Weekly Economic Updates (13th September 2024–19th September 2024)
3 min readSep 20, 2024
- Governor Adhikari says Nation’s Economy is improving
Nepal Rastra Bank Governor Dr. Maha Prasad Adhikari announced the economy recovering from the Gorkha earthquake and COVID-19, noting improvements in construction, industry and trade. He noted the implementation of reforms for financial stability by NRB.
(Source:https://thehimalayantimes.com/nepal/governor-adhikari-says-nations-economy-is-improving ) - Sovereign Credit Rating process gets started
Nepal has initiated the process for the Sovereign Credit Rating (SCR) through Fitch Ratings Agency after several delays. The SCR aims to boost foreign investment and allow bond issuance in international markets. FItch has expressed concerns over Nepal’s conventional fiscal policies, citing slow economic progress and a lack of innovation and risk-taking in policymaking.
(Source:https://myrepublica.nagariknetwork.com/news/govt-starts-process-of-the-receiving-the-country-s-sovereign-credit-rating/ ) - Government revenue increases by 7.8 percent, expenditure improves.
The government collected NPR 166.38 billion in the first two months of the current fiscal year, a 7.8% increase from the same period last year. Records from the Financial Comptroller General Office show this amount was collected from mid-July to mid-September 2024/25, compared to NPR 154.24 billion in the same timeframe of 2023/24.(Source:https://myrepublica.nagariknetwork.com/news/govt-revenue-increases-by-7-8-percent-expenditure-improves/) - Government aims at reducing import-based revenue nominally over next five years
Despite efforts to reduce dependency on import-based revenue, the government plans to generate more revenue from imports. The Domestic Revenue Mobilization Strategy (DRMS) 2024, released by the Ministry of Finance, aims to lower customs duty’s share of GDP from 4.8% to 4.5% over the next five years.(Source:https://myrepublica.nagariknetwork.com/news/govt-aims-at-reducing-import-based-revenue-nominally-over-next-five-years/) - Bangladesh Approves Import of 40 MW Hydropower from Nepal Amid Concerns Over Transmission Fees
Bangladesh’s interim government approved importing 40 MW of hydropower from Nepal. However, concerns over India’s transmission fees and missing documents from Bangladesh’s Law Ministry are delaying the tripartite agreement between Nepal, India, and Bangladesh.
(Source:https://www.abhiyandaily.com/article/nepaalbaatt-40-megaavaatt-jlvidyut-laijaan-bnngglaadeshko-antrim-srkaarko-sviikrti) - Nepal Rastra Bank Issues Account Freezing and Release Regulations 2081
Nepal Rastra Bank introduced the Account Freezing and Release Regulations 2081, effective October 2024, outlining documentation requirements for individuals and firms. These new rules clarify procedures, ensuring transparency, but NRB will reject requests without clear legal provisions.(Source:https://ekantipur.com/business/2024/09/15/bank-account-freeze-and-release-regulations-issued-for-the-first-time-09-04.html) - Decline in FDI Commitments in Nepal: Bhadra Sees NPR 5.32 Billion Drop Compared to Shrawan
In the second month of Fiscal Year 2081/82, Nepal’s FDI commitments dropped to NPR 3.83 billion from NPR 9.15 billion. Both automatic (NPR 265 million) and traditional (NPR 3.56 billion) routes saw declines, with tourism, IT, and services having the most approved projects.(Source:https://www.abhiyandaily.com/article/bhdaumaa-ghttyo-videshii-lgaanii-prtibddhtaa) - Public Debt surges to 43.34% of GDP in First Two Months of Fiscal Year
Nepal’s public debt rose by NPR 129 billion in two months, reaching NPR 2.561 trillion, with NPR 125 billion from domestic borrowing and NPR 3.59 billion from external loans. Public debt now accounts for 43.34% of GDP.
(Source:https://www.karobardaily.com/news/267758) - Nepal’s Struggles with Belt and Road Initiative (BRI) Implementation
Nepal’s participation in China’s Belt and Road Initiative, signed in 2017, has stalled due to political instability, skepticism over Chinese loans, and government indecision. Discussions now stress the need for political stability to advance BRI projects.(Source:https://www.abhiyandaily.com/article/biiaaraaii-kaaryaanvynmaa-anishcittaa) - Banks Struggle with Liquidity and Loan Demand
Banks face excess liquidity, keeping funds at the central bank at 3% interest due to a lack of profitable investment options. This shortage of loan demand and increased competition hurt profitability, while the economic outlook remains bleak despite government stimulus.
(Source:https://www.onlinekhabar.com/2024/09/1541890/banks-in-loan-hosakhos-festival-does-not-increase-demand)
