KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
The recent developments across Nepal’s economic and financial sectors indicate mixed progress.
The Nepal Stock Exchange (NEPSE) saw a 1.05% drop, ending a nine-day rally, as investors engaged in profit-taking, reflected in lower turnover and sectoral declines.
Meanwhile, gold and silver prices rose, indicating a shift toward safer assets. On the policy front, Nepal Rastra Bank (NRB) took several measures, including lowering loan loss provisions and revising vehicle loan limits, to ensure financial stability.
The government’s allocation of Rs 3.84 billion for health initiatives highlights its commitment to improving healthcare access.
However, the Prime Minister’s Employment Program is struggling with loan fund depletion and limited job creation, despite high demand.
Other notable measures include new rules for the insurance sector and efforts to expand regional airports.
Overall, while the government is taking steps to stabilize the economy, challenges like youth employment and funding issues remain significant hurdles.
NEPSE falls 30.36 points
The Nepal Stock Exchange (NEPSE) index on Tuesday dropped by 1.05%, or 30.36 points, ending at 2,846.30 points after a nine-day upward trend.
The turnover decreased from Rs 14.28 billion to Rs 12.94 billion. All sectoral indices ended lower, with the Manufacturing & Processing sector seeing the biggest decline of 2.21%.
Guardian Micro Life Insurance reached the upper circuit, while Sindhu Bikash Bank saw a 10% drop. Himalayan Reinsurance led the market with Rs 1.09 billion in trades. Analysts attributed the decline to profit-taking by investors.
Gold and silver prices rise
Gold and silver prices increased on Tuesday in the country. Gold was traded at Rs 169,500 per tola, up by Rs 1,400, while silver was priced at Rs 1,940 per tola, an increase of Rs 25. Internationally, gold was traded around $2,892 per ounce.
PM Employment Program faces challenges as loan funds deplete
The Prime Minister’s Employment Program, initiated in 2018 with a Rs 13.62 billion World Bank loan, has not achieved expected results. Despite 800,000 applicants this year, only 3,334 people have been employed.
With Rs 4.85 billion allocated for 5,473 projects, the program has stalled. Experts warn about mismanagement of the loan and urge the government to implement the program effectively to prevent further failure in creating jobs for Nepal’s youth.
NRB lowers loan Loss provision to 1 percent
Nepal Rastra Bank has lowered the general loan loss provision for financial institutions from 1.10% to 1.00%, as per its mid-term monetary policy review. Other loan categories remain unchanged: 5% for closely monitored loans, 25% for substandard loans, 50% for doubtful loans, and 100% for bad loans.
The NRB also revised the loan-to-value ratio, capping it at 60% for both electric and personal-use vehicles, replacing the previous 50% for regular vehicles and 80% for electric ones.
SEBON approves new rule for NEPSE closing prices
The Securities Board of Nepal (SEBON) has approved a new rule for determining the closing price of stocks on the Nepal Stock Exchange (NEPSE).
Under the new rule, the closing price will be based on the average price from the last 15 minutes of trading (2:45–3:00 PM), instead of the last traded price at 3:00 PM.
This change aims to reduce sudden price fluctuations and improve market stability. NEPSE plans to conduct system testing before full implementation, likely within a month.
NRB issues 7-point directive for financial institutions
Nepal Rastra Bank has introduced a seven-point directive in its mid-term monetary policy review. It includes reducing the loan loss provision for good loans from 1.10% to 1.00% for financial institutions.
The directive also mandates proportional loan loss provisions for infrastructure loans with a grace period over one year, and a phased provision structure for agricultural loans on crops like silk, cotton, and fruits. Additionally, the loan-to-value ratio for electric vehicle loans has been capped at 60%.
Govt allocates Rs 3.84 billion for health programs
The Ministry of Finance has allocated Rs 3.84 billion for health insurance payments and medical programs, including Rs 3 billion for the Health Insurance Board, Rs 600 million for senior citizens’ treatment, and Rs 240 million for free heart disease treatment at Sahid Gangalal National Heart Center.
Insurance firms required to pay regulatory fees quarterly
The Nepal Insurance Authority has introduced a new rule requiring insurance companies to pay regulatory fees within 30 days after each quarter’s end.
The new regulation stipulates that insurance companies must pay 0.75% of their annual gross premiums as regulatory fees, while micro-insurers will pay 0.5%.
Non-compliance will incur a 10% penalty, and the fees will be adjusted according to final audited financial statements.
Govt seeks Rs 16 billion for airport expansions in Karnali and Lumbini
The Ministry of Tourism has requested Rs 16 billion from the Ministry of Finance to acquire land for expanding Surkhet, Jumla, and Tarigaon airports.
Surkhet needs Rs 10 billion, Tarigaon Rs 5 billion, and Jumla Rs 1 billion. Previous expansion efforts were delayed due to funding issues and protests.
The Civil Aviation Authority of Nepal (CAAN) has begun land acquisition for the expansion of Jumla Airport’s runway and terminal.
Gas industry strike ends with govt agreement
The government and the gas industry have reached a five-point agreement, bringing an end to the ongoing strike.
The Nepal LP Gas Industry Association had halted gas imports, demanding higher profit margins. The Nepal Oil Corporation (NOC) agreed to increase operational costs by Rs 12.75 per cylinder, but assured consumers that they wouldn’t bear the extra cost. Gas supply will resume starting Wednesday.
Six firms shortlisted for loan portfolio review
Nepal Rastra Bank has shortlisted six firms to review the loan portfolios of Nepal’s top 10 commercial banks. The review, initially launched last fiscal year, was delayed due to procurement issues.
The shortlisted firms include Deloitte Partners (Sri Lanka), Howlader Yunus & Co. (Bangladesh), KPMG Assurance & Consulting Services (India), Mehra-JKSS-SSBDI JV (India-Nepal), MSKA & Associates (India), and SRBA & BK Agarwal & Co. JV (India-Nepal).
PM Oli warns against paying workers below minimum wage
Prime Minister KP Sharma Oli has warned that paying workers below the minimum wage is illegal and punishable by law.
Speaking at the 78th anniversary of the Nepali Trade Union Movement, he stressed the importance of paying fair wages to workers for the prosperity of industries. He also called for global cooperation to address the impact of climate change on the Himalayas.
Finance Minister pushes for swift passage of Banking and Securities Bills
Finance Minister Bishnu Prasad Paudel has urged the prompt passage and implementation of the Bank and Financial Institutions (First Amendment) Bill and the Securities (First Amendment) Bill.
Speaking to the Finance Committee, Paudel emphasized the need for swift deliberations to prevent delays.
The Committee also discussed amending customs laws to facilitate trade and align with international agreements like the Kyoto Convention and the WTO Trade Facilitation Agreement.
NRB allows bank accounts for children
Nepal Rastra Bank (NRB) has clarified that there are no age restrictions for opening a bank account. Parents can now open accounts for their children using a birth certificate or minor ID card.
The accounts will be managed by guardians until the child reaches adulthood, at which point the individual will gain control of the account.
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