Views of a Nepali Economist

Commercial banks have announced a cut in short-term lending rates by half to 2 percentage points in a bid to stimulate borrowing, which has slumped over the last three months due to slowdown seen in manufacturing and real estate sectors. Overall, interest rates on short-term loans - which include demand loans, overdrafts and export bills, among others - have now come down to an average of 12 percent from around 14 percent earlier.

Price of seasonal vegetables has increased by Rs 2 to Rs 15 per kg due to lower supply from neighboring districts.

Landmark Worldwide (LMW), a South Korean company that carried out detailed feasibility study (DFS) for the second international airport in Nepal at Nijgadh in Bara district, has filed an application with the government to allow it to construct the much-talked airport.

The Ministry of Agriculture and Cooperatives (MoAC) has prepared a set of guidelines for the proposed Farmer Concession Card to provide agriculture inputs at subsidized prices to poor farmers having less than four hectares in Tarai and thirty ropanies in Himalayan and Hilly districts. The guidelines envisage providing subsidy to the farmers on fertilizer, seeds and other agriculture inputs.

The Supreme Court on Wednesday issued an interim order to ban the production, import and sale of tobacco products that do not bear signs warning the harms of tobacco consumption. As per the law, the signs must come with message written in Nepali and the provision will be applicable also for imported tobacco products like cigarette and chewing tobacco. This particular provision is expected to discourage the import of foreign brands.

The government has raised the customs duty exemption for goods imported from bordering markets for household purposes to Rs 1,000 from Rs 100. A cabinet meeting on Monday took the decision to this effect. This means that those who buy goods worth up to Rs 1,000 by crossing the border will not be required to pay import duty. Although the Finance Ministry had proposed increasing the limit to Rs 500, the ceiling was increased further after immense pressure from Madhesi parties.

Nepal is witnessing a “gradual diversification” when it comes to its trading partners as well as products in the last few years, according to the World Trade Organisation’s (WTO) International Trade Statistics-2011. The European Union (EU) is now the country’s second largest export destination with a share of 11.1 percent of the total exports. However, the US that was the second largest destination in 2008 has slipped to the third position. Likewise, Bhutan has entered the list of Nepal’s top five export destinations. Not only in exports, there have been changes in the country’s import destination list also. India and China are still top two import destinations for Nepal, but the United Arab Emirates (UAE) has entered the top-five list in 2010 as the third largest destination. The UAE accounted for 8.9 percent of the total imports in 2010, mainly due to the huge import of gold. Nepal’s bullion traders that used to import gold from Australia, are now importing gold from the UAE.

Two years after the introduction of Monsanto seeds in Canada and the United States, for example, yields started to go down between 10-15 per cent. There has been a substantial increase in the use of chemicals resulting in the creation of "super weeds" requiring more highly toxic "super" chemicals, some containing agent orange. USAID and Monsanto are not implementing this program for the 'development' of Nepal and the betterment of the people. It will profit both, and cement the relationship between the US government and Monsanto already revealed in Wikileaks. A small number of thulo manchhe haru in the Nepal government will profit, but Nepali farmers will get poorer, Nepali soil will be damaged. The export potential will very likely be damaged with many countries refusing to import food products from Monsanto's hybrid and GMO seeds. If the pilot program goes ahead, the United States will leave a legacy of environmental degradation, human health issues, social disintegration and hardship. The USAID-Monsanto partnership is blatant exploitation of a corrupt and unstable government in Nepal. There is no 'point of no return' when it comes to this issue. Monsanto's presence in Nepal will be irreversible and will result in the introduction of genetically-modified crops, further alienating farmers from their land and food production, with disastrous consequences.

Exporter’s failure to verify exact value addition to Department of Industry has kept them away from the cash incentive facility. According to the exporters, the Cash Incentive Policy should be hassle free. According to the government criteria for cash incentive, if a product has a value addition of 30 per cent to 50 per cent, the exporter will get cash incentive of two per cent, whereas if the value addition is 50 per cent to 80 per cent, the exporter will get three per cent cash incentive, and value addition of more than 80 per cent will get a total cash incentive of four per cent. But, cash incentive will only be granted to exports made in convertible currency and the exporters will get cash incentive from the same bank with which they are doing the transaction.

From the assets size, the banks can be divided into four groups; largest (with above Rs 60 billion worth assets), large (Rs 40 billion-Rs 60 billion), middle (Rs 20 billion-Rs 40 billion), and small (with below Rs 20 billion worth assets). Only one commercial bank features in the largest bank category, whereas eight banks feature in the large banks category. The middle banks category has seven banks and the small banks category has 15 banks among the 31 commercial banks. The huge gap in the size of the banks calls for the necessity of merger immediately. The size of the banks can give some indications on which banks should be merged and how can a strong bank be formed.

At the 24th meeting of National Development Problem Solution Committee, vice chairman of the NPC Deependra Bahadur Kshetri said that only 38 projects met the target out of the total 224 projects. “The data shows that the project completion trend is also not satisfactory,” he said, adding that some 18 per cent development projects have completed 50 to 80 per cent of its works. Due to delay in their execution they have been hit by the time overrun cost. “The expenses of some of the big projects have increased in unpredictable manner because of delay in their execution,” he added.

IMF forecast for the current fiscal year is below the national growth projection of 5 per cent. Last fiscal year, IMF had projected GDP growth 3.5 per cent which was close to 3.7 per cent actual rate of growth achieved by Nepal. “Real GDP growth is expected at 3.25 per cent in 2011-12, with good agriculture output compensating for subdued non-agriculture activity,” according to IMF’s report on Nepal. The report also cautions that the forecast is subject to high degree of uncertainty, with risks on the downside chiefly owing to banking sector fragility. Inflation projection by IMF is at eight per cent while the financial authority had estimated inflation to moderate at seven per cent in the current fiscal year. An expected moderation in India’s inflation and a stabilisation of commodity prices is anticipated to ease the domestic prices of Nepal, according to the report.

Labels: asset size, excise, farmer card, IMF, korea, Monsanto, NPC, rates, tobacco, VAT, vegetables, WTO

# posted by Mukesh Khanal @ 12:03 PM