Macroeconomic environment of Nepal 2017

Editor's Notes

• #6: 1. Growth in GDP in fiscal year 2013/14 by 5.72%, then increase in a diminishing rate. 2. Economic activities have expanded due to favorable monsoon, increase in capital expenditure, energy management, and improvement in investment environment including overall supply situation. As a result, gross domestic product (GDP) at basic price is estimated to grow by 6.94 percent in the current fiscal year. 3. This growth rate is the highest since FY 1993/94. Such growth rate was 0.01 percent in the previous fiscal year due to high fall in agricultural and industrial sector by 0.01% and 6.45% respectively. The economy that contracted due to the earthquake and disruption in border points is in the stage of recovery and expansion. 4. Agriculture and non-agriculture sectors are estimated to grow by 5.29 percent and 7.74 percent respectively in FY 2016/17. Such growth rates were 0.03 percent and 0.16 percent in the previous fiscal year. 5. Likewise, service sector and industrial sector are estimated to grow by 6.9 percent and 10.97 percent respectively in the current fiscal year.  
• #7: 1. Primary sector includes activities of the agriculture and forestry and fishery 2. Industry Sector: Mining and Quarrying Sector, Manufacturing Industry, Construction Sector 3. Service Sector: Wholesale and Retail Trade Transport, Communication and Warehousing, Financial Mediation, Real Estate and Business Services, Public Administration and Defense, Education Sector, Hotel and Restaurants, Health Sector and Other Community, Social and Personal Services 4. Nepalese economy is in the stage of structural transformation as the share of service sector is increasing while that of agriculture sector is decreasing. 5. In the fiscal year 2016/17, the share of primary sector has been estimated to decrease to 30% and the secondary sector is estimated to rise to 14%. Similarly, the share of service sector is also estimated to rise to 56% of the total GDP.  
• #9: 1. There is a challenging task of economic development including macroeconomic stability by creating the foundation for the mobilization of resources as well as the availability, assurance and equitable distribution of the means and resources at the federal, provincial and local levels in line with federal governance system.   2. There remains a challenge of increasing domestic production through industrial infrastructure, decent labor relation, energy availability and the production of quality products.   3. It is a challenging task to reduce dependency on foreign employment and foreign aid by creating employment opportunities at home and reaping demographic dividend by developing human resources as per the national needs and demand.   4. Modernization and commercialization of agriculture by increasing production and productivity through an adequate arrangement of agricultural inputs such as improved seeds, fertilizers, irrigation, agricultural credit, technology, and skilled human resource is a challenging task.   5. Formulating strategies and work plans of scientific land-use policy and managing land effectively by resolving problems of uncontrolled land use and encroachment (violation) of public land have been daunting tasks.   6. There remains a challenge of containing inflation rate within desired limit by effectively managing supply through market monitoring and price information system as well as managing of the storage and distribution system of all the goods including petroleum products.   7. It is challenging to increase investment bearing capacity in line with sustainable fiscal structure and resource mobilization for the implementation of state policies and fundamental rights envisoned in constitution.   8. Timely completion of reconstruction works by ensuring budget for the development of modern settlement and the reconstruction of earthquake damaged private buildings, schools, health post, public buildings, cultural heritages and, physical and social infrastructures has been a challenge.
• #19: Types of Industries Total Capital Contribution in % (out of total Rs. 1084210.4 million) Agro-based 1.5 Construction 3.9 Energy 54.8 Production Oriented 21.2 Mining 0.4 Service 10.8 Tourism 7.3
• #20: Types of Industries Employment Generation (in%) Agro-based 6.4 Construction 0.6 Energy 5.2 Production Oriented 55.7 Mining 1.2 Service 20.8 Tourism 10
• #47: Monetary Policy for 2016/17 aims at containing annual average CPI Inflation at 7.5 % and maintaining foreign exchange reserves sufficient to cover the imports of goods and services at least for 8 months. Likewise, the monetary policy is geared to facilitating the economic growth rate of 6.5%. In the line with the above mentioned economic target, the broad money, as an intermediate target of monetary policy, is projected to increase by 17% in 2016/17. The monetary policy set the target of internal credit growth rate of 25 percent and the private sector credit is projected to grow by 20 percent. (The money supply is the totality of assets that households and businesses can use to make payments or to hold as short-term investments, such as currency, funds in bank accounts and anything of value resembling money. measure of the money supply that includes more than just physical money such as currency and coins (also known as narrow money). It generally includes demand deposits at commercial banks, and any monies held in easily accessible accounts.) CPI=A consumer price index measures changes in the price level of market basket of consumer goods and services purchased by households. Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.
• #48: The interest rate in case of refinance of loan to agriculture business including electricity and other productive sectors has been maintained at 4 % Traders importing goods via third-countries using instrument like draft and telex transfer to be extended foreign exchange facility of upto $50000 for one-time payment Ceiling on consortium financing raised to Rs. 1 bn form existing Rs. 500 mn. (A group of companies that cooperate and share resources in order to achieve a common objective, not a merger and the companies remain independent.) Commercial banks directed to channel 15% of total loans towards agriculture and energy sectors from 12 percent Over Rs. 3 million of financial transactions to be conducted through Cheques, previous ceiling stood at Rs. 5 million. Microfinance development banks directed to raise minimum paid-up capital to Rs. 600 Million within mid-July ,2018
• #52: year 2015 2016 % Change Air 407412 572563 41 Land 131558 180439 37 Total 538970 753002 40 Total Earning (US dollar '000,000) 497.83 518.49 11
• #53: Economic Liberalization is the gradual process of lessening government regulations and restrictions in the economy. It advocates greater participation of the private sector in the economic activities. It involves combining the economy with the rest of the world. Goal is to maintain or increase economic competitiveness by encouraging private sector on a competititive basis by reducing government intereference. History: Implemented from 1990 with predominant emphasis on privatization and open market policies After the adoption of these policies, a new industrial policy was enacted in 1992 that gave priority to the promotion of export oriented industries May be viewed from 2 perspectives.
• #54: Introduction to One window policy to provide quick and effective way the approvals, facilities and other administrative services to industries export duty drawback= the refund of duties, taxes, and fees imposed on imported merchandise which is subsequently exported. Bonded warehouse= a customs-controlled warehouse for the retention of imported goods until the duty owed is paid
• #55: fully convertible = can be traded in all international foreign exchange market Refinance= refer to the replacement of an existing debt obligation with another debt
• #56: Also called security market Refers to the part of a financial system concerned with raising capital by dealing in shares, bonds and other long-term investments Plays important roles in mobilizing savings and channels them into productive investments for the development of trade and industry Helps in capital formation and economic growth of a country
• #57: Floatation= process of offering a company's shares for sale on the stock market for the first time.
• #58: Foreigners allowed to invest in the stock exchange 15% income tax exemption for firms that issues shares to public No any regulatory intervention in pricing of IPO and price determined based on demand from investors and how much they desire to pay per unit share International financial institutions allowed to issue local currency Develop a compatible system for cross-border trading to bring investment from foreign institutional investors and non-resident Nepalese