The Nepal Finance Ministry lowered the projection following the Nepal budget 2019-20 implementation trend in the first three months of the ongoing fiscal.

According to the Ministry officials, the revised economic growth projection was based on the anticipation of low agricultural growth throughout 2019-20 and the slow pace of government expenditure.

The government has a projected a drop in paddy production this year, owing to faulty Garima seeds. Due to the drop in paddy production, the government is also anticipating an overall drop in Nepal’ agriculture output as paddy makes up for a major part of the country’s overall agricultural production.

In FY 2018-19, Nepal’s economy grew by 7 percent due to a major contribution the agricultural sector, especially paddy production.

The drop in agriculture is further likely to impact Nepal’s Gross Domestic Product (GDP) as agriculture alone makes up for 28.5 percent of it.

Likewise, the Nepal Government has not been able to increase the pace of its capital expenditure spending. This is due to the low pace of development and economic activities in the country. In the first three months, the government spent only 5.8 percent which is NPR 23.97 billion of the total allocated NPR 408 billion under capital expenditure of the current fiscal.

“All these factors show that we will not be able to meet the economic growth target initially projected for 2019-20,” said a source at the Ministry.

According to Economist Raghubir Bista may fail to achieve the targeted growth rate even if it managed to increase public spending.

“Despite increased investment in infrastructure, capital expenditure is far below the level needed to achieve the ambitious growth target,” said Bista.

Projections by World Financial Giants

The World Bank had projected a growth of 7.1 percent for the Nepal economy in the ongoing fiscal, which would be propelled by private investment and consumption. On the other hand, the Asian Development Bank (ADB) also projected a growth of 6.3 percent and said it would grow further if the capital expenditure increases even at the sub-national level and the private sector strengthens its hold.

Economists say that even a growth of 8.5 percent is achievable, however, the government has not done enough to manage infrastructure for the growth of the economy.

“Along with inadequate infrastructure, the government has not managed to expedite project development and budget expenditure, improve project implementation and attract ample investment,” said Biswo Poudel, an economist, adding that achieving the initial economic growth target of 8.5 per cent against this backdrop would have been difficult.

The private sector has also expressed dissatisfaction over the country’s business environment.

The post Nepal Government Revises Economic Growth Rate By 1.49 Percent appeared first on Nepali Sansar.

The country’s Gross Domestic Growth is expected to remain NPR 3.464 trillion. This year’s growth rate is comparatively higher than the previous year’s growth rate of 6.3 percent.

Nepal’s economic growth rate took a hit in FY 2072-73 when the Gorkha earthquake struck the country and stalled its livelihood.

The per capita income for FY 2075-76 is estimated to reach USD 1, 034 compared to last year’s USD 998. Likewise, the total number of people living below poverty line has also reduced. A total of 18.7 percent people are currently under poverty line.

According to the white paper presented by Finance Minister Yubaraj Khatiwada one and half year ago, 21.6 percent of the people were living below poverty line.

The post FY 2075-76: Nepal Records Positive Economic Growth, Reduced Poverty appeared first on Nepali Sansar.

Standing top of the list of provinces, Province 5 reported 7.37 percent growth rate for the fiscal year.

The Central Bureau of Statistics (CBS) said this in its announcement in Butwal on May 20, 2019.

Meanwhile, Gandaki Province stood second with 7.06 percent economic growth, followed by Province 3 (7.04 percent), Province 2 (6.53 percent), Province 1 (6.49 percent) and Far Western Province (6.25 percent), respectively.

Province 5 had 6 percent topped the list in the last year.

This news gains significance in view of the government’s emphasis on growth of local bodies in the upcoming year through Federal Budget 2019-20.

Hope the governmental efforts will reflect in overall economic growth of the country.

Also Read:–

• Gandaki Province Ahead in Nepal’s Cable Car Projects
• Province 3 Wins Nepal U16 Cricket League Championship
• Nepal Province 2 Introduces Education Insurance Program for Daughters
• Province 5 Five-Year Plan Structuring in Full Swing

The post Province 5, Nepal’s Top Financial Performer for 2018-19 appeared first on Nepali Sansar.

In its latest South Asia economic outlook report on April 07, 2019, WB noted that Nepal is poised for a 6 percent economic growth rate in FY 2018-19.

“In Nepal, GDP growth is projected to average 6 percent over the medium term. The services sector is forecast to benefit from strong tourism and manufacturing will be supported by the opening of Nepal’s largest cement factory next year,” WB said in its release.

While the growth is expected to be strong in the mid-term, WB said the country will need to consider few risk factors in its way forward.

World Bank’s Risk Factors for Nepal Economy include:

• Constraints in Reform implementation
• Vulnerability to Natural Disasters
• Slow-paced reforms to rise private investment, especially foreign investment
• Resource availability
• Supporting federalism
• Hit to Remittance Inflows
• Sustaining Service delivery
• Credit constraints as banks limit lending to meet the Credit To Core Capital Plus Deposit (CCD) ratio regulatory limit
• Fiscal discipline at the local level

“The poverty outlook is especially sensitive to remittance inflows, natural disasters and local level implementation capacity constraints that may hamper service delivery…”

“The transfer of financial management staff over a year ago made it possible for local governments to prepare budgets and receive fiscal transfers of 8 percent of GDP in FY2018/19. However, under-spending of the budget persists,” WB said in its release.

However, WB economic growth projections for Nepal for FY 2019 are below ADB’s expectations of 6.5 percent, IMF’s 6. 5 percent and the government’s own target of 8 percent.

“In Nepal, GDP growth is projected to average 6 percent over the medium term. The services sector is forecast to benefit from strong tourism, and manufacturing will be supported by the opening of Nepal’s largest cement factory next year,” the report added.

Also Read:

• Foreign Aid to Nepal: World Bank Tops, Govt Eyes Capacity Development
• World Bank Predicts a 5.9% Growth Rate for Nepal in 2019

The post World Bank Cautions Nepali Economy on Key Risk Factors appeared first on Nepali Sansar.

In its latest Nepal Macroeconomic Update released on April 03, 2019, ADB projected Nepal’s economic growth rate at 6.2 percent for FY 2018-19 and 6.3 percent for 2020.

Though there is only a slight rise in projection from 2019 to 2020, ADB says the Himalayan nation can achieve more, and in a sustained manner.

“The outlook is for a stable growth on the back of strong domestic demand, fueled by a larger budget allocation to sub-national governments and accelerated post-earthquake reconstruction,” said ADB Country Director for Nepal Mukhtor Khamudkhanov.

Source: Asian Development Bank

However, the country needs to address some challenges for smooth implementation of fiscal federalism and maintain fiscal discipline to achieve the expected growth.

“Challenges to smooth implementation of fiscal federalism and maintaining fiscal discipline at large could pose potential risks to the outlook. Nepal has the potential to achieve and sustain higher growth rate over a long period of time if these challenges are addressed,” Mukhtor adds.

Sector-wise

ADB projects a positive outlook for the agriculture sector, which is likely to grow up to 4.5 percent from 2.8 percent of the previous year, favored by monsoons.

This monsoon season is expected to boost Nepal’s paddy production to 5.5 million tons, giving an 8.4 percent year-on-year rise.

Industry sector is another area poised for a growth rate, at around 7.1 percent supported by enhanced power supply and favored investment climate.

Services sector is also expected to grow by 6.4 percent in FY 2019 as a result of positive trend in wholesale & retail trade and hotel industry, among other related areas, the report added.

Also Read

• FY 2018-19: Nepal Poised for Healthy, But Slow Economic Growth
• Nepal 2018 Highlights: Path of Progress Began! 

The post Nepal Poised for 6.2% Economic Growth in FY 2019 appeared first on Nepali Sansar.

The Kantipur Conclave is being organized by the Kantipur Media Group and has brought together eminent speakers and attendees from across the globe to hold discussions on diverse issues Nepal faces & solutions to propel the country’s growth.

The motto for this year’s conclave is ‘Unleashing Nepal’s Potential’.

Speaking at the inaugural ceremony of the conclave, World Bank Country Director- Nepal, Sri Lanka and Maldives Idah Pswarayi-Riddihough said Nepal’s stable government has been able to strategize and execute long-term goals for the country after many decades of instability.

“After decades of political transition following the Comprehensive Peace Agreement and the devastating setbacks of 2015 earthquake & 2017 floods, we are now back on the path towards a ‘Prosperous Nepal and Happy Nepali’,” stated Pswarayi-Riddihough.

She also spoke about how the natural disasters of 2015 and 17 had thrown Nepal off the development path. However, the World Bank Country Director believes that Nepal is on the right path to achieving ‘Middle Income Country’ status by 2030 by looking at the current data and analysis.

The WB Country Director added that Nepal would need to achieve a sustained annual economic growth rate of 7-8 percent or higher to get the ‘Middle Income’ status by 2030, which is possible only with public support.

“Already, we are seeing a slow but steady shift in the sources of growth from consumption fueled by remittances to investment-led growth. This shift has helped keep the growth strong, at 7.9 percent in FY 2016-17, 6.3 percent in FY 2017-18 and a forecast of 6 percent in FY 2018-19,” said Pswarayi-Riddihough while pointing at the considerable reduction of absolute poverty in Nepal from around 46 percent in mid 90s to 15 percent in 2010.

Stressing on the role of the public sector in Nepal’s development, the World Bank Director said that public resources will not be sufficient and they should not be the only source for the country’s growth.

It is important that the private sector engage both financially and technically in the country’s growth, as its investment is key to Nepal’s success story.

“The government and public institutions are the bedrock on which this economy will continue to be built,” she added.

World Bank’s Continue Support to Nepal

On the occasion, Pswarayi-Riddihough identified Nepal as an important World Bank member and said that the world body was sincerely working towards the Himalayan nation’s development. This partnership would continue for a long time.

“I am not speaking about money but emotional investment. Nepal is an important member of our institution. In fact, this year marks our 50th anniversary together. With 25 projects approaching $3 billion in financing, we are here for the long-haul,” she said.

The WB official also assured of World Bank’s continued support in the country’s various sectors, similar to the previous year’s efforts.

“Whether it is proffering support to the federal transition through federalism needs assessment or helping underpin the investment climate reforms through our policy and financial support, or to specific investment in agriculture, infrastructure and social sectors, we continue to support Nepal’s storyline,” said Pswarayi-Riddihough.

Nepal’s development efforts are becoming evident to the global community. It is no doubt that the country is headed forward in the path of stability.

Related News:

• Nepal 2018 Development Highlights: Path of Progress Began!

The post “Nepal on right path to achieving ‘Middle Income Country’status by 2030”- Idah Pswarayi-Riddihough appeared first on Nepali Sansar.

However, WB’s growth projection is lower than Nepal’s economic growth rate in FY 2017-18.

In its flagship report ‘Global Economic Prospects’ released on January 08, 2019, the global authority observed that the country’s economic growth will slow down to 5.9 percent in the current fiscal as Nepal’s strong post-earthquake momentum is expected to be moderate.

According to the report, the reconstruction activity will be backed by infrastructure investment and consumption.

The report also projects a consistent 6 percent for the next three fiscal years.

Comparatively, WB said that Nepal achieved an estimated economic growth rate of 6.3 percent.

“Less favorable monsoons led to weakness in agricultural activity, but this was offset by a recovery in remittances and robust industrial sector growth, particularly for manufacturing activities,” said the WB report while speaking further about the country’s economic progress.

However, it is important to note that WB’s growth projection of 5.9 percent for the current fiscal is lower than the International Monetary Fund’s (IMF) December 2018-forecast of 6.5 percent.

Likewise, the Asian Development Bank (ADB) in its macroeconomic update in September 2018 predicted that the economic growth in FY 2018-19 will be likely 5.5 percent.

South Asian Region Economic Growth Rate

The Global Economic Projects report has projected the growth rate for South Asia to increase to 7.1 percent in 2019 from 6.9 percent in 2018.

The report states that over the medium term, robust domestic demand will continue to drive growth which is expected to bring about the estimated 7.1 percent.

“However, risks to the outlook are tilted down. On the domestic side, vulnerabilities are being exacerbated by fiscal slippages and rising inflation, and the possibility of delays in needed structural reforms to address weaknesses in the balance sheets of banks and non-financial corporate,” read the report.

As per WB’s report, key external risks including a further deterioration in current accounts and faster than expected tightening of global financing conditions.

The global authority is keeping a close watch on Nepal’s progress.

While there are several factors that influence a country’s growth, the World Bank continues to monitor and rank countries based on such factors including ‘ease of doing business’ among others.

Nepal was ranked 158^th in WB’s Ease of Doing Business report.

The post World Bank Predicts a 5.9% Growth Rate for Nepal in 2019 appeared first on Nepali Sansar.

In its latest update, IMF revised Nepal’s economic growth to 6.5 percent in the current fiscal i.e. more than what it said in its last review. The earlier IMF projections in its World Economic Outlook report show only 5 percent growth for Nepali economy.

“Following a prolonged period of subdued growth, economic activities in Nepal have picked up in recent years. Supported by greater political stability and reliable supply of electricity, the growth is expected to reach 6.5 per cent in 2018-19, on expanding post-earthquake reconstruction activity, services and manufacturing,” reads a statement in the Article IV Consultation Report of IMF released on December 13, 2018.

An IMF team led by Geert Almekinders visited Nepal on December 2, 2018 for discussions on the 2018 Article IV consultation.

The new outlook recommended Nepal to balance its economic growth trajectory, alongside keeping a close watch on the rising fiscal and current deficits that increased outflow of foreign reserves.

IMF also recommends tight policy measures to keep up with the current economic scenario, deal with the internal & external pressure and achieve a durable economic expansion; it suggests higher interest rates, smaller fiscal deficit and tighter macro-prudential policies (than the budgeted).

It also cautions the government to ensure that the general budget won’t increase further in the process of implementing fiscal federalism.

Lauding the government for its efforts towards taxation and consolidation of expenditure through the Public Expenditure Review Commission, IMF suggests to slow-down on distribution of resources and responsibilities to the provinces and state governments.

IMF urged the government to also control the credit growth stating, “while credit growth has helped spur growth over the past several years, high pace of expansion raises stability concerns,” and also suggested to deny any measures that cause credit rise.

The post IMF Revises Nepal’s Economic Growth Trend, Says Positive! appeared first on Nepali Sansar.

This 26-km tunnel will supply water from the Melamchi river to the residents of the Kathmandu valley, who have been suffering a severe water shortage in the region.

The initiative is coming after a reported loss of about 40% of the 100 million liters of daily water supply, which was going waste due to leakage.

The scope of the USD 335 million project included building of the tunnel and also the construction of a 29-km access.

The Asian Development Bank (ADB) and the Government of Nepal worked hand-in-hand to address this long pending issue.

Within a span of 18 years and with the financial aid of USD 145 million from ADB, the government has brought the project to a promising point in its conception and aims at completing it by early July 2018.

In a joyous breakthrough ceremony, the ADB Director General, Hun Kim said, “I think it is a historic day. Nepal can now tell the outside world that ‘Nepal can do it!’ I think with this kind of spirit, we can overcome any challenges.”

“Today is important because this is the proof that we can work together, and we can deliver. ADB will continue to work with the government until the day when the people in Kathmandu valley get water 24/7,” he added further.

The breakthrough ceremony was also attended by other important dignitaries like the Vice President of Nepal Nanda Bahadur Pun and Minister for Drinking Water Bina Magar.

How can the inhabitants benefit?

With the new development, the customers of Kathmandu Upatyaka Khanepani Limited will now avail an additional 170 million liters of water per day, by the end of 2018. Moreover, the new system ensures water supply for at least 2-4 hours.

The Roadmap for the Future

ABD has planned to work with the Government of Nepal to incorporate the objectives of the Country Operations Business Plan (COBP) for the year 2017-2019, which focus on:

• Better road and air transport connectivity, and trade facilitation;
• Sustainable urban development and assessment of economic corridors to improve linkages with large, fast-growing neighboring countries;
• Energy sector reforms and investments in generation, transmission, and distribution systems;
• Upgrading skills and education; and
• Water resources development and management, and transformation from subsistence to commercial agriculture.

 A Recap of Past Objectives:

ADB had earlier decided to assist the Government of Nepal with its development objective of accelerated, sustainable, inclusive economic growth as per the Country Partnership Strategy for 2013-2017.

The framework of the initiative focused on:

• The growth in economic opportunities in infrastructure
• Access to economic opportunities through projects and programs in education which included skills development, water supply and sanitation and rural infrastructure
• Mainstreaming gender equality and social inclusion and supporting related reforms which would also improve access to basic services
• Promoting social protection through work on disaster risk management, skills development and knowledge partnerships

On an End Note!

The latest improvement supported by ADB is definitely a solution to one of the long-awaited key infrastructure concerns of the Kathmandu Valley. Hope more such international collaborations will take the country’s infrastructure development to the next level.

 Also read: ADB initiatives for Nepal for 2017-19.

The post ADB Addresses Nepal’s Long-awaited Water Crisis appeared first on Nepali Sansar.

Nepal secured the 22^nd position among 74 countries and leads the South Asian region in this report that analyzed inclusive growth of 103 global economies by growth and development, inclusion, and inter-generational equity.

The other South Asian countries followed Nepal that was ranked 27 in IDI 2017.

While India ranked 62^nd, Pakistan improved from 52^nd in 2017 to 47^th place in IDI 2018. Whereas, Bangladesh and Sri Lanka remained at 34^th and 40^th positions in the IDI 2018 against their 2017 rankings (36 and 39), respectively in IDI 2017.

Three South Asian economies including Bhutan, Afghanistan, and Maldives did not appear in the IDI 2018 list.

IDI divided the world nations into two different groups namely advanced economies and emerging economies.

With a 4.15 score, Nepal stood between slowly-advancing and rapidly advancing nations list among other countries in the emerging economies category.

Meanwhile Lithuania has led the emerging economies’ chart in IDI 2018 with a score of 4.86. Hungary, Azerbaijan, Latvia and Poland are among the other top inclusive emerging economies.

While Norway stood as the world’s most advanced economy, Iceland, Luxembourg, Switzerland and Denmark were featured as the other four top advanced economies.

IDI measures economies ‘performance based on their economic progress in various terms in addition to the Gross Domestic Product (GDP).

The post Nepal Leads South Asia In Inclusive Development appeared first on Nepali Sansar.