The Nepal Oil Corporation (NOC) would possibly incur an estimated monthly loss 0f NPR 4.44 billion considering the new oil rates it received from the Indian Oil Corporation (IOC).

It would be the record high loss in the history of state-owned oil corporation.

“If an appropriate measure is not taken on time, it will severely affect the supply of petroleum products in the domestic market,” exclaimed NOC Spokesperson Binit Mani Upadhyaya.

With the new rates, the NOC is set to incur a loss of NPR 15.01 per liter on petrol, NPR 14.16 per liter on diesel, NPR 4.56 per liter on air turbine fuel (domestic). Likewise, the loss on cooking gas is NPR 511 per cylinder.

The projected loss is mainly attributed to the escalating price of crude oil in international market along with the depreciation of Nepali rupee against the US dollar.

As per the reports, the price of Brent Crude oil stood at USD 84.86 per barrel on Sunday.

According to the Nepal Rastra Bank, the current exchange rate of US dollar is NPR 120.72 per dollar.

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Nepal Rastra Bank (NRB) stated that the banking and finance institutions (BFI) approved the purchase loans of NPR 837.12 billion during the fiscal years from 2016/17 to 2020/21. In addition, commercial banks approved loans worth NPR 679 billion during the same period.

As per the NRB, the BFI sector aided the economy with the purchase of loans of NPR 150.40 billion in 2016/17. The loan approvals surged to NPR 171 billion and NPR 180 billion in the next two years, respectively.

For the fiscal year of 2019, the amount surged to NPR 174 billion, and the fiscal year 2020/21 witnessed the loan approvals of NPR 160 billion.

NRB approved the threshold limit approval at 50 percent of the vehicle valuation in the fiscal year of 2016/17. The bank revised the limit to 65 percent in 2017/18.

However, for 2019/20, the limit was dropped to 50 percent again. This was done due to the pandemic impact.

The total loans issued by BFIs for hire-purchase loans plummeted by NPR 13.40 billion last year, stated NRB. 

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The report was released by the Nepal Rastra Bank (NRB) on Thursday.

The inflation rate has dropped by 2.55 percent from the 6.15 percent in FY 2019/20. This is probably the lowest annual average price rise in the last two decades.

The improvement in inflation rate last fiscal is mainly attributed to the uptick in prices of edible oils,  pulses, and legumes.

Y-o-Y rise of consumer prices of some products are:

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However, they allayed the fears by stating that their security systems are strong and customers had no reason to fret.

“Unidentified people emailed and telephoned us, but we tested all of our systems as well as those of other banks to find that everything is okay,” NRB Governor Maha Adhikari said.

Nabil Bank, a Nepali commercial banking institution, received a mail loaded with a threat that stated that his bank systems would be hacked. The CEO of the bank, Anil Shah, informed the central bank about the mail and its threat.

Anil stated that the bank’s systems were reviewed, and no gaps were found in the systems.

The other banks which received such threats were Rashtriya Banijya Bank, Kumari Bank, Nepal Bank Limited, Machhapuchhre Bank, NMB Bank, NIC Asia Bank, Citizens International Bank, Bank of Kathmandu, Sanima Bank, Everest Bank, Himalayan Bank, and Nepal Investment Bank.

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During the first 11 months of the 2020/21 fiscal year, 27 commercial banks have reaped profits of NPR 62.36 billion. The profits are relatively higher as banks earned a profit of NPR 54.35 during the previous fiscal year. The banker expects a spike in profits numbers as the report for the final month of this fiscal year is to seep in.

From the 27 banks, 20 commercial banks have witnessed the profits while the rest saw their profits shrink. The bankers said that their banks should distribute an average dividend of 20 percent this year.

It is significantly higher than the last year’s 13 percent dividend. The bankers are attributing this rise in profits, during these challenging times, to hard work and transparency.

However, the banks have received flak from businessmen. The latter are accusing the banks of making profits by harassing the borrowers. One entrepreneur felt that the banks were heartless by not making any concessions while the industrial sectors were in the doldrums. The entrepreneur said, “But in such a situation, the banks have not been able to give discounts and concessions to entrepreneurs as per the profits they have earned.”

However, Anil Sharma, Chief Executive Officer at the Nepal Bankers’ Association, deffered from that view. He said that transparency was the primary factor for these profits.”At the moment, some people think that all sectors are in trouble,” he said. “The pandemic has not had a negative impact in all sectors. The reality is that the situation in a small area has deteriorated and most of the corporate sector has done well.”

Anil Sharma also said that the banks reaped these profits because the corporate sector performed well.

Economist Nara Thapa adopted a very different view of this development. He remarked that international trade was what drove the banking profits higher. “Also, the banks have been able to increase their profits due to the policy taken by the Nepal Rastra Bank (NRB) and increased inflow of remittance. Some businesses also flourished during the pandemic,” he said.

NRB initiated a refinancing scheme last year after a pandemic roiled the Nepali business sector. The bank disbursed an average of NPR 135 billion last year as part of this scheme.

“It’s good to have financial stability during the pandemic,” Thapa said. “Not all sectors have sustained loss except banks. There are also examples of some doing better than before.”

The banks saw an inflow increase of 23 percent in the current fiscal year, according to the NRB data. Thapa observed that the influx should be seen as a service to the national economy.

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Issuing a notice in the Nepal Gazette on Monday, the government stated that it had lifted the ban on the import of vehicles costing more than NPR 5 million.

During the onset of the pandemic last year, the government has banned the import of luxury vehicles along with gold, alcoholic beverages, and dry fruits like dates, clove, small cardamom, and peas.

The Nepali Government took the drastic step to preserve foreign currency reserve during the economic crisis triggered by the pandemic-induced lockdown.

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Nepal spends a vast amount of foreign currency on importing unproductive goods such as luxury cars, gold, and alcoholic beverages.

However, the government has lifted restrictions on the import of alcoholic beverages a long time back. It has also eased import restrictions on peppercorn, peas, and dates a few days ago.

According to the Nepal Rastra Bank (NRB), the government has eased import restrictions in response to the rise in the foreign currency reserve in recent months.

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According to the NRB’s Current Macroeconomic Report, Nepal’s foreign currency reserve stood at USD 9.49 billion in March last year, before the pandemic. As of February 2021, the country’s foreign currency reserves reached USD 12.57 billion.

Moreover, the import of luxury vehicles contributes a major revenue source to the government in the form of custom tax.

Foreign remittance from the Nepalis staying abroad is the primary source of foreign currency earning of Nepal. According to the NRB, the remittance inflows reached NPR 567.70 billion in mid-February 2021, an increase of 10.9% from mid-July 2020.

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As the findings cover the pre-pandemic period, the market experts fear that industrial capacity utilization worsens in the pandemic period.

According to the Economic Activities Study Report 2019-20 (Half Yearly) by Nepal Rastra Bank, the industries utilized only 40% of the installed capacity in the six months between Mid-July 2019 to mid-January 2020, a 20% slump from 60% utilization in the corresponding period of previous fiscal 2018/19.

Though the overall industrial capacity utilization has dropped significantly, some industries have enjoyed positive growth in capacity utilization.

Among the 154 surveyed industries, the liquor industry had registered the highest capacity utilization at 92.1%.

Industries that witnessed a rise in capacity utilization:

• Mustard oil, soybean oil, chocolates, rice, noodles, flour, liquor, jute goods, synthetic clothes, paint, cement, and medicines

Industries that witnessed a drop in capacity utilization:

• Ghee, processed milk, biscuits, processed tea, animal feed, beer, cigarettes, garments, processed leather, threads, soaps, plastic items, paper, concrete, bricks, steel rods, aluminum, and tires and tubes

However, as per the study, the credit flow to various industries in the review period increased to 17.3% and reached NPR 1.06 trillion. The credit flow had stood at 12.6% in the corresponding period last fiscal.

Industry-wise Credit Flow Details:

• Non-food items production industry- 35.3%
• Construction materials manufacturing industry – 31.4%
• Agriculture, forests, and beverages Industry – 15.9%
• Electricity, gas, and water Industry – 12.9%
• Mining Industry – 0.7%

Moreover, the study has emphasized the need to boost industrial production and increase capacity utilization. It has also recommended training programs for the employees in the industries to enhance their skills.

Likewise, the Nepal Rastra Bank also mentioned the vital role of non-resident Nepalis in developing industries.

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The Nepali tourism sector is prominently affected as the country has been forced to stay in lockdown for over four months, especially during the main spring season.

According to the Minister for Culture, Tourism and Civil Aviation Yogesh Bhattarai, the Nepali tourism sector has incurred a loss of NPR 60 billion due to the pandemic.

Speaking at a virtual meeting on the resumption of the tourism sector organized by the Confederation of Nepalese Industries (CNI), Minister Bhattarai said that Nepal has faced a massive loss from international and domestic tourism due to travel bans and other steps taken by the government to contain the pandemic.

“It has been a daunting task to restore the lost economy as the coronavirus pandemic incurred a loss of NPR 60 billion in the tourism sector,” exclaimed Minister Bhattarai.

He said that the Tourism Ministry is continually approaching the Finance Ministry and the Nepal Rastra Bank for an economic package to restore the tourism industry.

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Meanwhile, other members at the meeting also raised some suggestions regarding the revival of the tourism sector.

CNI President Satish Kumar Moore suggested that the Nepali Government should resume the tourism sector and civil aviation services by adopting appropriate health measures.

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Likewise, CNI member and Chairman of Shree Airlines Sudhir Mittal suggested that both international and domestic flights should be resumed to restore the economic loss caused by the pandemic.

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Thousands of Nepali students who were aspiring to study abroad are in dismal given international travel restrictions, social distancing norms and sheer uncertainty of the near future.

Every year, in June and July, students used to flood visa centers and consulates to start their paperwork to travel and study abroad. But things are quite different this year.

All their plans have been either postponed or shattered due to the pandemic.

The fall in the mobility of the students had severely affected businesses such as airline companies and educational consultancies.

In fiscal year 2018/19, the Nepali students spent around NPR 41 billion on airfare. But the figure dropped to NPR 25.2 billion in FY 2019/20 amid the pandemic.

“Students who leave around this time of the year (June/July) used to make up a significant proportion of travelers,” said Gunakar Bhatta, Nepal Rastra Bank Spokesperson.

Likewise, educational consultancies are bearing the brunt of the coronavirus pandemic.

“Educational consultancies have registered heavy losses and many are on the verge of shutting down,” said Santosh Pyakurel, Chair of the National Education Consultancies’ Association.

According to Pyakurel, around 4,000 education consultancies were in operation in Nepal before the lockdown. However, 20% of the consultancies have shut down entirely due to a lack of business following the pandemic.

“Before the lockdown, the consultancies and language institutes contributed billions of rupees to the country’s economy. However, the possibility of them getting back to business soon is bleak,” said Pyakurel.

In 2016 alone, the foreign remittances from the US, the most preferred destinations for Nepali students, amounted to NPR 110.03 billion.

“The setback we are seeing could be temporary. Once they rejoin the job market, after graduation or during their study period, they will start sending money again,” he said.

Even if, months later, the situation improves to some extent, and Nepali students could travel abroad and enroll on campus, they still have to face some severe challenges in foreign lands.

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Coronavirus is continuing its spread across the world with around 6,714,464 confirmed cases in 188 countries. Nearly, 393,419 have lost their lives.

Currently, 3,059,679 patients are undergoing treatment with 3,004,223 in mild condition and 55,456 in critical condition. However, 3,261,366 patients were recovered successfully.

COVID-19 in Nepal:

Even though the coronavirus pandemic has not spread rigorously in Nepal, it has undoubtedly disrupted the country’s business activities and tourism.

According to the Nepal Rastra Bank (NRB), the nation’s economy is expected to incur around NPR 168 billion loss in the current FY ending in mid-July.

“These are our estimates of losses to national production only for this year due to COVID-19,” exclaimed Chinta Mani Siwakoti, NRB Deputy Governor.

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Moreover, the extent of total economic loss will depend on the lockdown period and revival of economic activities.

Earlier, the Nepali Government has decreased the economic growth forecast for the year to 2.3% from 8.5% due to the ongoing health crisis.

The government has implemented the nationwide lockdown until June 14, 2020. However, politicians, business groups and the public are pressing the government to re-open the economy before then.

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