KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.

Over Rs. 600 billion unused in banks amid stagnant loan demand

Despite a surge of over Rs. 600 billion in bank funds, sluggish loan demand leaves much untouched. Deposits rise, but lending fails to match, resulting in a monthly surplus.

From FY 2080/81 to May 31, loans worth Rs. 245 billion were disbursed against Rs. 456 billion in deposits, with a deposit growth rate of 7.9% and loan growth at 5%. This shortfall challenges the central bank’s loan expansion goals.

The average CD ratio declines to 80.08%, indicating excess funds, while the interbank interest rate remains low at 3%, underscoring subdued lending activity and the need for efficient resource allocation.

NEPSE shows modest growth, rises by 6.22 points on Tuesday

The Nepal Stock Exchange (NEPSE) saw a modest increase on Tuesday, marking the third trading day of the week. NEPSE climbed by 6.22 points, reaching 2085.30 points, buoyed by a transaction worth Rs. 4.84 billion.

During the day’s trading, 125 companies saw price gains, while 114 experienced declines, with 8 remaining stable. Investors, particularly from Global IME Microfinance, garnered notable profits.

This rise comes after a slight dip of 3.97 points the previous day, reflecting ongoing fluctuations in the market.

FinMin assures MCC completion within deadline

Finance Minister Barshaman Pun reassured MCC Vice President Jonathan Brooks of timely completion of the MCC project during formal discussions on Tuesday. Minister Pun affirmed the government’s commitment and highlighted necessary cooperation for project completion.

He addressed concerns like land acquisition and forest area usage. Vice President Brooks expressed satisfaction with progress, detailing construction advancements in electricity transmission lines and roads. The Rs. 60 billion MCC agreement includes constructing 315km of transmission lines and 77km of roads within five years, with Rs. 45 billion from MCC grants and Rs. 15 billion from Nepal’s investment.

Despite the agreement signing in 2017, implementation began after Nepali Parliament approval two years ago.

Gold prices surge by Rs 1,700 per tola

On Tuesday, the price of gold surged by Rs 1,700 per tola, reaching a new benchmark of Rs 141,000 per tola. This increase contrasted with the previous trading day’s rate of Rs 139,300 per tola.

The Federation of Nepal Gold and Silver Dealers’ Association announced the revised standard gold price at Rs 142,000 per tola, reflecting market dynamics and demand-supply forces.

Concurrently, the price of silver also experienced an upward trend, standing at Rs 1,860 per tola. This fluctuation in precious metal prices underscored the volatility and sensitivity of the market to various factors, including global economic conditions, geopolitical events, and investor sentiments.

Most ministries spend less than half of budget by mid-April

As per data from the Ministry of Finance, most ministries have utilized less than 50% of their allocated budgets by March in the current fiscal year. The Ministry of Finance itself has only expended 17.60% of its budget during this period.

Despite an allocation of 33 billion 69 billion 98 lakh 40 thousand rupees, only 5 billion 93 crore 18 lakh 60 thousand rupees have been spent. This trend reflects a persistent issue, with the Ministry consistently underspending, having utilized only 35.46% of its budget in the previous fiscal year.

Other ministries also exhibit weak expenditure patterns; for instance, the Prime Minister’s Office, allocated 5 billion 62 million 25 million 60 thousand rupees, has spent only 2 billion 91 million 48 million 48 thousand rupees by March’s end.

Foreign exchange rates see a rise

The Nepal Rastra Bank (NRB) has fixed the foreign currency exchange rates for June 5, 2024. After experiencing a decline on Tuesday, the values of the US dollar, Euro, British pound, and Qatari riyal have risen on Wednesday. Notably, the British pound has now exceeded 170 rupees.

Specifically, the NRB has established the buying rate of one US dollar at 133 rupees 36 paisa and the selling rate at 133 rupees 96 paisa. Similarly, one Euro is now bought at 144 rupees 94 paisa and sold at 145 rupees 59 paisa.

The British pound is bought at 170 rupees 11 paisa and sold at 170 rupees 88 paisa. For the Qatari riyal, the buying rate is 36 rupees 58 paisa, while the selling rate is 36 rupees 74 paisa.

These changes highlight a general increase in the value of these foreign currencies against the Nepalese rupee.

(Compiled and prepared by Srija Khanal)

Economic Digest is a daily morning economic digest, basically relatable summations of the most important business news, and happenings from Nepal into easy-to-understand summaries.