathmandupost.com/national/2022/05/02/new-transmission-line-planned-along-postal-highway#:~:text=In%20the%20first%20phase%2C%20the,transmission%20directorate%20at%20the%20NEA.

177.

“Government Preparing Directive to Rent Out Transmission Lines”,

75

76

DOCKING NEPAL’S ECONOMIC ANALYSIS

chrome&ie=UTF-8 193.

Ibid

194.

ibid

195.

ibid

196.

ibid

197.

ibid

198.

“Global Competitiveness Report 2019”, World Economic Forum, 2019, https://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf

199.

Prasain, Sangam, “Nepal’s Lockdown 2.0, new covid curb on travel”, The Kathmandu Post, April 28, 2021. https://kathmandupost. com/money/2021/04/28/explained-nepal-s-lockdown-2-0-newcovid-curbs-on-travel

nectivity”, The Kathmandu Post, 23 March 2022, Accessed 19th May 2022, https://tkpo.st/3wKB9rd 218.

Suman Siwakoti, “5 ambiguities in the recent amendment to the National Broadcasting Rules”, The Kathmandu Post, 16 April 2022, Accessed 19th May 2022, https://english.onlinekhabar.com/ amendment-national-broadcasting-rules.html

219.

Krishana Prasain, “Nepal slips in global ranking in mobile broadband speed”, The Kathmandu Post, 6 May 2022, Accessed 19th May 2022, https://tkpo.st/3shcE1B

220. “Nepal avoids internet shut down after MoCIT talk”, Nepali Telecom, 4 May 2022, Accessed 19th May 2022, https://www. nepalitelecom.com/2022/04/nepal-could-face-internet-shutdown-next-week.html 221.

Current Macroeconomic and Financial Situation (based on 9 months data), Nepal Rastra Bank

200. “95% work of Madan Bhandari Highway completed”, my Republica, April 28, 2022, https://myrepublica.nagariknetwork.com/ news/95-percent-work-of-madan-bhandari-highway-completed/

222. “Nepal imposes ban on import of expensive phones”, Nepali Telecom, 29 April 2022, Accessed 19th May 2022, https://www. nepalitelecom.com/2022/04/nepal-imposes-ban-on-import-ofexpensive-phones.html

201.

223. “Nearly 5,000 login details were stolen from at least 37 government websites in Nepal”, Himal Sanchar, 16 March 2022, Accessed 19th May 2022, https://himalsanchar.com/nearly-5000-logindetails-were-stolen-from-at-least-37-government-websites-innepal/

” Nepal’s journey to electric public transport”, Nepali Times, April 15, 2022, https://www.nepalitimes.com/here-now/nepals-journeyto-electric-public-transport/

202. Prasain, Krishnana,” Chobhar dry port opens for business”, The Kathmandu Post, April 5, 2022, https://kathmandupost.com/money/2022/04/05/chobhar-dry-port-opens-for-business 203. Prasain, Krishnana, “Chobar dry port to open for business by March-end “, The Kathmandu Post, March 20, 2022, https:// kathmandupost.com/money/2022/03/20/chobhar-dry-port-toopen-for-business-by-march-end 204. Shrestha, Sarita, “Road upgrade underway along 24-km Dharke-Sitapaila section”, The Kathmandu Post, April 23, 2022, https:// kathmandupost.com/province-no-3/2022/04/23/road-upgrade-underway-along-24-km-dharke-sitapaila-section 205. “Melamchi water to be distributed from April 24”, Khabarhub, April 20, 2022, https://english.khabarhub.com/2022/20/247993/

224. “Poor digital literacy hinders growth in Nepal”, The Kathmandu Post, 2 May 2022, Accessed 19th May 2022, https://tkpo.st/3vXBxR5 225. “Public Announcement of Income-Expenditure Details of Fiscal Year 2023/23”, Ministry of Finance, 2021. https://mof.gov.np/uploads/document/file/ 226. “Public Announcement of Income-Expenditure Details of Fiscal Year 2023/23”, Ministry of Finance, 2021. https://mof.gov.np/uploads/document/file/ 227.

“Public Announcement of Income-Expenditure Details of Fiscal Year 2023/23”, Ministry of Finance, 2021. https://mof.gov.np/uploads/document/file/

206. “Melamchi Project resumes water supply to Kathmandu Valley from today”, my Republica, April 24, 2022, https://myrepublica. nagariknetwork.com/news/melamchi-project-resumes-water-supply-to-kathmandu-valley-from-today/

228. “Public Announcement of Income-Expenditure Details of Fiscal Year 2023/23”, Ministry of Finance, 2021. https://mof.gov.np/uploads/document/file/

207. “Gautam Buddha International Airport comes into operation”, Khabarhub, April 21, 2022, https://english.khabarhub. com/2022/21/248140/

229. Logan, Marty. “Growing appetite for school lunches”, Nepali Times, April 2, 2022. https://www.nepalitimes.com/here-now/growing-appetite-for-school-lunches/

208. “Gautama Buddha International Airport begins operation with domestic flights”, The Himalayan Times, April 22, 2022, https:// thehimalayantimes.com/nepal/gautam-buddha-international-airport-begins-operation-with-domestic-flights

230. Ibid

209. NTA MIS Report Magh 2078 (mid-January to mid-February 2022) 210.

NTA MIS Report Magh 2078 (mid-January to mid-February 2022)

211.

NTA MIS Report Magh 2078 (mid-January to mid-February 2022)

212.

NTA MIS Report Magh 2078 (mid-January to mid-February 2022)

213.

https://www.nepalitelecom.com/nepal-fixed-broadband-mobilebroadband-rank-speedtest-global-index

214.

Current Macroeconomic and Financial Situation (based on 9 months data), Nepal Rastra Bank

215.

Current Macroeconomic and Financial Situation (based on 9 months data), Nepal Rastra Bank

216.

Krishana Prasain, “Electronic Know Your Customer to replace paperwork by November”, The Kathmandu Post, 9 April 2022, Accessed 19th May 2022, https://tkpo.st/3Jjlt0A

217.

Krishana Prasain, “Everest base camp to have high-speed con-

231.

“Transforming Education System Through Model School”, Asian Development Bank, 2022. https://www.adb.org/news/videos/ transforming-education-system-through-model-schools

232. Ibid 233. Ghimire, Aakriti. “Education incentive: Scholarship for daughterin-law”, The Kathmandu Post, April 20, 2022. https://kathmandupost.com/national/2022/04/20/education-incentive-scholarships-for-daughters-in-law 234. Ibid 235. “Free induction cookers to be distributed to students of the Kathmandu from remote areas”, The Ray Times, March 3, 2022. https:// theraytimes.com/free-induction-cookers-to-be-distributed-tostudents-of-kathmandu-from-remote-areas/ 236. ‘Petrol Diesel Price in Nepal – 2022’, KTM2DAY, May 22, 2022, https://www.ktm2day.com/petrol-diesel-lpg-gas-aviation-fuelprice-in-nepal/ 237.

“Free induction cookers to be distributed to students of the Kathmandu from remote areas”, The Ray Times, March 3, 2022. https://

NEFPORT ISSUE 49 – JUNE 2022

theraytimes.com/free-induction-cookers-to-be-distributed-tostudents-of-kathmandu-from-remote-areas/ 238. “New school reform plan set for rollout despite two previous flops”, The Kathmandu Post, January 20, 2022. https://kathmandupost.com/national/2022/01/20/new-school-reform-plan-set-forrollout-despite-two-previous-flops 239. “Nepal: Education Sector Analysis 2021”, Ministry of Education, Science and Technology (MoEST), 2021. https://www.moe.gov.np/ assets/uploads/files/Nepal_2021_Education_Sector_Analysis.pdf 240. “Technical education will be expanded at all 753 local levels: Minister Poudel”, Khabarhub, April 5, 2022. https://english.khabarhub. com/2022/05/245522/ 241.

“Schools to remain closed on Sunday from May 16”, my República, May 11, 2022. https://myrepublica.nagariknetwork.com/news/ schools-to-remain-closed-on-sunday-from-may-16/

260. Arjun Poudel, “Over 3 million Pfizer and Moderna vaccine doses to be rolled out after local elections”, The Kathmandu Post, 10 May 2022, Accessed 18th May 2022, https://tkpo.st/3soqVcT 261.

Current Macro Economic and Financial Situation (based on 9 months data), Nepal Rastra Bank, 11 May 2022

262. “Over 1.22 billion worth of facemask, sanitizer imported in nine months”, Khabarhub, 23 April 2022, Accessed 18th May 2022, https://english.khabarhub.com/2022/23/248426/ 263. Arjun Poudel, “Whole-genome sequencing being done on samples from people returning from India”, The Kathmandu Post, 11 May 2022, Accessed 18th May 2022, https://tkpo.st/3N4EMgj 264. Arjun Poudel, “Health laboratory in Madhes Province begins whole-genome sequencing”, The Kathmandu Post, 1 April 2022, Accessed 18th May 2022, https://tkpo.st/3KaIPGI

242. “SEE begins from today”, Khabarhub, April 22, 2022. https://english.khabarhub.com/2022/22/248163/

265. Arjun Poudel, “Antenatal care visits to be doubled to reduce maternal deaths, stillbirths”, The Kathmandu Post, 15 May 2022, Accessed 18th May 2022, https://tkpo.st/3wfnwiV

243. “Rural Municipality provides audio books to community schools”, Khabarhub, March 22, 2022. https://english.khabarhub. com/2022/22/242854/

266. Arjun Poudel, “Two-day weekend will add to case backlogs at hospitals, doctors say”, The Kathmandu Post, 29 April 2022, Accessed 18th May 2022, https://tkpo.st/3vSujgV

244. Gautam, Dinesh. “NOC to four lakh students in a decade”, Shilapatra, September 21, 2021. https://shilapatra.com/detail/42921

267. "Nepal tourism eyes new start as Covid-19 departs", Hindustan Times, April 28, 2022. https://www.msn.com/en-in/news/other/nepal-tourism-eyes-new-start-as-covid-19-departs/ar-AAWGXV8

245. Wagle, Achyut. Paradoxes in higher education, The Kathmandu Post, April 25, 2022. https://kathmandupost.com/columns/2022/04/25/paradoxes-in-higher-education 246.

“Process to integrate CTVET, CEHRD curriculums begins”, my República, March 21, 2022. https://myrepublica.nagariknetwork. com/news/process-to-integrate-ctevt-cehrd-curriculums-begins/

247. https://www.macrotrends.net/countries/NPL/nepal/life-expectancy

268. "Nepal tourism eyes new start as Covid-19 departs", Hindustan Times, April 28, 2022. https://www.msn.com/en-in/news/other/nepal-tourism-eyes-new-start-as-covid-19-departs/ar-AAWGXV8 269. Current Macroeconomic and Financial Situation Tables (Based on Nine Months data of 2021/22)”, Nepal Rastra Bank, Table-22. https://www.nrb.org.np/

248. https://www.macrotrends.net/countries/NPL/nepal/birth-rate

270. Economist intelligence Unit, “Travel ready Index-2022”, The Economist, 2022. https://bluesyemre.files.wordpress.com/2022/04/ travel-ready-index-2022-get-the-outlook-for-asias-tourism-industry-in-2022.pdf

249. https://www.macrotrends.net/countries/NPL/nepal/death-rate

271.

Current Macroeconomic and Financial Situation Tables (Based on Nine Months data of 2021/22)”, Nepal Rastra Bank, Table-42. https://www.nrb.org.np/

272.

Current Macroeconomic and Financial Situation Tables (Based on Nine Months data of 2021/22)”, Nepal Rastra Bank, Table-52. https://www.nrb.org.np/

250. https://www.macrotrends.net/countries/NPL/nepal/infant-mortality-rate 251.

https://www.macrotrends.net/countries/NPL/nepal/fertility-rate

252. Arjun Poudel, “Ministry to support Nepal Drugs Limited to produce 25 essential medicines”, The Kathmandu Post, 15 April 2022, Accessed 18th May 2022,https://tkpo.st/3JKBL2w 253. Arjun Poudel, “Government’s health insurance scheme fails to retain subscribers”, The Kathmandu Post, 9 April 2022, Accessed 18th May 2022, https://tkpo.st/37wkPjd

273. “Economic Survey 2021-22”, Ministry of Finance, 2022. https:// mof.gov.np/public/uploads/document/file/1633341980_Economic%20Survey%20(Engslish)%202020-21.pdf

254. Arjun Poudel, “Government’s health insurance scheme fails to retain subscribers”, The Kathmandu Post, 9 April 2022, Accessed 18th May 2022, https://tkpo.st/37wkPjd

274. Prasain, Sangam. “Tourism sector upbeat as Nepal throws door open to fully vaxed travellers”, The Kathmandu Post, March 10, 2022. https://kathmandupost.com/money/2022/03/10/tourismsector-upbeat-as-nepal-throws-door-open-to-fully-vaxxedtravellers

255. Arjun Poudel, “Cases of seasonal flu and waterborne diseases are rising”, The Kathmandu Post, 1 May 2022, Accessed 18th May 2022, https://tkpo.st/3s1Ybq6

275. “Current Macroeconomic and Financial Situation Tables (Based on Nine Months data of 2021/22)”, Nepal Rastra Bank, Table-22. https://www.nrb.org.np/

256. Arjun Poudel, “Funds crunch could delay jabs for children”, The Kathmandu Post, 21 April 2022, Accessed 18th May 2022, https:// tkpo.st/3uYr1tt

276. “Foreign tourism arrival in Nepal in April”, myRepublica, May 2, 2022. https://myrepublica.nagariknetwork.com/news/35-871-foreign-tourists-arrived-in-nepal-in-april/

257. Arjun Poudel, “Covid jabs for 5-11 year olds likely pushed to June last week”, The Kathmandu Post, 5 May 2022, Accessed 18th May 2022, https://tkpo.st/3MQxooD

277.

258. Arjun Poudel, “Over 3 million Pfizer and Moderna vaccine doses to be rolled out after local elections”, The Kathmandu Post, 10 May 2022, Accessed 18th May 2022, https://tkpo.st/3soqVcT 259. Arjun Poudel, “Over 3 million Pfizer and Moderna vaccine doses to be rolled out after local elections”, The Kathmandu Post, 10 May 2022, Accessed 18th May 2022, https://tkpo.st/3soqVcT

Economist intelligence Unit, “Travel ready Index-2022”, The Economist, 2022. https://bluesyemre.files.wordpress.com/2022/04/ travel-ready-index-2022-get-the-outlook-for-asias-tourism-industry-in-2022.pdf

278. Prasain, Sangam. “Hotels scrap uniform pay system as tourism perks up”, The Kathmandu Post, April 20, 2022. https://kathmandupost.com/money/2022/04/20/hotels-scrap-uniform-pay-astourism-perks-up 279. Malik, Khalid. “Nepal airport tax hike may hit tourism industry”,

77

78

DOCKING NEPAL’S ECONOMIC ANALYSIS

Malaysan Sun, April 25, 2022. https://www.malaysiasun.com/ newas/272513867/nepal-airport-tax-hike-may-hit-tourism-recovery 280. “Tourism entrepreneurs urge govt to facilitate tourists’ arrival”, Khabarhub, April 19, 2022. https://english.khabarhub. com/2022/19/247806/ 281.

“Notice Regarding Visa Fees”, Department of Immigration, April 19, 2022. https://www.immigration.gov.np/post/notice-regarding-visa-fee

282. “Visiting foreign tourism urged to pay for in-arrival visa in cash”, Khabarhub, April 16, 2022. https://english.khabarhub. com/2022/16/247411/ 283. Government to implement traking system to stop illegal activities”, The Himalayan Times, February 28, 2022. https://thehimalayantimes.com/nepal/president-to-donate-to-sadhus-ascetics 284. “Nepal second airport nearly complete, ready to takeoff: ADB”, The Himalayan Times, March 26, 2022. https://thehimalayantimes. com/business/nepals-second-international-airport-nearly-complete-ready-for-takeoff-adb 285. “NTB and FNCC Iink MoU to cooperate in tourism promotion”, The Himalayan Times, April 29, 2022. https://thehimalayantimes.com/ business/ntb-fncci-ink-mou-to-cooperate-in-tourism-promotion 286. “Tourism submit in September”, New Business Age, March 20, 2022. https://www.newbusinessage.com/Articles/view/14957 287.

“Farwest Travel Mart 2022 concludes successfully ”, The Himalayan Times, April 11, 2022. https://trade.ntb.gov.np/farwest-travel-mart-2022-concludes-successfully/

288. NRB, Current Macroeconomic and Financial Situation of Nepal, Based on Nine Months Data Ending Mid-April, 2021/22) https://www.nrb.org.np/contents/uploads/2022/05/ Current-Macroeconomic-and-Financial-Situation-English-Based-on-Nine-Months-data-of-2021.22.pdf

289. “Government policies and programs emphasize economic upliftment”, Share Sansar, May 25, 2022, https://www.sharesansar.com/ newsdetail/government-policies-and-programs-emphasize-economic-upliftment-2022-05-25 290. “Nepal bans imports of luxury goods amid dwindling forex reserves”, Kathmandu Post, April 29, 2022, https://kathmandupost. com/money/2022/04/27/nepal-bans-imports-of-luxury-goodsamid-dwindling-forex-reserves 291.

“Local elections dent deposit collection”, Himalayan News Service, May 20, 2022, https://thehimalayantimes.com/business/ local-elections-dent-deposit-collection

292. “Initial Public Offering (IPO) Approved”, Sebon, https://sebon.gov. np/ipo-approved 293. “SEBON Suggests Capital Gains Tax Reduction, See The List Of Suggestions Submitted By SEBON To The Ministry Of Finance”, Share Sansar, May 23, 2022, https://www.sharesansar.com/newsdetail/sebon-suggests-capital-gains-tax-reduction-see-thelist-of-suggestions-submitted-by-sebon-to-the-ministry-offinance-2022-05-23#:~:text=SEBON%20has%20proposed%20 a%206.5,proposed%20lowering%20capital%20gains%20taxes.

294. “Himalayan General and Everest Insurance Merger Agreement”, Himal Sanchar, April 22, 2022, https://himalsanchar.com/himalayan-general-and-everest-insurance-merger-agreement/ 295. “मर्जरमा जान ५ कम्पनीले पाए बीमा समितिको स्वीकृति”, Bikash News, May 17, 2022, https://www.bikashnews.com/2022/05/17/328075.html 296. “२ महिनाभित्रै विदेशमा बस्ने नेपालीलाई आईपीओमा कोटा : अध्यक्ष हमाल”, Online Khabar, May 6, 2022, https://www.onlinekhabar. com/2022/05/1121615 297. “Sebon asks Nepse to run stock market on Friday instead of Sunday, maintaining the five-day-a-week schedule”, My Republica, May 7, 2022, https://myrepublica.nagariknetwork.com/news/ sebon-asks-nepse-to-run-stock-market-on-friday-instead-ofsunday-maintaining-the-five-day-a-week-schedule/

NEFPORT ISSUE 49 – JUNE 2022

NEF Profile Nepal Economic Forum (NEF) is a premier private sector-led economic policy and research organization that seeks to redefine the economic development discourse in Nepal. Founded in 2009 as a not-for-profit organization under the beed (www. beed.global) umbrella, NEF is a thought center that strives to positively transform Nepal’s economic and development policies by strengthening the Nepali economy through various activities to promote an efficient and inclusive private sector. NEF has been featured in the list of Top Think Tanks in Southeast Asia and the Pacific in the Global Go-To Think Tank Index Reports 2016 through 2021.

NEF BROADLY WORKS UNDER THE FOLLOWING AREAS: Business Policy Research Center (BPRC) consolidates NEF’s activities into a hub that takes a holistic approach to the issues; generates dialogue between the public and private sectors on economic growth concerns, and acts as a platform for information dissemination.

NEF produced the following products as part of BPRC in 2021:

Himalayan Circular Economy Forum (HICEF) HiCEF is a platform to ideate research, initiate policy dialogues and disseminate information relating to the circular economy and the Himalayas.

Center for Digital Transformation Center for Digital Transformation is an incubation program that addresses cross-cutting themes related to digital adoption and revolution in emerging and frontier markets of Asia and Africa.

Global Nepali Network Global Nepali Network is a platform to connect Nepalis around the world regardless of their citizenship.

Renewable Energy Center Renewable Energy Center is an incubation program that engages multiple stakeholders to articulate discourse that will shape nationallevel energy policies.

Nepal and the World Nepal and the World (NAW) will study Nepal's foreign policy and diplomacy.

Center for Private Sector Development The Center for Private Sector Development (CPSD) will focus on private sector-led development by supporting the growth of small and medium enterprises.

79

80

DOCKING NEPAL’S ECONOMIC ANALYSIS

Nepal Economic Forum has been engaged in the discourse of federalism in Nepal since 2009. NEF has engaged in multiple policy discourses, conducted assessments and produced publications on Doing Business in Nepal against the backdrop of federalism. Hence, through the Doing Business in Federated Nepal (DBFN) vertical, NEF shall continue to engage itself in fostering a conducive business environment in the federated structure, supporting local businesses and empowering local bodies in governance. For this, NEF intends to open national chapters in each of the seven provinces of Nepal to promote localized efforts.

NEF operates in domain of Development Consulting (devCon) in conjunction with beed management. It works with a variety of bilateral, multilateral, national and international institutions in the areas of policy research, economic analysis, value chain analysis, enterprise development, sectorial studies and public private dialogue.

We are striving to ensure financial sustainability for NEF to complement the support it currently receives from beed management and the Open Society Foundations. If you are interested to support NEF, please do get in touch with info@nepaleconomicforum.org

www.linkedin.com/company/nepal-economic-forum @NEFNepal https://www.youtube.com/channel/UCP5RNfvnTKSuSrZO4gqGpJw @nepaleconomicforum @nepaleconomicforum https://medium.com/@nepal-economic-forum

NEFPORT ISSUE 49 – JUNE 2022

P.O.Box 7025, Krishna Galli, Lalitpur - 3, Nepal Phone: +977 1 5548400 info@nepaleconomicforum.org www.nepaleconomicforum.org

81