KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Gold prices in Nepal remained stable early in the week of September 1st to September 6th, but surged to Rs 153,300 on Friday due to possible shifts in global trends or local factors.
The Nepal Stock Exchange (NEPSE) experienced significant volatility, with a notable recovery followed by sharp declines, reflecting market sensitivity.
The Ministry of Finance is tackling revenue leakages with new inspection teams, amid criticism of past performance and challenges in controlling illegal trade.
Nepal Rastra Bank plans to withdraw an additional Rs 40 billion to manage liquidity, while the government secured a Rs 15.29 billion ADB loan for an irrigation project and appointed a new EPF chairman.
Gold prices in Nepal show stability early in the week, surge abruptly on Friday
During the week of September 1st to September 6th, gold prices in Nepal exhibited initial stability, with a steady rate of Rs 152,300 on Sunday falling slightly to Rs 152,000 from Monday to Thursday, indicating a period of equilibrium likely influenced by balanced supply and demand, stable global gold market conditions, and steady local economic factors.
However, a significant price surge to Rs 153,300 on Friday suggests a sudden shift in market dynamics, potentially driven by global gold price fluctuations, currency movements, increased local demand, or unforeseen economic developments.
This abrupt increase highlights the market’s sensitivity to both domestic and international factors, underscoring the need for continuous monitoring of global trends, currency exchange rates, and local economic indicators to better understand and anticipate future price movements in Nepal’s gold market.
NEPSE exhibits high volatility with strong recovery and sharp decline last week
The Nepal Stock Exchange (NEPSE) exhibited notable volatility from September 1st to September 5th, starting with a significant drop of 1.95% on Sunday, reflecting possible profit-taking or cautious sentiment.
A robust recovery on Monday, with a 4.72% rise, suggested renewed investor confidence or positive market catalysts.
However, this upward trend was short-lived, as the index saw a marginal gain on Tuesday, followed by a sharp 3.20% decline on Wednesday, indicating potential market corrections or negative news impacting sentiment.
The slight further decrease on Thursday, down 0.40%, highlighted ongoing caution or profit-taking.
This week’s fluctuations underscore the NEPSE’s sensitivity to market news and investor behavior, emphasizing the importance of staying informed about underlying factors influencing market movements for better investment decisions.
Finance Ministry deploys inspection teams to tackle revenue leakages amid criticism
The Ministry of Finance established two rapid inspection teams to combat revenue leakages amid growing concerns over sluggish revenue collection.
One team, spearheaded by the Inland Revenue Department’s Deputy Director General, will scrutinize the eastern East-West Highway corridor from Chitwan to Mechi.
Concurrently, another team, led by the Department of Customs’ Deputy Director General, will oversee the western stretch from Chitwan to Mahakali.
This initiative addresses recent criticism regarding revenue performance, which fell to 68.21% of targets in FY 2022/23 and improved marginally to 74.29% in the subsequent fiscal year.
With customs duties contributing approximately 40% of total revenue last year, the government’s response is critical, especially given the challenges of controlling illegal trade across the open border with India.
The Ministry’s move aligns with its 100-day work plan, aiming to bolster revenue and enhance fiscal oversight.
NRB to withdraw additional Rs 40 billion to regulate liquidity amidst outstanding funds
Nepal Rastra Bank (NRB) has revealed its intention to extract an additional Rs 40 billion from the banking system to regulate liquidity.
This will be implemented through a 21-day bidding process, with banks and financial institutions required to submit their proposals by 3 PM on Wednesday.
It is important to note that Rs 121 billion previously absorbed by the central bank remains outstanding and has not yet matured.
This action highlights NRB’s continued efforts to manage liquidity levels within the financial sector, even as a significant portion of funds from earlier operations remains tied up.
Govt secures Rs 15.29 billion ADB loan for irrigation project
The government has agreed to accept concessional loan assistance totaling around Rs 15.29 billion (115 million USD) from the Asian Development Bank (ADB) for the Irrigation Modernization Enhancement Project.
A negotiation team, led by the Joint Secretary of the Ministry of Finance, will be established to handle discussions on behalf of the government.
Additionally, Dinesh Kumar Ghimire, Secretary at the Ministry of Finance, has been appointed as the new Chairman of the Employees Provident Fund (EPF).
(Prepared by Srija Khanal)
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