Monday, September 18, 2017

Central bank issues new banknotes worth Rs 11 billion

The central bank has issued Rs 11 billion worth of new banknotes to different banks and financial institutions meant for Dashain till Monday.
Executive director at the Currency Management Department of the central bank Laxmi Prapanna Niraula said that the Nepal Rastra Bank (NRB) has circulated new notes of Rs 5, Rs 10, Rs 20, Rs 50 and Rs 100 denomination worth Rs 11 billion over the last one week.
The central bank had started the distribution of new currency notes to the public from September 13.
"The demand for new notes in banks and financial institutions is increasing," he said, adding that the central bank expects the demand for new banknotes during Dashain this year to increase by almost 20 per cent compared previous Dashain. "NRB had issued new currency notes worth Rs 11 billion during Dashain last year."
The central bank might circulate around Rs 14 billion in new notes in the market this Dashain. However, the central bank will issue new banknotes to financial institutions and public up to September 26 only.
The demand for new currency notes during Dashain is increasing every year also due to expansion of the banking system across the country apart from increase in purchasing capacity of people.
According to the central bank, an individual can exchange new notes upto Rs 27,000 per person.
Different banks and financial institutions have been distributing new banknotes to the public but Nepal Bank, Agricultural Development Bank and Rastriya Banijya Bank are providing the exchange facility of new notes worth only Rs 20,000 from their 16 branches across the country.
The central bank also expects to circulate an additional Rs 4 billion worth of small denomination notes – Rs 5, Rs 10, Rs 20, Rs 50 and Rs 100 – before the Dashain vacation begins.
“We are expecting the demand for small denominations to hit Rs 15 billion this year,” central bank spokesperson Narayan Prasad Poudel said, adding that there will not be a shortage of new notes this year.
The central bank has set up counters at its currency management department at Thapathali and 16 branches of Rastriya Banijya Bank Nepal Bank and Agricultural Development Bank in order to meet such demand. 

Sunday, September 17, 2017

World Bank forecasts moderate economic growth of 4.6 per cent

The economic growth is expected to be moderate at an average of 4.6 per cent in the current fiscal year – fiscal year 2017-18 – and 4.5 per cent in the next fiscal year as agriculture output is expected to drop due to the recent floods and both export growth and remittance growth have been tapering along with the oil price shock in the Gulf countries.
Releasing the ‘Nepal Development Update’ – a semiannual publication of the World Bank to report on key economic development of the country – the multilateral development partner said that severe floods in the southern plains of the country in mid-August has hit the country’s economy.
The World Bank had lowered its forecast following devastations caused by floods, which are expected to affect agricultural output, which contributes to around 30 per cent of the GDP. The floods have affected over 5 per cent of the total population, with several districts recording the heaviest rainfall in 60 years. Over 80 percent of land in southern Tarai, the country’s food basket, was affected. Estimates of destroyed crops at 64,000 hectares will likely lead to a weak agricultural output in the current fiscal year. This will hamper agricultural output in 2017-18, according to the report.
According to the World Bank, service sector is expected to grow by 5.8 per cent, industrial sector by five per cent and agriculture sector by 2.7 per cent in the current fiscal year compared to 6.9 per cent growth in service sector, 10.9 per cent growth in industrial sector and 5.3 per cent growth in agricultural sector in the last fiscal 2016-17.
"Economic activity in Nepal, which rebounded strongly in the last fiscal year, reaching 7.5 per cent following two challenging years, has again been impacted by severe flood affecting more than one-third of the country,” according to the World Bank report.
The Washington DC-based multilateral lender’s forecast is far lower than the government’s target of 7.2 per cent growth in the current fiscal year.
Speaking at a media briefing World Bank economist Sudyumna Dahal – also principal author of the update – said that severe floods in the Tarai are likely to affect agriculture, economic activity, and poverty reduction efforts even up to the current fiscal year 2017-18.
The industrial sector growth is also expected to slow down due to base effect, impact of the floods and slow implementation of electricity generation projects, which can contribute to industrial growth like 465MW-Upper Tamakoshi Hydroelectric project, he said, adding that service sector growth may also be affected due to slowdown in remittance inflow and remittances have been lubricating the economy by stabilising wholesale and retail trade.
Nepal posted 7.5 per cent economic growth in the last fiscal year – the highest since fiscal year 1993-94 – on the account of low base of a fiscal year ago, rise in agricultural output on the back of one the best monsoons in recent years, improvement in industrial growth amid end of power cut and strong revival of growth in tourist arrivals.
However, economic growth in the current fiscal year is likely to face a setback from the recent flooding, according to the development partner. Though there has not been any assessment of the damage and losses caused by the floods, preliminary estimates show that 64,000 hectare of standing crops have been destroyed. Similarly, the floods have had a significant impact on critical infrastructure, with 80 schools across 28 districts destroyed and 710 damaged. Likewise, agricultural output, one of the major contributors in the GDP, is going to be hit worst by the flood.
"Particularly, agricultural output, which was expected to be normal, will be impacted by floods," the report reads, adding that the impact on industry sectors is however expected to be temporary, while construction is likely to remain strong driven by earthquake and flood reconstruction. "The transition to the federal structure is likely to weigh on the economic activity of the country amid challenge on budge execution in the new set-up."
Likewise, an overly ambitious budget has continued into the current fiscal year as well which is going to pose a challenge because of the lack of clarity around spending in the federal structure and several upcoming elections.
"As the country moves to a federal structure, there is lack of clarity regarding the fiscal architecture in the federal context, which can cause unintended interruptions in service delivery and execution of capital projects,” added the report which has a special focus this time on fiscal architecture for federal set-up.  
The budget for the current fiscal year has proposed a total of Rs 242 billion in transfers to the local level governments.
"The subnational governments will play an increasingly critical role in Nepal’s public expenditures,” said the World Bank’s Country Manager for Nepal Takuya Kamata. "A system of fiscal transfers that is designed for transparency and predictability and supported by a small set of simple rules, could go a long way in helping meet the development objectives of federal Nepal,” he said.
Likewise, slowdown in remittances will hit private consumption, however, the government’s consumption is expected to grow substantially as the current fiscal is the ‘de-facto year’ in terms of implementing the federal structure as the final phase of local elections as well as provincial and federal elections is going to take place within this fiscal. Export of services is expected to grow along with a rebound in tourism sector, however, export of goods to neighbouring India may slump because Nepali products have become expensive in the Indian market since the implementation of the goods and services tax (GST) in the southern neighbour from July 1.
However, on the brighter side the inflow of tourists will help revive the flagging tourism industry and progress in reconstruction activities will contribute to stimulate economic growth.

More women are working in Nepal

Nepali women are gradually climbing up in the job map comparatively more among the South Asian countries.
A World Bank paper reveals that the female workforce is rising in most parts of the world and so is in Nepal. In Nepal, women labour force employment is 79.9 per cent while in Bangladesh it is 57.4 per cent. In India 27 per cent of working age women were employed and in Pakistan the number stands at 24.6 per cent in 2015-16, the papers reads, adding that China – with its powerhouse economy – has 64 per cent of its women working, one of the highest rates in the world. "In the US, it is over 56 per cent."
Apart from parts of the Arab world, everywhere else more women are working.
The World Bank paper – by Luis Andres and colleagues – revealed that whether married or unmarried, whether Dalit, Adivasi or from the upper caste, whether illiterate or college graduates, women from all sections were increasingly not working in India.

Saturday, September 16, 2017

Bhaban Bhatta announces candadicy for NRNA president

Bhaban Bhatta today declared his candidacy for the post of president of Non Resident Nepalis Association (NRNA)-International Coordination Council (ICC).
Bhatta, the incumbent NRNA-ICC vice president, said that the NRNs have been contributing in national economy through investment of their capital, skill and technology.
Bhatta, who made a fortune from hospitality business in Japan, has also made investments in the apparel industry, education, hospitality, media and aviation sector in Nepal. He also has investments in the hospitality industry in Europe.
Announcing his candidacy, Bhatta pledged that he would give continuity to works initiated by the NRNA, if he is elected the president. The works include completion of model settlement at Laprak in Gorkha, which was devastated by the 2015 earthquakes; construction of NRNA’s own headquarters in Kathmandu; implementation of Vision 2020 and Beyond, prevention of brain-drain while encouraging those abroad to return Nepal.
He, on the occasion, also said that NRNA – under his leadership – will contribute in entrepreneurship development and transforming the country’s tourism sector by mobilising NRNA’s vast network and encourage national coordination committee of each nation to start at least one flagship project in Nepal. The association that was established some 14 years ago, has its network in 77 countries.
Likewise, he also pledged to set up a start-up fund through NRNA so that innovative ideas will get a chance to be realised to benefit especially women and youth. He also promised to work for the welfare of migrant workers through NRNA’s network and start insurance through mobilising a welfare fund. The Fund has been currently used for the rescue and relief of migrant workers. The NRNA has Rs 50 million in Foreign Employment Fund at present. "I will introduce insurance products for Nepalis working abroad," he said, addressing the media.
Around 1,500 to 2,000 NRNs are gathering in Kathmandu for the NRN Global Conference and NRNA International General Assembly on October 14-17. The NRNA-ICC had last held its election in 2015.
During the four-day event, NRNs will choose the new president, as incumbent president Shesh Ghale, is stepping down after completing his second two-year term. According to the Statute, one can have only two terms as president.
The International General Assembly will also elect different NRNA-ICC’s executive committee member. It will also elect regional coordinators and co-coordinators for six regions including Asia-Pacific, Europe, America, Oceania, Africa and the Middle-East.
No wonder as the umbrella association of Nepali Diaspora is scheduled to hold its 8th Global Conference in Kathmandu on October 14-17 to elect a new leadership for 2017-2019- term, aspirants have started announcing their candidacy but no one has formally announced candidacy for the post of president till date. Due to his growing clout in diaspora and positive energy, Bhatta is seen as a lone candidate for the president. But many other NRNs have started announcing for various posts for the next term as the election fever is slowly gripping the NRNs more.
The NRNA that is now expanded to 77 countries around the globe, except in South Asia, has over 100,000 members, though it is reported that 5 million Nepalis are living in 110 countries throughout the world.

Thursday, September 14, 2017

Nepal, MCC sign largest grant agreement

Nepal has signed a long-awaited deal with the Millennium Challenge Corporation (MCC) to mobilise $500 million grant for the development of energy and road transport sector, which are considered the major constraints for the economic growth of the country.
Finance minister Gyanendra Bahadur Karki and acting chief executive officer of the MCC Jonathan Nash signed the pact, on behalf of the Government of Nepal and US Government’s MCC respectively, in US Department of State’s Treaty Room in Washington DC today.
The signing ceremony was attened by US deputy secretary of State John J Sullivan, Nepal’s ambassador to US Dr Arjun Kumar Karki, US ambassador to Nepal Alaina B Teplitz and senior officials from both the governments.
"I am pleased to be one of the signatories of this Compact Agreement that opens up an additional avenue of US-Nepal bilateral relations and economic cooperation," finance minister Gyanendra Bahadur Karki said after the signing ceremony.
"Today, as we sign this $500 million MCC compact with Nepal, we are celebrating a new chapter in the US-Nepal partnership,” MCC acting chief executive Jonathan Nash said, adding that this compact is designed to spur economic growth and private investment, and open new markets to benefit the economy, regional security and the broader global community.
According to head of the International Economic Cooperation Coordination Division
Baikuntha Aryal, the US government’s grant will be instrumental in transforming the economic landscape of the country through development of electricity transmission line via major load centres of the country to Indian border, which will also facilitate cross-border electricity trade. "The upgradation of major highways will be the lifeline for country’s economic development," he added.
Nepal will be able to mobilise $630 million – $500 million from MCC and $130 million counterpart fund – for the installation of 300-km high voltage electricity transmission lines along with three substations of 400 kV and maintenance of roads with total length of 305 km that would help spur economic growth and reduce poverty in Nepal.
"These projects need to be implemented within five years from the starting date of project, otherwise the money will go back to the US,” Aryal said. "Nepal government is responsible for land acquisition, resettlement and right of way clearance to implement the projects."
The Nepal Compact – MCC’s first compact in South Asia – aims at strengthening Nepal’s energy sector, improve regional energy connectivity, and control transportation costs to encourage growth and private investment for job creation. MCC’s investment is expected to benefit about 23 million people.
The MCC had selected Nepal for a smaller threshold programme in December of 2011. The MCC and government had analysed economic growth constraints and jointly prepared a policy improvement programme based on the results. Given Nepal’s strong performance in its MCC policy indicator scorecard through 2014, MCC’s board of directors selected Nepal to be eligible to develop a compact, a larger grant-based investment.
Nepal first passed the MCC scorecard – as it met at least 10 of a set of 20 indicators ranging from child health to fiscal policy to government effectiveness – in late 2014 before the MCC’s board officially approved Nepal for a compact – in December 2014 – and the deal has been in development since then.
A group of MCC and local economists first worked on a growth diagnostic to identify binding constraints that were impeding private sector investment. They had identified power and transportation as key barriers for Nepal's economic growth.
On the basis of the study, the compact programme is investing in an Electricity Transmission Project (ETP) and a Road Maintenance Project (RMP). The ETP is expected to transform power sector by expanding and strengthening the high voltage electricity transmission network to support new investments in generation and allow greater cross-border electricity trade. Likewise, the RMP is expected to improve the road maintenance regime and complement existing efforts to build new roads by other parties.
Out of the $500 million, $398.2 million will be spent on the electricity transmission project while $52.3 million has been allocated for the transportation project. The remaining fund of $49.5 million is for the monitoring and evaluation and programme administration, according to the MCC, an independent US government agency working to reduce global poverty through economic development.
Office of the Millennium Challenge Nepal (OMCN) – a Nepal government office which coordinates development of MCC programme – in coordination with MCC, had finalised the projects that are going to be implemented under the MCC grant.

Identified Energy projects
Transmission line and substations (400 kV)
Lapsifedi (Kathmandu)-Damauli (Tanahu)
Galchhi (Dhading)-Hetauda (Makawanpur)
Damauli (Tanahu)-Sunwal (Nawalparasi)
Three substations (of 400 kV) at Galchhi, Damauli and Sunwal (India border)

Road maintenance
Mechi Highway
Koshi Highway
Sagarmatha Highway
Tribhuvan Rajpath (Bhaise-Hetauda section)
Bhaise-Bhimphedi
Amelia (Dang) to Tulsipur (Dang)

Monday, September 11, 2017

UN Global Emergency Response Fund provides $4.8 million for flood affected

The UN’s Central Emergency Response Fund (CERF) has announced $4.8 million new humanitarian funding to help address urgent needs amongst flood affected communities in the Terai.
"The CERF is one of the fastest ways that the UN has to support people affected by crises,” UN Resident Coordinator Valerie Julliand said. "These funds will allow the Humanitarian Country Team through UN agencies and their partners to quickly scale-up their urgent activities and deliver additional shelter, food, critical health care and more to 700,000 people," he said, adding that the latest disaster has impacted already vulnerable and poor regions of Nepal including areas of the Terai which were affected by major flooding in 2014. "Schools, medical centres and houses have been destroyed and large areas of crops washed away."
Immediate assistance is now needed to help people recover and to prevent a further worsening of the humanitarian situation," Julliand added. "The rapid allocation from the CERF is hugely important and my appreciation goes to all donors to the fund whose support will help to reduce human suffering and to restore dignity."
At least 66 persons were killed and 35 were injured in the floods and landslides triggered by torrential rainfall in various parts of the country in August last month.
According to the Home Ministry, hundreds of families have been displaced after floodwaters gushed into human settlements in most parts of the Terai region.
Panchthar, Ilam, Jhapa, Morang, Sunsari, Siraha, Rautahat, Mahottari,  Sindhuli, Bara, Parsa, Makawanpur, Chitwan and Lalitpur are some of the most flood-affected districts.

MDBs increase 2016 financing to tackle climate challenge, South Asia gets largest chunk

The world’s six largest multilateral development banks (MDBs) continued to make a strong contribution to the global climate challenge in 2016, increasing their climate financing in developing countries and emerging economies last year to $27.4 billion from $25 billion in 2015.
Of the total, $21.2 billion or 77 per cent was dedicated to climate mitigation finance, with the remaining 23 per cent devoted to climate adaptation.
Combined with additional co-financing from other investors, the total amount of finance mobilised for climate action reached $65.3 billion last year.
The MDBs have reported jointly on climate finance since 2011. Collectively, the banks have committed over $158 billion in climate finance during the past 6 years.
The latest MDB climate finance figures are detailed in the 2016 Joint Report on Multilateral Development Banks’ Climate Finance, combining data from the African Development Bank, the Asian Development Bank (ADB), the European Bank for Reconstruction and Development, the European Investment Bank, the Inter-American Development Bank Group, and the World Bank Group.
"ADB acknowledges MDB’s pivotal role in providing climate finance and remains committed to strengthen its collaboration with other MDBs and ultimately to the successful implementation of the Paris Agreement,” ADB vice president for Knowledge Management and Sustainable Development Bambang Susantono said, adding that the ADB has recently approved its Climate Change Operational Framework 2030, which will guide in enhancing resilience and strengthening climate actions in the Asia and Pacific region.
Broken down by region, the largest share of last year’s MDB climate finance went to South Asia, with 20 per cent, followed by East Asia and the Pacific and non-EU Europe and Central Asia, with 19 per cent and 18 per cent, respectively. The Middle East and North Africa, at 9 per cent and Sub-Saharan Africa, at 7 per cent, received the least climate finance.
The MDBs also reported again on climate finance according to financial instrument. The vast majority of finance, or 73 per cent, was provided in the form of investment loans.
The MDBs’ methodologies for climate finance tracking align with the Common Principles for Climate Change Mitigation Finance Tracking, jointly agreed by the MDBs and by the International Development Finance Club (IDFC), and first published in March 2015.
The MDBs and the IDFC agreed on the Common Principles for Climate Adaptation Finance Tracking in July 2015. The MDBs and the IDFC have begun taking the next steps to harmonize their approaches in tracking adaptation finance.
The MDBs are continuing to work to update their joint tracking methodologies for mitigation and adaptation to support the goals of the Paris Agreement, playing a key role in defining the finance flows consistent with a pathway towards low greenhouse gas emissions and climate resilient development.
ADB – based in Manila – is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB is celebrating 50 years of development partnership in the region. It is owned by 67 members, 48 from the region. In 2016, ADB assistance totaled $31.7 billion, including $14 billion in co-financing.