KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
The Nepal Stock Exchange (NEPSE) fell sharply by 145.05 points to 2,651.32 amid a record turnover of Rs 23.71 billion, primarily due to a negative circuit breaker on 11 companies and disappointing financial reports.
Meanwhile, Kailali district has achieved milk self-sufficiency and is expanding exports, producing 168 metric tons of milk annually.
Gold prices dropped significantly by Rs 2,300 per tola to Rs 147,700, reflecting shifting market conditions.
Social security allowances in Nepal have surged nearly 11-fold over a decade, placing substantial fiscal pressure on the government.
Meanwhile, the Rastriya Awas Company Limited (RACL) is launching a direct housing project in Jhapa and Bardiya with a Rs 100 million budget, marking its first foray into direct housing construction.
NEPSE plunges 145 points with record turnover
The Nepal Stock Exchange (NEPSE) on Tuesday experienced a sharp decline of 145.05 points, closing at 2,651.32, following a record-high daily turnover of Rs 23.71 billion.
The market was significantly impacted by a negative circuit breaker imposed on 11 companies, including Nepal Finance and Gurkhas Finance, with seven companies seeing a 10% drop in their values.
This downturn followed a bullish trend driven by recent government formation and lenient monetary policies, which had previously boosted the NEPSE index by approximately 800 points.
Analysts attribute the decline to profit-taking by investors and disappointing financial reports from banks and financial institutions showing reduced distributable profits.
The sensitive index also fell by 27.22 points, with all 13 sectors losing ground; the life insurance index dropped the most by 870.14 points.
Among individual stocks, only eight companies gained, with Three Star Hydropower Limited emerging as the top performer.
Gold prices drop by Rs 2,300 per tola; fine gold now at Rs 147,700
Gold prices on Tuesday experienced a significant decrease of Rs 2,300 per tola. According to the Nepal Gold and Silver Dealers’ Association, fine gold was priced at Rs 147,700 per tola.
At the same time, standard gold was traded at Rs 147,000 per tola. This marked a considerable drop from Sunday, when fine gold was valued at Rs 150,000 per tola.
Additionally, the price of silver had been set at Rs 1,725 per tola. This decline in gold prices indicated a potential shift in market conditions or external economic influences affecting the precious metals sector.
Social security allowances surge 11-fold in a decade
Over the past decade, social security allowances in Nepal have surged nearly 11-fold, driven largely by political efforts to increase old-age benefits and boost popularity.
From Rs 12.99 billion in FY 2013/14, allocations for social security allowances soared to Rs 142 billion in FY 2023/24, with expenditures rising from Rs 10.95 billion to Rs 116 billion during the same period.
Despite stagnant government revenue and a limited development budget, social security now consumes 8.16% of the total budget, up from 2.51% a decade ago.
This surge has led to unsustainable fiscal pressure, with social security expenses approaching a quarter of government revenue.
The program, initially expanded by successive governments, has included beneficiaries who also receive pensions from abroad, such as in India and the UK. Despite regulatory measures, double benefits persist.
The government has allocated Rs 298.57 billion for social security in FY 2024/25, covering various programs beyond allowances. However, rising costs and broadening coverage are straining the government’s fiscal capacity.
RACL launches direct housing project with Rs 100 million budget
The Rastriya Awas Company Limited (RACL), a government-owned entity, is initiating its first direct housing project in Jhapa and Bardiya districts, with plans to expand if successful.
The company will construct and sell earthquake-resistant homes, starting with 10 houses on its existing land, supported by a Rs 100 million budget.
This move marks the first time the government is directly involved in housing construction and sale. RACL, which owns 3,496 bighas of land nationwide, has faced challenges in land utilization due to political interference and administrative issues.
The company is also launching a Rs 250 million land pooling program in Chandragiri Municipality-12, Balambu, aimed at consolidating 117 ropanis for settlement purposes.
Despite generating minimal income from land leasing and facing legal complications, including disputes over land ownership records, RACL is now focused on optimizing its land assets and resolving these issues to improve its financial performance and effectiveness in land use.
Kailali achieves milk self-sufficiency and expands export market
Kailali district has achieved milk self-sufficiency through advanced cattle and buffalo breeds. It now exports milk to other districts, with daily exports of 2,000 to 2,500 liters.
Milk production rose from 96 metric tons in FY 2078/79 to 168 metric tons in FY 2080/81.
The district hosts 52 registered farms, employs 156 people, and supports 14 cooperatives, 44 private dairies, and Khaptad Industries Pvt. Ltd, generating an annual business of about Rs 188.4 million.
Sudurpaschim Province, including Kailali and Kanchanpur, is nearing self-sufficiency in dairy, meat, eggs, and fish.
FOREX: US dollar hits record high
The Nepal Rastra Bank (NRB) announced today’s (Wednesday) foreign currency exchange rates, with the US dollar hitting a new high.
The dollar’s buying rate is now 134 rupees 03 paisa and its selling rate is 134 rupees 63 paisa, reflecting a steady increase from yesterday’s rates.
The Euro and British pound have both decreased slightly in value, with the Euro’s buying and selling rates dropping to 146 rupees 19 paisa and 146 rupees 85 paisa, respectively, and the British pound’s rates adjusting to 170 rupees 24 paisa and 171 rupees.
The Australian dollar has also seen a minor increase, with the buying rate at 86 rupees 87 paisa and the selling rate at 87 rupees 26 paisa.
Meanwhile, the Kuwaiti dinar and Bahraini dinar rates have seen minimal changes, maintaining stability with slight fluctuations.
(Prepared by Srija Khanal)
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