Wednesday, March 28, 2018

Priorities of PM Oli-led government and more

Priorities of PM Oli-led government (from his address to diplomatic community on 27 March 28, 2018):
  1. Nationalism: “protection of our sovereignty, territorial integrity, national independence, and fulfilment of our national interest”
  2. Democracy and fundamental freedoms: “We believe that democracy is irreversible and no one can snatch it now from us.”
  3. Social justice based on equality: “We stand firm on achieving social justice that ensures equitable opportunities and equal protection to all sections of our society.”
  4. Stability, progress and development: “Any attempt to undermine peace and stability will not be tolerated at any cost and will be dealt with firmly and resolutely. There is no space for violence in our society.”
  5. Good governance: “We will also pursue a policy of zero-tolerance against corruption. Our aim is to ensure corruption-free governance. We will adopt an efficient and smart mode of service delivery so that people can feel the change.”
  6. Broad-based, inclusive and sustainable development: “We have a strong resolve to attain rapid economic growth to underpin political transformation.”
Here is an outline of the previous version of the priorities of left alliance. We need to see further specifics on this government's economic vision, and strategy to achieve them within a given time frame. 
  • Replace gas and petroleum fuel with electricity use within five years
  • One industrial area in each province
  • Establish waste processing and disposal center and generate electricity out of it
  • Establish polytechnique institute in each local body
  • Upgrade zonal hospitals to medical college
  • Government to establish medical college
  • Retain National Planning Commission
  • Revive National Trading Limited
  • Widen tax net
  • Reduce government expenditure

From The Kathmandu Post: Haphazard credit disbursement that created irreparable holes in the balance sheet of erstwhile Apex Development Bank has exposed long-suspected counterintuitive practice of ‘evergreening’ of bad loans in the banking sector, which could contaminate and even bring down the entire financial sector. A loan restructuring directive approved by the board of directors of the development bank on September 13, 2015 had included a provision that enabled the management to disburse fresh loans to settle the outstanding credit, says an on-site inspection report prepared by the Nepal Rastra Bank (NRB), the banking sector regulator, a copy of which has been obtained by the Post. This implies the bank’s board, whose job is to ensure good governance, had officially allowed the management to evergreen the loan book.

Evergreening takes place when banks provide additional loans to borrowers who are unable to service their debt on time. The additional loan is then used to repay the instalments of the outstanding loan. This is a counterintuitive practice because it prevents banks from issuing good loans, as available fund is diverted to borrowers holding low-quality loans. This creates a vicious circle and the financial institution ultimately finds itself in a position where it can no longer issue good loans, thus exerting pressure on capital adequacy ratio, an indicator to gauge the credit disbursement capacity of banking institutions.

Apex Development Bank was engaged in this malpractice for quite some time. This is evident from the practice of issuing loans to the same group of borrowers and diverting credit to the same group via other borrowers, according to the report, which was submitted to the NRB on January 12, 2017, or a month after the extension of final approval for merger between NCC Bank and Apex Development Bank.

Direct contribution of tourism is estimated at 4% of GDP in 2017

From The Kathmandu Post: Nepal’s travel and tourism sector injected Rs195 billion into the economy and supported more than 1.02 million jobs directly and indirectly last year, according to the latest report of the World Travel and Tourism Council (WTTC). The report said that 497,500 jobs were generated directly out of the total jobs supported by the industry last year.

According to the report, the direct contribution of tourism to the GDP was Rs99.8 billion in 2017, which is 4 percent of the total GDP. This is forecast to rise by 4.9 percent in 2018 and then by 3.8 percent annually to Rs152.4 billion in 2028. The total contribution of the travel and tourism industry to the GDP was Rs195 billion, 7.8 percent of the GDP in 2017. This is projected to rise by 3.9 percent annually to Rs299.5 billion, or 8.2 percent of the GDP, in 2028. This primarily reflects the economic activity generated by industries such as hotels, travel agencies, airlines and other passenger transportation services, excluding commuter services. It also includes, for example, the activities of the restaurant and leisure industries directly supported by tourists.

The country received Rs72.5 billion in foreign exchange earnings from tourists last year. More than 940,000 tourists visited Nepal in 2017, up 24.86 percent from 2016. 

Bharatpur metropolitan city passes a local law to hike taxes

From myRepublica: Office of the Municipal Executive, Bharatpur Metropolitan Office, has increased registration fee for applications from Rs 10 to Rs 25, while fee for getting relationship certificate has been increased to Rs 100 from existing Rs 25. Similarly, fee for registration of gold and silver shops has been increased to Rs 25,000 (for A category) and Rs 15,000 (for B category) from the Rs 1,008. The business tax for running a restaurant and hotel has been increased from Rs 1,500 to Rs 125,000. Earlier, such rates were in range of Rs 500 to Rs 12,000 only.

Likewise, the metropolis has also hiked the fees for services like getting certificates of family details, certifying birth dates, issuing character certificates, fee for connection of drinking water lines, and ownership transfer. Fee for all of these services has been increased to Rs 575 from Rs 190. 

Bharatpur Metropolitan City introduced the new tax rates by endorsing the Financial Act from the Municipal Executive meeting in January. Tax rates have been hiked by up to 20 times. Bharatpur Metropolitan City has defended the decision to hike tax rates, stating that the metropolis needs for resources to 'strengthen its financial status'. Chitwan Chamber of Commerce and Industry (CCCI), on Tuesday, submitted a memorandum to the Office of the Municipal Executive, Bharatpur Metropolitan Office, drawing the attention of the municipal officials toward tax rate hike. CCCI have also said that the Act has no clarity on segregating villages and towns in respect to levying taxes.