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

Policies and Programs: Govt targets microfinance sector for intervention

As President Ram Chandra Paudel addressed a joint session of the Federal Parliament, the government introduced its policies and programs for the fiscal year 2024/25. Amid this unveiling, the government announced plans to intervene in the microfinance sector, proposing measures such as refinancing and loan restructuring for borrowers.

While acknowledging the Nepal Rastra Bank’s authority over monetary policy and financial institutions, the government aims to provide support to microfinance institutions through annual policies.

The program emphasizes the importance of these provisions in assisting microfinance borrowers encountering financial challenges.

Multi-pronged strategy for Fiscal Year 2024/25

The government announced plans to empower 1,000 youths by providing loans to kick-start their businesses in the upcoming fiscal year. The policies and programs highlight the launch of an innovation and national startup campaign, aiming to bolster entrepreneurship through collaboration with academic institutions and province-wide business incubation initiatives.

Additionally, strategies include integrating government-owned cooperatives and merging savings and loan cooperatives to enhance efficiency in budget allocation and explore new revenue sources.

Despite assurances, concerns arise regarding budget allocation to retail projects without adequate preparation. The government pledges to invest internal loans solely in productive sectors to curb non-essential spending.

Overall, the government’s policies aim to intervene in microfinance, support youth entrepreneurship, foster cooperative integration, and improve budget allocation efficiency while prioritizing productive investments.

NEPSE surges to 2000 levels

The Nepal Stock Exchange (NEPSE) Index on Tuesday witnessed a robust surge, gaining 1.43% or 28.62 points, reaching 2,027.51 points by the end of the day’s trading session, following a previous session’s increase of 24.39 points.

Despite opening at 2,000.7, the day saw fluctuations with an intraday high of 2,027.59 and a low of 1,999.14. The Securities Board’s reduction in broker commissions and decreased bank interest rates signal proactive efforts to stimulate market dynamics, redirecting investable liquidity to the banking sector.

With active trading, 320 stocks exchanged hands in 59,856 transactions, totaling 9,855,285 shares traded and a turnover of Rs. 4.08 Arba. Market capitalization reached Rs. 32.14 Kharba, with a float market capitalization of Rs. 10.89 Kharba.

SEBON implements reduced commission rates for stockbrokers

The Securities Board of Nepal (SEBON) initiated the implementation of its revised commission rates for stockbrokers starting Tuesday.

This decision stems from a recent board meeting held on the 23rd of Baisakh, where SEBON decided to decrease commission rates for brokers in the market.

Following approval from the Ministry of Finance two weeks prior to the announcement, SEBON has introduced a significant reduction of 10 percent in commission rates.

Previously, investors were charged commissions ranging from 0.27 percent to 0.40 percent, depending on transaction volume, which will now be adjusted in line with the revised regulations.

Finance Minister reassures alignment of budget with government’s agenda

Minister for Finance, Barsaman Pun, reiterated that the forthcoming fiscal year’s budget will conform to the government’s outlined policies and programs. Following the President’s unveiling of the upcoming fiscal year’s agenda on Tuesday, Minister Pun said that the budget will seamlessly complement these directives.

Addressing concerns of previous discrepancies between budgetary allocations and governmental objectives, Minister Pun emphasized the synchronicity between the two.

“Historically, there have been grievances regarding the mismatch between budgetary allocations and policy directives, but this time, such disparities will be rectified,” affirmed the Finance Minister.

Government to form regulatory body for cooperative oversight

The government unveiled plans to form a dedicated regulatory body for rigorous supervision and regulation of cooperatives. This initiative aims to protect savings and investments in the cooperative sector through strategies like establishing the Cooperative Savings and Credit Protection Fund and a Cooperative Credit Information Center.

Mandatory affiliation with a cooperative management system and consolidation of government-owned cooperatives are emphasized for improved governance and efficiency.

Gold rates decline; silver sees increment

The domestic gold market saw a downtrend on Tuesday, with a decrease of Rs 700 per tola. The price of fine gold settled at Rs 137,400 per tola, marking a decline from Monday’s Rs 138,100 per tola.

Similarly, standard gold prices also experienced a dip, settling at Rs 136,750 per tola compared to the previous day’s Rs 137,450 per tola. Conversely, silver prices saw an uptick, rising by Rs 25 per tola to reach Rs 1,740 per tola compared to Rs 1,715 per tola previously.

Moreover, the international gold market mirrored the domestic trend, with gold prices sliding from $2352.55 per ounce on Monday to $2342.97 per ounce on Tuesday.

However, silver prices exhibited an opposite trend, climbing to $28.44 per ounce from the previous day’s $28.05 per ounce.

Rasuwagadhi Hydropower Project suffers Rs 1 billion loss

The Rasuwagadhi Hydropower Project, which has a capacity of generating 111 MW, faced significant setbacks over the past four months, leading to a loss exceeding Rs 1 billion.

These setbacks primarily stem from delays in constructing the ‘Chilime Hub’ substation and the associated transmission line. Despite the successful completion of test production, the project couldn’t commence commercial electricity generation, resulting in monthly financial losses amounting to Rs 270 million.

The financial burden was further exacerbated by additional expenditures, such as loan interests, contributing to losses ranging between Rs 150 million to Rs 200 million.

Furthermore, the incomplete transmission line linking the Chilime Hub to the Trishuli-3B Hub compounds the project’s challenges, hindering connections with other hydroelectric ventures. To mitigate these issues and prevent electricity wastage, urgent action is imperative, including the involvement of the private sector to expedite the construction process.

NRB proposes 190 budget recommendations to Ministry of Finance

Nepal Rastra Bank Governor Maha Prasad Adhikari presented a comprehensive set of 190 suggestions for the fiscal year 2024/25 budget to the Ministry of Finance.

These recommendations, sourced from all seven provinces, span various sectors such as tourism, agriculture, industry, and monetary affairs. Adhikari emphasized the significance of tackling provincial challenges and highlighted the holistic approach of the suggestions, aimed at fulfilling diverse sectoral needs.

Nepali banks slash deposit rates

Nepali commercial banks have slashed deposit interest rates due to sluggish loan demand and excess liquidity. The maximum fixed deposit interest rate has dropped to 7.06 percent from the previous 7.14 percent average, with nine banks, including Nepal SBI Bank, announcing decreases.

Nepal SBI Bank now offers the lowest rate at 6.39 percent. Most banks are offering rates below 8 percent, with NMB Bank and NIC Asia Bank maintaining the highest rate at 7.8 percent. This strategy aims to reduce banks’ cost of funds.

Concurrently, average lending rates have fallen to 10.55 percent, the lowest in 27 months. Despite these adjustments, banks have struggled to meet the central bank’s target of increasing private sector lending by 11.5 percent this fiscal year, achieving only 5.1 percent growth in the first nine months.

“Doing Business with Finland” spurs partnership prospects

A program ‘Doing Business with Finland’ was organized in Kathmandu, facilitated by the Institute for Strategic and Socio-Economic Research (ISSR), aiming to boost investment opportunities and partnerships. The event attracted Finnish investors and entrepreneurs, along with Nepali industrialists and delegates, engaging in discussions on investment feasibility.

Former Finance Minister Dr. Prakash Sharan Mahat emphasized Nepal’s investment potential, particularly advocating for leveraging the Indian market. Challenges in Nepal’s business landscape, including bureaucratic hurdles and delays, were highlighted by Manish Jung Khadka from Cognit Nepal Limited.

Naresh Shrestha, Director of ISSR, discussed promising opportunities for technology sharing and collaboration in finance, packaging, and production sectors.

Insights from Finland’s business landscape were shared by Bishesh Shrestha, General Secretary of the Nepal Finland Chamber of Commerce. The program, featuring presentations from the Embassy of Finland and Fin Fund, provided insights into bilateral trade dynamics. This marked the third Nepal-Finland investment promotion program, with a focus on creating an investor-friendly environment and fostering positive outcomes.

Government commits to year-round Melamchi Drinking Water supply in Kathmandu

The government has underscored the commitment to provide uninterrupted Melamchi Drinking Water to Kathmandu residents.

This pledge reflects the government’s efforts to secure consistent access to drinking water throughout the year for the city’s inhabitants.

(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.