KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
The recent rise in Nepal’s public debt to Rs 2.49 trillion, surpassing development spending, highlights a concerning fiscal trajectory.
With increasing reliance on both internal and external borrowing, the country faces sustainability challenges, particularly as debt servicing competes with vital developmental investments.
The debt-to-GDP ratio of 43.69% signals economic vulnerability, limiting future borrowing capacity and increasing the risk of financial shocks.
To mitigate these risks, Nepal must focus on fiscal discipline, enhance revenue generation, and reduce dependency on debt, ensuring funds are efficiently allocated for sustainable economic growth.
Public debt reaches Rs 2.49 trillion, outpaces development spending
The sharp rise in Nepal’s public debt to Rs 2.49 trillion, surpassing development spending, signals a precarious fiscal situation with long-term implications.
The growing reliance on both internal (21.34%) and external (22.35%) borrowing to finance expenditures raises concerns about sustainability, especially as debt servicing costs divert resources from crucial developmental initiatives.
The 43.69% debt-to-GDP ratio underscores the economy’s vulnerability to financial shocks, potentially constraining future borrowing capacity.
To address this, Nepal must prioritize fiscal discipline, enhance revenue generation, and implement targeted measures to reduce reliance on debt while ensuring efficient allocation of funds for economic growth.
NRB targets liquidity boost
Nepal Rastra Bank (NRB) has unveiled plans to remove Rs. 40 billion from the banking system as part of its continued efforts to regulate liquidity.
Due to limited lending activities by banks, the central bank will employ a bidding process to withdraw surplus funds from the market for a duration of 21 days.
In this context, NRB has invited proposals from financial institutions facing liquidity challenges.
Since December 17, NRB has already withdrawn Rs. 120.15 billion from the market.
NEPSE rises by 14.11 points
The Nepal Stock Exchange (NEPSE) advanced by 14.11 points (0.54%) Tuesday, settling at 2,626.31, following a 28.91-point surge in the previous session.
Opening at 2,615.67, the index experienced fluctuations, reaching a peak of 2,645.20 and a low of 2,612.94 during the day. The total turnover stood at Rs. 5.20 billion, with 64,917 transactions recording 12,746,410 shares traded across 312 companies.
Gold price stable
The price of gold has stabilized at Rs 149,800 per tola in Nepal, following consecutive increases of Rs 1,100 on Sunday and Rs 200 on Monday.
This stability comes after significant fluctuations earlier in the year, including a steep drop of Rs 18,500 per tola within two days in the third week of Mangsir.
In contrast, silver has experienced a modest increase, rising by Rs 10 to Rs 1,805 per tola.
The current trends reflect a momentary pause in gold price volatility while silver continues to show slight upward movement.
Vehicle imports at Birgunj Customs plummet by over 38%
Petrol-fueled vehicle imports dropped by 38.13% in quantity and 16.43% in revenue compared to the same period last fiscal year, indicating reduced demand or purchasing power through the Birgunj customs checkpoint during the first five months of the current fiscal year.
Similarly, electric vehicle imports experienced an even sharper decline, with a 59.07% decrease in numbers and a 58.63% reduction in revenue.
This trend suggests multiple factors at play, such as tightened economic conditions, policy changes, or reduced consumer interest in higher-value or eco-friendly vehicles.
The overall data reveals a contraction in the automobile trade via this major customs point, reflecting broader economic or market challenges.
Mahuli Laghubitta’s FPO closes on Tuesday
Mahuli Laghubitta Bittiya Sanstha Limited’s Further Public Offering (FPO) of 475,449.15 units at a par value of Rs. 100 is closing today after being oversubscribed by 41.35 times.
The issue, open since 5th Poush, 2081, complies with the Banks and Financial Institutions Act, 2073, and NRB regulations, which require at least 30% of issued capital to be held by public shareholders.
This FPO aims to raise the public shareholding from the current 19.68% to the mandated 30%, reflecting robust investor interest and the company’s commitment to regulatory compliance and broadened ownership.
NAC’s domestic flights come to a halt
The entire domestic flight service of national flag carrier Nepal Airlines Corporation (NAC) has come to a standstill for lack of aircrafts.
The NAC’s all domestic flights are off now after the only Twin Otter plane of the NAC was grounded.
Presently, the NAC has two Twin Otter planes and one of them is grounded for the last seven months.
(Prepared by Srija Khanal)
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