KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
The High-Level Recommendation Committee on Tax System Reforms in Nepal has proposed changes aiming to boost revenue by Rs 300 billion, suggesting measures like scrapping VAT write-offs and amending income tax caps. Another committee recommends the establishment of an Implementation Facilitation and Monitoring Unit. Meanwhile, Nepal’s gold market saw a decline, with prices dropping by Rs 600 per tola.
The country faces a significant budget deficit of Rs 181 billion due to overspending, risking government payments. In Karnali province, internal revenue over six years totaled Rs 2.86 billion, with the current fiscal year’s revenue achieving 94.8% of the target, and 74.10% for 2023-24 against a total budget of Rs 66.66 billion.
Real estate transactions increase
Real estate transactions have seen a slight increase in May 2024 compared to the previous year. According to the Department of Land Management and Records, 55,079 house deeds were passed in April-May, whereas 61,161 house deeds and 30 apartments were recorded by May-June.
This marks an increase of over 6,000 real estate deeds in May of this year compared to May of the previous year. Specifically, in April-May 2023, 49,782 documents and 28 apartment deeds were passed.
Analyzing the Department’s monthly turnover reveals a gradual increase in real estate transactions from August last year to May of the current fiscal year.
This data indicates a fluctuating but overall positive trend in real estate transactions over the past year.
State treasury could gain Rs 300 billion with tax reforms
The High-Level Recommendation Committee on Tax System Reforms, formed by the government, stated that the country could gain Rs 300 billion more in revenue if tax systems were revised. Recommendations include scrapping VAT write-offs on some goods, amending income tax caps, waiving excise duties (except on harmful goods), imposing a green tax, revising social security tax, and increasing digital payments while discouraging cash payments.
The four-member committee, chaired by Bidhyadhar Mallik, submitted its report three months ago, proposing an Implementation Facilitation and Monitoring Unit under the Revenue Secretary. Effective implementation of these reforms could yield Rs 291 billion more in revenue, according to the Ministry of Finance.
Gold market sees drop on Monday
The Nepali gold market on Monday witnessed a decline, with the price of gold dropping by Rs 600 per tola. According to the Federation of Nepal Gold and Silver Dealers’ Association, the rates stood at Rs 142,200 per tola for fine gold and Rs 141,500 per tola for standard gold, down from the previous Friday’s rates of Rs 142,800 and Rs 142,100 per tola respectively. Meanwhile, silver was priced at Rs 1,800 per tola.
These daily price adjustments by the Federation reflected changes in international market rates, influencing domestic pricing strategies.
Federal government faces deficit crisis with Rs 204 billion reserve fund shortfall
By mid-June, excessive spending led to a significant deficit in Nepal’s budget, with a negative balance reaching Rs 181 billion, an increase of Rs 23.70 billion during the recent review period. Government receipts totaled Rs 944.59 billion, comprising Rs 829.03 billion in tax revenue, Rs 90.15 billion in non-tax revenue, Rs 2.75 billion in grants, and Rs 22.65 billion from borrowings. However, expenditures amounted to Rs 1.181 trillion, exceeding last year’s by Rs 3 billion.
This included Rs 822.80 billion in recurrent expenses, Rs 134.97 billion in capital expenditures, and Rs 223.50 billion for interest and loan repayments. Officials from the Financial Comptroller General Office warned that further expansion of the negative reserve fund could hinder government payments, with only Rs 5 billion in fiscal space left for loans this year.
Karnali Province generates only three billion rupees internal revenue in six years
Over the past six years, the Karnali provincial government has generated a mere Rs 2.86 billion in internal revenue. By the end of May in the current fiscal year, the internal revenue collection for 2022-23 reached Rs 2.24 billion, achieving 94.8 percent of the target.
For the fiscal year 2023-24, the revenue collection was Rs 61.97 million, or 74.10 percent of the target. The total budget for the Karnali provincial government over these six years was Rs 66.66 billion.
72,000 Nepalis leave for foreign employment in one month
A staggering 72,861 Nepalis embarked on foreign employment in Jestha (May 14 to June 14) as reported by the Department of Foreign Employment. Among them, 64,886 were men, and 7,975 were women. Dhanusha district saw the highest number of workers leaving the country, totaling 4,248 individuals during this period.
Of those departing for work, 24,812 were returning for another stint after previous employment abroad. Additionally, 870 individuals secured jobs overseas through government programs, notably in Korea.
The data also shows that 11,172 people traveled abroad on personal visas, while 36,007 went through manpower agencies.
Tueaday’s foreign currency exchange rates
Nepal Rastra Bank has fixed the exchange rates of foreign currencies for today (June 18). According to NRB, the buying rate of one US dollar is 133 rupees 40 paisa, and the selling rate is 134 rupees 00 paisa.
Similarly, the buying rate of one Euro is 142 rupees 95 paisa, and the selling rate is 143 rupees 59 paisa. The buying rate of one British pound is 169 rupees 03 paisa, and the selling rate is 169 rupees 79 paisa.
According to Nepal Rastra Bank, the buying rate of one Qatari riyal is 36 rupees 59 paisa, and the selling rate is 36 rupees 75 paisa.
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.
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