Nefport 54 - Fueling Regional Connectivity Special

Fueling Regional Connectivity

Nepal Factsheet

KEY ECONOMIC INDICATORS

* World Bank, Nepal Data Bank 2023 ** World Bank, Data Bank 2023

*** Current Macroeconomic and Financial Situation of Nepal (Based on annual data ending in mid-July 2023)

**** UNDP, Human Development Report 2022/23

Issue 54: October 2023

Publisher: Nepal Economic Forum

Website: www.nepaleconomicforum.org

P.O Box 7025, Krishna Galli, Lalitpur – 3 Nepal Phone: +977 1 554-8400

Email: info@nepaleconomicforum.org

Contributors:

Animesh Shrestha

Arti Govinda Shrestha

Pooja Suwal

Pratisha Lakhey

Sagar Jung Karki

Sanjit Tuladhar

Shuvangi Shrestha

Sudiksha Tuladhar

Sukeerti Shreshta

Udita Mulmi

Peer Reviewers:

Raju Dhan Tuladhar

Rojesh Bhakta Shrestha

Sudip Bhaju

Sujeev Shakya

Special Section – Authors:

Narendra Prajapati, Managing Director, N.P. Associates Pvt. Ltd.

Pratik Pradhan, Vice President, Butwal Power Company

Sucharita Bhattacharjee, Policy Analyst, CUTS International

Bipul Chattopadhyay, Executive Director, CUTS International

Design & Layout: Thuprai Solutions support@thuprai.com

Cover Design:

Sudiksha Tuladhar

Editor:

Suyasha Shakya

This issue of Nefport takes into account news updates from 1 June to 31 August.

The USD conversion rate for this issue is NPR 131.51 to a dollar, the quarterly average for this issue.

Reproduction is authorized provided the source is acknowledged.

The views and opinions expressed in the article/publication are those of the author(s) and do not necessarily reflect the official opinion of Nepal Economic Forum. Neither the organization nor any person acting on their behalf may be held responsible for the use which may be made of the information contained therein.

Executive Board Members:

Alpa B. Shakya

Chandni Singh

Shayasta Tuladhar

Sudip Bhaju  Sujeev Shakya

Advisory Board:

Arnico Panday

Kul Chandra Gautam  Mahendra Krishna Shrestha

Prativa Pandey

Shraddha Gautam

Sneh Rajbhandari

Senior Distinguished Fellows: Bibhakar Shakya  Giuseppe Savino  Suman Basnet

Senior Fellows:

Amish Raj Mulmi

Apekshya Shah  Ashraya Dixit

Bibek Raj Kandel

Diva Shrestha

Mark Perrin

Editorial

The third quarter of the year 2023 did not see any major departure in national politics. The various scams dominated newspaper headlines and the key party Chairs continued to avoid being indicted as the troika of leaders used one scam against another as bargaining chips to protect themselves and their loyal supporters. The parliament did not pass any major legislation thereby adding to the pile of pending legislation. For context, since July 2019, no major legislation pertaining to business and economic reform has been adopted by the parliament.

The macroeconomic indicators for the fiscal year 2022/2023 AD (2079/80 BS) have shown significant improvements. Balance of Payments (BOP) moved from a deficit of NPR 255.26 billion (USD 1.94 billion) to a surplus of NPR 290.52 billion (USD 2.20 billion). Remittances surged by 12.1% in USD terms and 21.2% in NPR terms. Additionally, foreign exchange reserves grew to USD 11.71 billion (NPR 1.54 trillion) that would cover 10 months’ imports. The current trend on the macroeconomic indictors indicate recovery from the pandemic years. This recovery is also reflected in tourism bouncing back and the trading of electricity with India, providing much needed revenue. NEF continues to be optimistic about macroeconomic trends despite the hype of economic crisis that prevails based on people’s opinion in traditional and social media. Data does not give any indication of an economic downturn.

NEF has continuously been engaged in the future of the Himalayas and consolidated all its work around circular economy and renewable energy to the Himalayan Future Forum (HFF). The first inaugural meet would be held in October and a larger meet in February 2024. In line with the themes of the HFF, revolving around Climate Change (mitigation and adaptation), Communities (sustainability and inclusion) and Connectivity (people, places and ideas), this Nefport has a special section on “Fueling Regional Connectivity” that delves into the past, present and future of Nepal’s hydropower sector with a particular focus on regional connectivity.

The contributions to the special section have been made by Narendra Prajapati (Managing Director, N.P. Associates Pvt. Ltd.), Pratik Pradhan (Vice President, Butwal Power Company), Sucharita Bhattacharjee (Policy Analyst, CUTS International) and Bipul Chattopadhyay (Executive Director, CUTS International). We would like to sincerely thank them for their effort and continued support for our work.

We would also like to thank the voluntary contributions from many individuals as well as our readers and patrons who have supported and engaged with us throughout our journey.

We are working continuously on recalibrating our Nefports to make them more useful to our readers. Please feel free to write to us at info@nepaleconomicforum.org for any further comments or feedback.

Sujeev Shakya Chair, Nepal Economic Forum

General Overview

Political Overview

The government under Prime Minister Pushpa Kamal Dahal came under considerable pressure as multiple scams and political decisions came into scrutiny. As in the Bhutanese refugee scam, there were reports of the involvement of high-level officials and leaders in the gold smuggling scam as well, including key Maoist leaders. These developments led to the obstruction of the parliament as well as Prime Minister Dahal having to answer questions regarding the matter during the parliamentary session. Besides this, as has become usual in Nepali governance and politics, there were certain changes in the Cabinet made in the last quarter. Adding to the changes in the previous quarter, this period witnessed the Janamat Party joining in the government for the second time, with one of their leaders appointed to the Ministry of Federal Affairs and General Administration. In other news, the investigation into the Gaur massacre was dropped, garnering a lot of criticism from the victims’ committee. The decision was seen as a politically motivated move to reconcile with the Janata Samajbadi Party.

EXECUTIVE UPDATES

MCC Enters Into Force Despite Opposition

The Millennium Challenge Corporation (MCC)-Nepal Compact was brought into force on August 30, 2023, amidst various objections. The project spans a period of five years with funding of NPR 65 billion (USD 500 million) by the Corporation and an additional NPR 25 billion (USD 197 million) by the

Government of Nepal.6 Using this money, it plans on building a 315 km 400 kV transmission line and upgrading part of the Mahendra Highway.7

Amongst the various obstacles that MCC had to go through, just before the agreement took effect, concerns were raised by several political parties regarding the agreement. This particularly included the Communist Party of Nepal which announced weeklong protests against MCC. The

major concerns posed by the parties revolved around MCC’s perceived ambiguity regarding Nepal's interpretative declaration, a document that outlines Nepal’s stance on the MCC declaration.8 The 12-point interpretative declaration includes points such as an emphasis on Nepal’s constitution prevailing over the compact. To combat these issues, the US embassy in Nepal

clarified its position, stating that they acknowledged the interpretative document.9

Janamat Party Joins Government For the Second Time

The Janamat Party, led by CK Raut, joined the government for the second time on August 14, 2023 following Prime Minister Dahal’s concessions to the party’s desired ministerial appointments. As part of this, party leader Anita Devi Sah was assigned to the Ministry of Federal Affairs and General Administration.10 Previously, CPN (Maoist Center) leader Aman Lal Modi occupied this position but was recalled. The reason for the party originally leaving the coalition government was another one of Janamat Party’s leaders, Abdul Khan, who was appointed Minister of Water Supply, stepping down in January 2023, citing dissatisfaction with the assignment of ministries.11 However, despite leaving the coalition government, the party did not withdraw its support to the government.

Gold Smuggling Scam

One of the major events this quarter has been the gold smuggling scam in which a total of 100 kg of gold was smuggled into Nepal on July 19, 2023.12 The gold was found in a brake shoe and was confiscated from Sinamangal, near Tribhuvan International Airport (TIA). Initial investigations revealed the gold was smuggled into Nepal from Hong Kong and Delhi was its final destination.13 Following the investigations by the Department of Revenue, a total of 21 individuals

have been arrested including custom officials, Chinese and Indian nationals and middlemen.14 According to reports, many high-level politicians, including Barshaman Pun, former speaker Onsari Gharti Magar, the family of former Vice President Nanda Kishor Pun, and Maoist Centre Vice Chair Krishna Bahadur Mahara and his son are involved in the case.15

In recent developments, the Central Investigation Bureau (CIB) has sought help from the International Criminal Police Organization (INTERPOL) for the investigation of the case.16 Similarly, Prime Minister Pushpa Kamal Dahal also requested help from India and China regarding the matter.17 An official from the Nepal Police has also been sent to Hong Kong to investigate and gather evidence regarding the case.18 While the main opposition party, CPN-UML, had been obstructing the House of Representatives, demanding a proper investigation of the case, this obstruction was quelled with an agreement among parties to form an inquiry commission against the case.19

LEGISLATIVE UPDATES

TRC and CIEDP Without Office Bearers For A Year

The Truth and Reconciliation Commission (TRC) and the Commission on the Investigation of Enforced Disappeared Persons (CIEDP) have been without office bearers for over a year since July 2022.20 This is due to the fact that the call for an amendment of the transitional justice bill has been stalled in the parliament. Without its approval, neither can

office bearers be appointed, nor can they investigate the cases.21 Because of the lack of progress and a lack of tasks, employees have even been requesting to be transferred elsewhere.22

Special Rapporteurs Point Out Errors in TRC Bill

In recent developments, three United Nations (UN) special rapporteurs and a working group, consisting of human rights experts from Nepal and the world, have highlighted issues in the latest bill to amend the Truth and Reconciliation Act.23 They pointed out that the bill recognized serious human rights violations, such as murder, cruelty, rape, enforced disappearance, but didn't include all the violations recognized by international law.24 Thus, the current categorization of violation of human rights could allow impunity for serious crimes that were committed during the conflict.25 While they applauded the positive changes such as mandating the Truth and Reconciliation Commission (TRC) to examine the root causes of the conflict and recommending institutional reform, they emphasized the need for amendments to address the bill's existing shortcomings.26

Government Approves Cyber Security Policy

The government approved the Cyber Security Policy, 2080 on August 8. According to the Ministry of Communication and Information Technology, the endorsement of the policy has opened the way to advance the Cyber Security Bill.27 The move comes at a crucial point in time as the cyber bureau received over

16,000 complaints in the last four years and over 1500 government websites were shut down by hackers.28 However, despite the need for the bill, experts have shown concerns regarding matters of privacy, infrastructure and human resource related to the bill. They have also doubted upon its successful implementation as the bill is not backed by necessary laws and regulations.29

JUDICIARY UPDATES

Gaur Massacre Investigation To Be Dropped

The Gaur Massacre took place on March 21, 2007, where as many as 27 individuals associated with the CPN (Maoist) were brutally killed, with another 115 injured in the incident.30 Recently, on August 8, 2023, after many years of inactivity on the matter, the government signed a five-point agreement with the Gaur Murder Victims Struggle Committee after the victims staged a protest for six days.31 However, the agreement with the victims did not go well with the Janata Samajbadi Party leader Upendra Yadav who claimed that Maoist Center leader Prabhu Sah and the Maoist party were the main culprits behind the massacre.32 After the opposition and under pressure to appease the Party, the coalition partners concluded that there is no need to further investigate the Gaur Massacre.33

ELECTION UPDATES

Election Commission Proposes Various Reforms

The Election Commission has proposed for changes in the current election act, through a meeting on July 3, 2023.

The draft bill created in the meeting suggests steps towards amending and combining election-related laws. Among the various proposed changes, one is to create a maximum limit of two terms for lawmakers to be elected through the proportional representation system.34 Similarly, the bill suggests that candidates defeated from elections will not be eligible to run at another level for a period of five years. Further, the bill proposes that political parties must nominate women in 33% of the positions for the direct elections.35 The Election Commission has further proposed the provision of None of the Above (NOTA) and suffrage rights for Nepali citizens living abroad from the next term.36 Within this, it also proposes not allowing participating candidates to contest again if more than half of the total votes they receive are cast under NOTA.37

BILATERAL AND MULTILATERAL UPDATES

Nepal and Cameroon Establish Bilateral Relations

Nepal and the Republic of Cameroon established diplomatic relations on June 22, 2023. Ambassador and Permanent Representative of Nepal to the United Nations, Amrit Bahadur Rai, and Ambassador and Permanent Representative of the Republic of Cameroon to the United Nations, Michel Tommo Monthe, signed the agreement.38 With this, the number of countries Nepal has diplomatic relations has reached 180.39

Nepal, EU Sign Agreements for Nepali Development

Nepal and the European Union

(EU) have signed an agreement worth NPR 10.5 billion (USD 79.05 million) towards financing the education and climate sector in Nepal.40 The agreement was signed for two different programs, namely, 'Quality Education for All' and 'Local Adaptation to Climate Change'.41 The assistance aims to contribute towards a welleducated and skilled society in Nepal, which, as a consequence, will result in the economic and social development of the country.

PROVINCIAL UPDATES

Koshi CM Thapa’s Status

Uncertain

Koshi Province Chief Minister Uddhav Thapa has been ordered by the Supreme Court to not take any long-term decisions until a verdict is passed regarding a case filed against him by CPN(UML) leader Hikmat Karki.42 Karki’s case against Thapa questions the legitimacy of his victory following the vote of confidence. The basis of Karki’s case is that during this vote, Assembly member Israil Mansuri was not a part of the confidence vote but his vote was put in favor of Thapa, a move which Karki labeled as unconstitutional as Mansuri’s was the 47th vote received which was the exact number required for Thapa to win.43

Sudurpashchim Province Cabinet Expanded

The Chief Minister of Sudurpashchim Province, Kamal Bahadur Shah, appointed three ministers to expand the ministerial cabinet of the province.44 While Shiva Raj Bhatta of the Nepali Congress was appointed as the Minister of Internal Affairs and

Law, Rameshwor Chaudhary and Kailash Chaudhary of Nagarik Unmukti Party were appointed

as the Minister and Minister of State of the Land Management, Agriculture and Cooperative

Outlook

Ministry respectively.45

The Government of Nepal has faced multiple changes recently. The contemporary changes in the ministerial cabinet undertaken by Prime Minister Dahal, in particular, appear to be driven by a desire to maintain harmony within the coalition government. In addition, the dropping of the investigation of the Gaur massacre can also be seen as an act for the same purpose - appeasement of coalition partners. This approach by Dahal may seem to provide short-term political stability, but may not prove viable in the long run, indicating a possibility of political instabilities ahead.

International Economy

As in the last quarter review, global growth in this review period as well is estimated to fall amidst high inflation along with tighter monetary policy and restrictive conditions in credit. In the case of lower-income nations, where sovereign borrowing is dollar-denominated, debt distress has become a particular worry. The global economy, in the review period, also faced many new developments and projects to bolster the rebound from the economic slowdown due to the pandemic, global inflation, climate change, and the Russia-Ukraine war. In particular, the programs planned in this period have been geared mainly towards developing economies and sustainability. In this context, International Financial Corporation (IFC) and United Nations Conference on Trade and Development (UNCTAD) have called for urgent investment to fill in financial gaps to support emerging economies in the pursuit of clean energy and sustainability. The Energy Transition Index (ETI) framework has also been revised to incorporate the balance of the three major components of the energy triangle which are equity, security, and sustainability. Besides this, a major development that has occurred is that, as a result of the Ukraine war and the sanctions by the West, Moscow and its trading partners have opted for non-US dollar alternatives like the Chinese yuan.

ECONOMIC CRISIS UPDATES

Global Growth and Inflation Update

According to the World Economic Outlook update as of July, 2023, global growth is estimated to fall

from 3.5% in 2022 to 3.0% in both 2023 and 202455 amidst high inflation, tighter monetary policy, and restrictive conditions in credit.56 The current US debt ceiling standoff and strong steps of the authorities to address turbulence in US and Swiss banking have decreased

FACTSHEET

Global Headline Inflation in 2023 (Expected) (as of April) 7%46

Global Multidimensional Poverty Index 2023 (July) 18.03%47

World Population (as of July 2023) 8.06 billion48

Food Price Index (as of July 2023) 123.9 points49

Total Global Debt (as of Q1 2023)

USD 305 trillion (NPR 40,110 trillion)50

Food Price Inflation (since January 2020) +21%51

Energy Price Inflation (since January 2022) +7%52

Shipping Price Inflation (since January 2022) -39%53

Coronavirus Vaccination (at least one dose vaccinated) 70.5%54

the immediate risks of turmoil in the financial sector. This has led to moderate adverse risks to global growth.57 Additionally, global headline inflation is forecasted to decrease to 6.8% in 2023 and 5.2% in 2024, from 8.7% in 2022.58

Possibility of Debt Distress in Emerging Markets

Due to unresolved problems in real estate, the recovery in China is estimated to be slow. This could lead to debt distress spreading to many other countries due to negative crossborder spillovers.59 In the case of lower-income nations, where sovereign borrowing is dollardenominated, debt distress is a particular worry, especially as financial conditions tighten.60 In the case of most nations, the achievement of sustained disinflation along with financial stability has become a priority.

INTERNATIONAL FINANCIAL UPDATES

IFC Supports Projects in Developing and Emerging Markets

The International Finance Corporation (IFC) has raised USD 730 million (NPR 96 billion) through a three-year green bond issuance to support climatefriendly projects in emerging markets. It supports projects in renewable energy, energy efficiency, green buildings, clean transport, and biodiversity conservation.61

As part of another initiative, IFC and the Government of Switzerland have partnered for the second phase of the Sustainable Cities program.62 This initiative promotes eco-friendly urban infrastructure in emerging markets, aiding subnational governments and private sector partners in attracting investments for transportation, water, waste management, etc.63 This is in line with a report by the International Energy Agency (IEA) and IFC that emphasizes that

poorer countries must invest more in clean energy, increasing spending from USD 770 billion (NPR 101 trillion) in 2022 to around USD 2.8 trillion (NPR 368 trillion) by the early 2030s to meet energy demands and climate goals.64

UNCTAD Calls to Attract Huge Investment in Clean Energy

The United Nations Conference on Trade and Development (UNCTAD) has issued an urgent call for immediate support to developing nations in their pursuit of clean energy investments.65 The 2023 World Investment Report reveals that, despite a nearly threefold growth in international investments in renewable energy since the Paris Agreement in 2015, the majority of these investments have been concentrated in developed countries.66 Developing nations require around USD 1.7 trillion (NPR 223 trillion) annually for renewable energy, but they only attracted USD 544 billion (NPR 71 trillion) in foreign direct investment for clean energy in 2022.67 This funding gap encompasses power grids, transmission lines, storage, and energy efficiency.68 UNCTAD proposes a compact outlining urgent action, including derisking investment, public-private partnerships, and debt relief to make sustainable energy systems more attractive to investors.69 Additionally, it highlights the importance of aligning climate goals in private equity deals. All in all, the report highlights a growing USD 4 trillion (NPR 526 trillion) annual investment gap across all Sustainable Development Goals sectors, primarily in energy, water, and transport infrastructure.

KEY HIGHLIGHTS OF INTERNATIONAL REPORTS Fostering Effective Energy Transition

As nations are emerging out of different health, economic, and geopolitical crises, the boundaries of the global energy transition have been constantly shifting. As part of this, the Energy Transition Index (ETI) framework has been revised to incorporate the balance of three major components of the energy triangle which are equity, security, and sustainability. The ETI provides countries with a benchmark for their recent energy system performance as well as with longer-term measures for transition readiness.70 According to the World Economic Forum (WEF) report 2023, global efforts still lack in attaining wellrounded development across all dimensions of the energy triangle.71 As a result, the concept of ‘transition momentum’ has been introduced to evaluate a country’s advancement in terms of system performance indicators. The focal point of this energy transition is moving closer to emerging and developing nations as there has been consistent improvement in their preparedness for the energy transition.72 As of now, out of all nations, only India and Singapore are currently making strides in all facets of energy system performance.73

GLOBAL EVENTS UPDATE

India Refiners Initiate Yuan Payments for Russian Oil Imports

Following Russia’s invasion of Ukraine and the subsequent sanctions, Moscow and its

partners have increasingly had to explore non-USD settlement alternatives.74 As part of this, Indian oil refiners, who are key buyers of Russian oil, are now paying for specific Russian oil imports with the Chinese yuan.75 While India doesn't formally recognize the Russian sanctions, Indian banks are cautious about handling payments for Russian oil.76 Thus, to navigate this, Indian refiners have been employing alternative payment approaches, including using Chinese banks and paying in yuan.77

FIFA Women’s World Cup 2023 Convened

The 2023 FIFA Women's World Cup, the ninth installment of FIFA's global women's soccer championship, took place from July 20 to August 20, 2023.78 It was hosted jointly by Australia and New Zealand, marking the first occasion of multiple nations co-hosting the event.79 This edition of the World Cup saw record-breaking attendance as well as revenues of USD 570

Outlook

million (NPR 74.96 billion) despite the increase in the prize purse.80

India's Chandrayaan-3

Becomes the First Spacecraft to Land Near the South Pole of the Moon

Chandrayaan-3, created and launched by India, achieved the historic feat of landing in close proximity to the Moon’s southern pole.81 If the plan unfolds smoothly, it is expected to explore the lunar terrain, capturing images and collecting data. The third lunar mission of India, with a budget of USD 75 million (NPR 9.86 billion) took place just a few days following Russia’s unsuccessful unmanned Luna-25 spacecraft which experienced loss of control and subsequently crashed into the Moon.82

G20 Summit 2023 Held

The 18th edition of the G20 Summit was held on 9th and 10th September, 2023 in New Delhi, India, where high level delegates from the G20 countries were present. Some major updates of

the summit included the formal inclusion of the African Union in the G20 as a new member and the release of a declaration based on envisaging a green development agreement for a sustainable future.83 The deliberations during the meet mostly revolved around accelerating sustainable and inclusive global growth through effective implementation of the 2030 Agenda for Sustainable Development.84

UPCOMING EVENTS COP 2023

The 28th Conference of the Parties (COP) of the United Nations for Climate Change Conference (UNFCCC) 2023 is going to be held from 30th November to 12th December 2023 in Dubai. It is going to be the final key climate event of 2023 with the priority being the acceleration of a just transition to an economy that is friendly to both people and the planet.85

As global growth is estimated to decrease in the upcoming years, central banks need to focus on restoring price stability and strengthening financial supervision as well as monitoring possible risks. There should be fiscal buffers and adjustments to ensure targeted support to the vulnerable ones. This might help emerging markets and developing economies (EMDEs) to foster stable macroeconomic and financial conditions to lead to robust, sustainable, and inclusive paths to development. Various initiatives and projects of IFC and UNCTAD have even provided insights into the path forward to recover from the Covid-19 era. A major topic of discussion, as in previous years, has been sustainable development and energy transition, as seen in the G20 summit as well as multiple reports by the IFC. To make this happen, developing countries need help from others to improve clean energy rules, infrastructure, and financing. Green bonds and bundling smaller clean energy projects has also been recommended to help these countries benefit from clean energy and combat climate change. Besides all of this, the Russia-Ukraine conflict has continued to have far-reaching implications, majorly prompting a shift away from the US dollar towards the yuan, which could reshape global financial dynamics in the years to come.

Macroeconomic Overview

Macroeconomic Overview

Throughout the review period of the fiscal year 2022/23 AD (2079/80 BS), the economic landscape of Nepal underwent significant changes. An annual consumer price inflation rate stood out prominently at 7.74% which loomed over the target of 7% set by the monetary policy of FY 2022/23 AD (2079/80 BS). Simultaneously, the Gross Domestic Product (GDP) at current prices soared with an increase of 9.12% compared to FY 2021/22 AD (2078/79 BS). Amidst inflation, this was a glint of hope for the resilience of the Nepali economy. However, the cost of goods and services also saw a surge in both food and beverages and non-food and service sections leaving consumers to grapple with the rising cost of living. Meanwhile, there was also a drop in the trade deficit, whereas the balance of payment saw a rise indicating pressure on the nation’s international financial transactions.

In other major news, the Nepal Rastra Bank (NRB) unveiled a new monetary policy for FY 2023/24 AD (2080/81 BS) which arrived two months after the budget announcement. It deigned to tackle the economic challenges faced by the country with a targeted inflation to keep below 6.5%. Additionally, a foreign currency reserves sufficient to cover imports for seven months was given importance to safeguard the nation’s economic stability. Furthermore, the NRB pledged to support the government with a target of achieving 6% economic growth. Hence, along with the challenges, there are still hopes and aspirations of the nation relying on prudent policies and decisions by the government.

GROSS DOMESTIC

According to the ‘Current Macroeconomic and Financial Situation’ published by the NRB, the Gross Domestic Product (GDP) at current prices was estimated to be NPR 5.38 trillion (USD 40.9 billion) in FY 2023/24 AD (2080/81 BS) as compared

to NPR 4.93 trillion (USD 37.48 billion) in the previous FY 2022/23 AD (2079/80 BS).87 This shows around a 9.12% rise in the value of GDP compared to last year, an encouraging trend reflecting a boost in economic activities in the country.88

Following this, the monetary policy for FY 2023/24 AD (2080/81 BS)

was unveiled by NRB with a target of achieving economic growth of 6% as decided in the budget statement.89 The monetary policy aims to keep the economy stable and prevent price pressures from monetary expansion.

Source: Current Macroeconomic and Financial Situation (based on annual data of FY 2022/23)

Source: Current Macroeconomic and Financial Situation (based on annual data of FY 2022/23)

Figure 1. GDP in current prices over the last five years (in NPR billion)

Figure 2. Year-on-year Consumer Price Index (CPI) of the last six FYs

PRODUCT (GDP)

INFLATION

As per NRB annual data for the fiscal year 2022/23 AD (2079/80 BS), the year-on-year Consumer Price Index (i.e., the measurement for average inflation rate) slightly increased to 7.74% from 6.32% in the previous FY 2021/22 AD (2078/79 BS).90 Despite the NRB's interest rate hike to combat inflation, there has been concern about the uncontrollable nature of inflation caused by structural economic issues such as dependency on remittances and imports.91

Concurrently, the Asian Development Bank (ADB)

anticipated that Nepal’s inflation will be 7.4% in 2023 despite implementing a stringent monetary policy.92 However, the ADB expects inflation to slow down slightly to 6.2% in 2024. Similarly, the World Bank anticipated the inflation rate in Nepal to be 6.8% in 2023 with a subsequent decline to 6% in 2024 and 5.5% in 2025.93 As per the World Bank, the major causes of inflation are higher vegetable prices; India's export ban on wheat, onion, and rice; higher transportation charges due to an increase in international energy prices; and a rise in housing and utility prices.94

Figure 2 shows the year-on-year changes that have occurred in the annual CPI index over six consecutive fiscal years till 2022/23 AD (2079/80 BS).

CONSUMPTION OF GOODS AND SERVICES

The Consumer Price Index (CPI) measures the overall impact of price changes for a diversified set of products and services during a specific period.95 Table 1 shows the pattern of consumption over two consecutive years.

The CPI for food and beverage has seen an increase of 1.42% from 6.32% in FY 2021/22 AD (2078/79 BS) to 7.74% in FY 2022/23 AD (2079/80 BS).96 This surge can be attributed to the rise in the price of cereal grains by 8.31%, spices by 14%, and food in restaurants and hotels by 8.59% as well as an increase in the price of milk products and eggs by 2.43%.97 On the other hand, the limited rise of the surge can be attributed to an ease in the price of pulses and legumes, meat and fish, and ghee (clarified butter) which have

decreased by 5.41%, 3.5%, and 26.1% respectively as compared to the previous financial year.98

Monetary Policy Highlights

The review period saw the launch of the new monetary policy for FY 2023/24 AD (2080/81 BS) on 23 July 2023.99 NRB Governor, Mr. Maha Prasad Adhikari, unveiled the monetary policy following the announcement of the budget in May 2023 by the finance minister. The cautionary monetary policy hopes to maintain a foreign currency reserve to cover

imports for seven months.100 The limit for carrying foreign currency while traveling abroad has been increased to USD 2500 (NPR 328,775) from USD 1500 (NPR 197,265) previously.101 Additionally, the monetary policy states the intention to implement the Central Bank Digital Currency (CBDC) in the coming years.102

FINANCE STATUS Investments (FDI)

During FY 2022/23 AD (2079/80 BS), the net Foreign Direct

Source: Current Macroeconomic and Financial Situation (based on annual data of FY 2022/23)

Table 1. Food and nonfood Consumer Price Inflation (CPI) over two fiscal years (in %)

Investment (FDI) fell by 67.88% in comparison to the NPR 18.56 billion (USD 141.12 million) in the previous financial year and remained at NPR 5.96 billion (USD 45.31 million).103 A major reason for the FDI plunge to a nine-year low is the deterrence of potential investors caused by corruption, political instability, and bureaucratic hassles that have been amplified in the recent months.104 According

to the 2022 Corruption Perceptions Index released by Transparency International, Nepal was ranked as the 110th least corrupt country out of 180 countries worldwide.105 To add on to this, Nepal recently faced two major corruption scandals within a short time period. The scams included a fraudulent Bhutanese refugee scheme and a million-dollar gold smuggling case in which government

officials and former ministers were involved.106 Another reason for the plunge is that FDI is channeled primarily through government-to-government agreements.107 Thus, it is hard for investors to go through the bureaucratic channels regarding land acquisition, transmission lines installation, registration of companies.108

3. Gap between FDI commitment and realization

To improve this decreasing trend in FDI in Nepal, as portrayed in Figure 3, specialists and experts have suggested alternative ways of FDI inflows such as green financing, blended finance, developing the bond market, and hedging mechanisms.

FOREIGN ASSISTANCE

According to the Current

Macroeconomic and Financial Situation Update of Nepal (as of July 2023), foreign assistance has decreased from NPR 158 billion (USD 1.20 billion) in FY 2021/22 AD (2078/79 BS) to NPR 123 billion (USD 940 million) in FY 2022/23 AD (2079/80 BS). As shown in Table 2, the trend of foreign aid in the last six years was increasing until FY 2021/22 AD (2078/79 BS). The major cause

for this trend is non-replication of the community empowerment model from Nepal’s central government and donors in the new development projects.110

Source: Nepal Rastra Bank109

Figure

BILATERAL AND MULTILATERAL AID

Customs Duty Imposed on Import of Natural Materials by Foreign Aid Funded Projects

In the current fiscal year 2023/24 AD (2080/81 BS), a new policy was introduced with the amendment to the Customs Act whereby all projects funded by foreign aid will be obligated to pay customs duties when importing natural materials.111 This is in line with the fact that, since July 17, 2023, projects receiving foreign aid have not been receiving customs duty exemptions for importing items such as cement, iron rods, iron and plastic pipes, zinc sheets, and electric cables.112

China Pledges NPR 145 Million (USD 1.103 million) Aid for Nepal’s Seven Provinces

Led by a prominent member of the Communist Party of China, a Chinese delegation has pledged to allocate NPR 145 million (USD 1.10 million) for diverse agricultural projects spanning all seven provinces of Nepal.113 The funding will be channeled through the ChinaSouth Asian Countries Poverty Alleviation and Cooperative Development Centre, headquartered in Chongqing, China. This financial aid aims to benefit 1,500 households in each province, concentrating on agriculture, livestock training, and horticulture, and serving as a pilot initiative. This initiative

essentially aims to support Nepal’s self-sufficiency in food and agricultural products.114

GRANTS AND CONCESSIONAL LOANS

ADB Grants Concessional Loan for Rural Roads in Nepal

The Asian Development Bank (ADB) has granted a USD 100 million (NPR 13 billion) concessional loan from its regular funds to support Nepal’s ongoing Rural Connectivity Improvement Project, focusing on enhancing rural road infrastructure for better market access.115 ADB will provide an extra USD 1 million (NPR 131.5 million) in technical assistance from its Technical Assistance Special Fund to facilitate

Foreign Assistance (in NPR million)

Source: Current Macroeconomic and Financial Situation of Nepal (ending mid-July 2023)

Table 2. Annual foreign assistance (as of mid-July 2023)

project execution and enhance institutional capabilities.116 The project, initially approved in December 2017, aims to boost agriculture and agri-business by enhancing road access for approximately 7.5 million people across 16 districts in five agriculturally reliant states.117 The additional funding will upgrade 324 km of provincial roads to match all-weather standards and safety measures applied in the original five provinces, supporting Nepal’s transition to federalism and bolstering technical capacities.

Cabinet Approves ADB’s Concessional Loan and Budget Assistance

The Government of Nepal has accepted a concessional loan of USD 300 million (NPR 39.45 billion) from ADB to support the Sub-Regional Transport Enhancement Project.118 This program, as outlined by the ADB, aims to modernize customs procedures using digital technologies such as electronic customs duty payments and electronic export document submissions, aligning with the current Customs Reform and Modernization Plan.119 Additionally, the Council of Ministers, during its meeting, approved a USD 50 million (NPR 6.6 billion) loan from ADB for budget assistance, which will be allocated to the Customs

and Logistic Improvement Program.120

EU Grants EUR 16.7 Million (NPR 2.4 billion) for Agricultural and Educational Development

The European Union (EU) has allocated EUR 12 million (NPR 1.73 billion / USD 13.15 million) to support Nepal’s agricultural and rural development, along with an additional EUR 4.7 million (NPR 680 million / USD 5.17 million) for the development of the school sector, demonstrating its ongoing commitment to Nepal’s progress.121 The School Sector Development Program, that is to be funded using this money, aims to make significant progress in improving access to education, particularly for girls. On the other hand, the agriculture sector development program that is to be funded by this money has played a vital role in stabilizing Nepal’s economy during and after the pandemic in provincial and local levels, addressing the food trade deficit.122

REMITTANCE AND MIGRATION REMITTANCE INFLOWS

In the fiscal year 2022/23 AD (2079/80 BS), remittance inflows surged by 21.2% to reach NPR 1.22 trillion, a significant contrast to the previous year’s growth of only 4.8%. When considering the

US dollar, remittances increased by 12.1% totaling USD 9.33 billion in the same period, showing noteworthy improvement compared to the 2.2% growth seen in the preceding year.123

Furthermore, the number of Nepali workers seeking approval for foreign employment (both new institutional and individual applicants) witnessed a substantial rise of 40.3%, reaching a total of 497,704 in FY 2022/23 AD (2079/80 BS). This is a stark contrast to the previous year when there was a remarkable increase of 392% in this category.124 On the other hand, the number of Nepali workers seeking to renew their approval for foreign employment experienced a decline of 1.8% totaling 277,272. This follows the exceptional growth of 198.5% observed in the previous year.125

PLANS AND PROGRAMS TARGETED TOWARD MIGRANT WORKERS

Digital Payment Services Sign Pact to Facilitate Remittance Services

E-Sewa Money Transfer has forged an agreement with Enjaz Payment Services, a prominent financial entity in Saudi Arabia, to facilitate remittance services.126 This collaboration, formalized in Riyadh, aims to streamline remittance services for Nepali migrants workers in Saudi Arabia.127 Under this, Nepali migrants can remit funds to Nepal through any of Enjaz Payment’s branches or via its App Point of Sale (POS), kiosks, and web platforms. On the other side, recipients in Nepal can collect remittances from over 13,800 payment agents and cashpickup enabled wallet locations offered by E-Sewa Money Transfer as well as from major banks and financial institutions.128

Human Rights Commission in Nepal and Qatar Sign Pact to Protect Migrant Workers’ Rights

The National Human Rights Commissions of Nepal and Qatar have entered into a memorandum of understanding (MoU) aimed at safeguarding the rights of migrant workers.129 The agreement seeks to bolster cooperation between the two countries, with a priority on exchanging information related to migrant worker grievances and legislative processes.130 The pact was signed by the chairman of Nepal’s National Human Rights Commission, and Qatar’s deputy chairman of the National Human Rights Committee.131 Despite existing international and national legal frameworks, migrant workers still face numerous challenges. Both parties are eager to ensure that the rights of migrant workers are upheld and aligned with international standards. The

agreement reflects a renewed commitment to addressing these issues and follows a similar agreement signed in November 2015.132

TOP DESTINATIONS

Malaysia, along with Gulf nations like United Arab Emirates (UAE) and Saudi Arabia, had the most labor approvals for Nepali migrant workers in FY 2022/23 AD (2079/80 BS).133 It is also interesting to note that there has been a rise in the number of approvals for European countries such as Romania, Malta, and Poland. This shows the diversification in the destination countries from the usual Gulf and Southeast Asian nations.

Source: Current Macroeconomic and Financial Situation of Nepal (ending mid-July 2023)

Figure 4. Annual remittance inflows to Nepal (ending in mid-July)

GOVERNMENT FIGURES Government Reserves

In the last fiscal year 2022/23 AD (2079/80 BS), foreign exchange reserves rose by 26.6% from NPR 1.22 trillion (USD 9.54 billion) in mid-July 2022 to NPR 1.54 trillion (USD 11.74 billion) in mid-July 2023.134 Out of the total reserves, reserves held by Nepal Rastra Bank increased by 27.4% from NPR 1.06 trillion (USD 8.03 billion) in mid-July 2022 to NPR 1.35 trillion (USD 10.23 billion) in mid-

Table

FYs

July 2023. Moreover, reserves held by banks and financial institutions (BFIs) grew by 21.4% from NPR 159.41 billion (USD 1.21 billion) in mid-July 2022 to NPR 193.59 billion (USD 1.47 billion) in mid-July 2023.

On the basis of the data on imports in the fiscal year 2022/23 AD (2079/80 BS), the banking sector’s foreign exchange reserves are expected to be adequate to cover prospective merchandise imports for 11.7 months and both merchandise

and services imports for 10 months.135 As of mid-July 2023, the ratios of reserves-toGDP, reserves-to-imports, and reserves-to-M2 were recorded at 28.6%, 83%, and 25.2% respectively. The ratios were comparatively lower at 24.6%, 57.8%, and 22.1% in mid-July 2022.136

Table 3. Annual number of Nepalis going for foreign employment as per destination (ending mid-July 2023)

Source: Current Macro-economic and Financial Situation of Nepal (ending mid-July 2023)

Annual Number of Nepalis going for Foreign Employment (ending mid-July) New Institutional and Individual Applicants

Source: Current Macroeconomic and Financial Situation of Nepal (ending mid-July 2023)

4. Gross foreign exchange reserves as of mid-July for the last three consecutive

Government Debt (Total, Domestic

In FY 2022/23 AD (2079/80 BS), the Government of Nepal raised NPR 256 billion (USD 1.95 billion) through domestic debt issuance and made principal repayments totaling NPR 115.09 billion (USD 86 million).137 This resulted in a net domestic debt mobilization of NPR 140.90 billion (USD 1.07

billion), which accounts for 2.6% of the country’s GDP. Additionally, the government secured external loans amounting to NPR 102.12 billion (USD 780 million) during the same period.138

As of mid-July 2023, the total outstanding public debt reached NPR 2.22 trillion (USD 16.87 billion). Within this amount, the foreign debt was NPR 1.09 trillion (USD

8.29 billion), while the domestic debt stood at NPR 1.13 trillion (USD 8.56 billion).139 This means the ratio of the total outstanding public debt to GDP was 41.2% in the fiscal year 2022/23 AD (2079/80 BS), slightly higher than the 40.7% recorded in the previous year.140

Source: Current Macroeconomic and Financial Situation of Nepal (Based on Annual Data of 2022/23)

Government Spending (Expenditure and Revenue)

According to the Financial Comptroller General Office (FCGO) within the Ministry of Finance, the Government of Nepal’s total expenditure in the fiscal year 2022/23 AD (2079/80 BS) amounted to NPR 1.43 trillion (USD 10.86 billion), which is an increase from NPR 1.30 trillion

(USD 9.84 billion) in the previous year.141 This expenditure was divided into recurrent, capital, and financing expenditures for the federal government, which amounted to NPR 1.01 trillion (USD 7.66 billion), NPR 233.70 billion (USD 1.78 billion), and NPR 190.11 billion (USD 1.45 billion) respectively.142

On the other hand, the

government’s revenue collection reached NPR 957.15 billion (USD 7.28 billion), whereas it had been NPR 1.08 trillion (USD 8.12 billion) in in the preceding year.143 Additionally, the overall resource mobilization of the Government of Nepal, which encompasses revenue and other receipts, stood at NPR 1.01 trillion (USD 7.69 billion).144

Source: Current Macroeconomic and Financial Situation of Nepal (Based on Annual Data of 2022/23)

Table 5. Status of government debt over the last three FYs (as of Mid-July 2023)

Table 6. Government spending as of mid-July 2023

and External)

Expenditure (in NPR million)

Source: Current Macroeconomic and Financial Situation of Nepal (Based on Annual Data of 2022/23)

TRADE STATUS

Foreign Trade Scenario

In terms of the foreign trade scenario, the total trade deficit fell by 15.5% to NPR 1.46 trillion (USD 11.06 billion) in FY 2023/24 AD (2080/81 BS) as compared to by 23% in the previous FY 2022/23 (2079/80 BS).145 Merchandise

exports fell by 21.4% to NPR 157.14 billion (USD 1.19 billion), preceding a 41.7% growth in the previous year. Concurrently, merchandise imports fell by 16.1% to NPR 1.61 trillion (USD 12.25 billion), compared to a 24.7% growth the previous year.146 As shown in Figure 6, the total foreign trade declined from NPR 2.12 trillion

(USD 16.12 billion) in FY 2021/22 AD (2078/79 BS) to 1.77 trillion (USD 13.45 billion) in FY 2022/23 AD (2079/80).

Source: Current Macroeconomic and Financial Situation of Nepal (Based on Annual Data of 2022/23)

Figure 5. Annual government revenue and expenditure (as of mid-July 2023)

Figure 6. Total foreign trade over the last four FYs (in NPR million)

Top Imports and Exports

The top five imports during FY 2022/23 AD (2079/80 BS) were petroleum products (19.2% of the total number of imports), machinery and parts (4.5%), transport, vehicle equipment, and parts (3.8%), medicine (3%) and gold (2.7%).147 In terms of exports, the top five were palm oil (13.1% of the total number of imports), woolen carpets (7.3%), polyester yarn, and thread

(6.7%), soybean oil (5.4%) and cardamom (5.3%).148 The imports of sponge iron, chemical fertilizer, stationeries, and bitumen increased while the exports of zinc sheet, particle boards, cardamom, woolen carpets, polyester yarn, and thread also saw a rise in the past financial year.149

According to the data collected, exports to India fell by 31.3%, while exports to China and

other nations grew by 118.3% and 10.7%, respectively. The sudden exponential rise in exports to China can be attributed to the opening of the long-closed Tatopani border on May 1, 2023.150 Similarly, imports from India, China, and other nations fell by 14.4%, 15.9%, and 20.7% respectively.151

Balance of Trade

In the last FY 2022/23 AD (2079/80 BS), the total trade deficit fell by 15.5% to NPR 1.46 trillion (USD 11.06 billion) compared to the previous year's deficit of 23%.152

Balance of Payment

According to the Current Macroeconomic and Financial Situation of FY 2022/2023 AD

(2079/80 BS), Nepal’s current account deficit for the year was NPR 72.16 billion (USD 54.87 million) compared to NPR 623.38 billion (USD 474.01 million) in the preceding year.153 Additionally, the Balance of Payments (BoP) was in excess at NPR 290.52 billion (USD 2.2 billion), compared to a deficit of NPR 255.26 billion (USD 1.94 billion) in the previous financial year. The trend of the balance of payment has been depicted

in Figure 9 where noticeable declines have occurred in FY 2018/19 AD (2077/78 BS) and FY 2021/22 AD (2078/79 BS) as a result of heavy imports and the coronavirus pandemic respectively.154

Source: Current Macroeconomic and Financial Situation (based on annual data of FY 2022/23)

Figure 7. Total imports, export, and trade balance over four consecutive FYs (in NPR billion)

Source: Current Macroeconomic and Financial Situation (based on annual data of FY 2022/23)

Source: Current Macroeconomic and Financial Situation (based on annual data of FY 2022/23)

Exchange Rate

The Nepali currency visa-avis the United States Dollar depreciated by 8.18% from an annual average of NPR 121.14 (USD 0.921) in FY 2021/22 AD (2078/79 BS) to NPR 131.05 (USD 0.996)

in FY 2022/23 AD (2079/80 BS).155 Additionally, the average buying exchange rate per USD reached NPR 130.45 (USD 0.991) in FY 2022/23 AD (2079/80 BS) from NPR 120.54 (USD 0.916) in FY 2021/22 AD (2078/79 BS).156 The continuous devaluation of

NPR as compared to USD has caused imports to be costly in import-dependent Nepal. The devaluation of the Nepali currency has also significantly contributed to the country's rising inflation rate.

Figure 8. Trade deficit for four consecutive years (in NPR billion)

Figure 9. Balance of Payment trends of last eleven years (in NPR million)

Gold/Silver Updates

The import of gold increased from NPR 42.70 billion (USD 324.62 million) in FY 2021/22 AD (2078/79 BS) to NPR 43.89 billion (USD 333.71 million) in FY 2022/23 AD (2079/80 BS).157 In addition, the price of gold jumped by 14.5% to USD 1953.70 (NPR 256,931.08)

per ounce in mid-July 2023 from USD 1706.15 (NPR 224,375.78) a year ago. Despite the increasing prices, gold was still one of the top ten import commodities of Nepal.158

On the other hand, silver did not occupy a prominent position in the top import items of Nepal.

Nevertheless, silver was one of the most imported commodities from China with silver worth NPR 2.03 billion (USD 15.41 million) imported in FY 2021/22 AD (2078/79 BS).159

Source: Current Macroeconomic and Financial Situation (based on annual data of FY 2022/23)

Source: Current Macroeconomic and Financial Situation (based on annual data of FY 2022/23)

Figure 10. Exchange rate fluctuations over the last six FYs (in NPR)

Figure 11. Import trend of gold in the last four FYs (in NPR billion)

Outlook

Macroeconomic indicators are critical in examining a country's future trends to assess its overall economic situation. In this context, the net foreign direct investments may face further uncertainty due to political volatility and policy instability. However, the FDI based on green financing might bring in more investments in the future. Multilateral development agencies such as the World Bank, EU and ADB will continue supporting Nepal through loans and grants in various crucial sectors such as education, transportation and agriculture.

Moreover, increasing youth emigration might increase remittance inflows but will also lead to a shortage in skilled human resources. In terms of foreign trade, mounting remittances may fuel imports amidst the government’s efforts to maximize exports which will perhaps result in the continuity of trade deficit in the future. In such a situation, the government has to attract foreign investments along with proper channelization of bilateral and multilateral aids. Overall, Nepal’s macroeconomic environment seems to be at a crucial junction with the announcement of the budget and monetary policy of the new FY 2023/24 AD (2080/81 BS). Therefore, the government will need to consider macroeconomic issues such as high trade deficit, low capital expenditure, minimal FDI, and falling government revenues in the upcoming 16th five-year plan.

3 Sectoral Review

Agriculture and Livestock

Agriculture continues to play a pivotal role in propelling the Nepali economy forward. Notably, the sector is gradually moving away from traditional methods in favor of technological advancements. Farmers are embracing hybrid imported seeds, known for their elevated productivity and resilience against crop-damaging pests. This shift has led to a reduced reliance on indigenous seeds. In another important development, in the previous review period, Nepal grappled with a milk shortage, primarily attributed to lumpy skin disease and insufficient supply. However, in this review period, the situation stabilized, with the government's decision to raise milk prices that incentivized suppliers from Indian border towns to increase their shipments to Nepal. Moreover, Nepali tea has witnessed a surge in demand within the Indian market, largely driven by a shortage of tea resulting from aging tea bushes in Indian tea estates. This has demonstrated Nepal’s potential for exports. The evolving agricultural landscape has put Nepal in a better position to move towards a self-reliant economy.

Rice/Paddy: NPR 36.4 billion (USD 276.64 million)10

Crude soyabean oil : NPR 35.67 billion (USD 271.45 million)169

Crude palm oil: NPR 25.91 billion (USD 196.81 million)170

Edible oil: NPR 18.71 billion (USD 142.13 million)171

Palm oil: NPR 20.51 billion (USD 155.95 million)172

Jute goods: NPR 7.24 billion (USD 55.03 million)173

Cardamom: NPR 8.26 billion (USD 62.68 million)174

Soybean oil: NPR 8.48 billion (USD 64.40 million)175

Top 4 agricultural commodities imports based on annual data ending in midJuly 2023

Top 4 agricultural commodities exports based on annual data ending in midJuly 2023

PRODUCTION UPDATES

Mango Production on the Rise

Mango production in Nepal has seen significant growth over the years as productivity has improved. In the fiscal year 2021/22 AD (2078/79 BS), a total of 466,267 metric tons of mango was produced from 43,689 hectares of land.176 Similarly, in the fiscal year 2022/23 AD (2079/80 BS), the production increased to 498,859 metric tons from 39,579 hectares of land. Comparing both the years, the change in per-hectareproduction increased from 10.6 to 12.60 metric tons. As a result, Nepali mangoes dominated the market, decreasing the wholesale price to between NPR 40-50 (USD 0.30-0.38) this year, from NPR 80-90 (USD 0.61-0.68) last year.177 Fruit sellers have revealed that in the peak season, the price gets cheaper and Nepali mangoes dominate the market, while during the beginning and end of the season, the prices are expensive as imported mangoes dominate the market.

Number of Farmers Cultivating Indigenous Crops Declining

Myagdi, a district rich in genetic resources and biological diversity, is facing the potential disappearance of 97 varieties of indigenous crops in its rural areas.178 According to The Agriculture Knowledge Center in Myagdi, the decline has been attributed to illegal harvesting and lack of government programs to encourage farmers to protect indigenous crops.179 This worrying trend has been ongoing for a decade, with crops like sorghum, perilla, various types of rice, and

naked barley at an increased risk of extinction. Local farmers have even stopped preserving indigenous seeds for future use, favoring imported seeds instead.180

The government's efforts to promote indigenous crops like millet and foxtail millet to combat this problem have been hindered by the increasing import of unhusked rice and millet from various countries. Additionally, the consumption of milletbased products has significantly decreased in the local area, and crops like buckwheat, barley, and foxtail millet are rarely prepared or consumed. Despite subsidies and government priorities, farmers seem to be more attracted to hybrid vegetable seeds; further displacing indigenous crops and contributing to the decline in their production.181

INPUT UPDATES

Farmers Turning to Usage of Tractors

Over the past year, the lumpy skin disease had affected cattle, causing concern for farmers whose ox fell ill during critical tilling periods.182 The disease led to many to abandoned oxen, causing challenges for traditional farmers. Thus, Nepali farmers such as those in Gorkha district have been turning to tractors for plowing instead of relying on oxen, saving time and cost. While oxen took weeks to till the land, tractors now complete the task in a day’s time. In terms of costs, some farmers hire tractors for NPR 3000 (USD 22.81) per hour.183 However, despite mechanization, this use of tractors has been restricted to larger fields whereas

smaller plots continue using oxen MARKET UPDATES

Staple Food Becomes Expensive Following New Financial Bill

India's ban on wheat export followed by its curbing of rice shipments has led to a significant spike in rice prices in Nepal, resulting in financial stress among people whose income remains unchanged. Furthermore, the government increased taxes on vegetables and other daily farm consumables by 13%. The Value Added Tax (VAT) Act of 1996 prohibited taxing products like potatoes and onions but the government promptly amended the law through the 2023 Financial Bill, removing 170 items from the tax-free list.184

Milk Market Witnesses Increase in Prices

After the government decided to increase the price of raw milk by NPR 9 (USD 0.06) per liter in March, the private dairy associations, too, raised the retail prices by NPR 14 (USD 0.11) per liter.185 This, along with less supply of milk, has led to traders bringing in milk from across the border in large amounts since there is increased profitability. This has resulted in a surplus of milk despite decreased domestic production caused by the lumpy skin disease. To address the situation, the government is considering market inspections and investigations into traders bringing in Indian milk.186

EXPORT AND IMPORT OF AGRO-COMMODITIES

Increasing Demand of Nepali Tea

Nepal annually produces

approximately 26,379 tons of green tea leaves and exports almost half of it.187Out of this, almost 98% of Nepal's tea exports go to India, where both Crush, Tear, Curl (CTC) and orthodox tea are in high demand. In a recent turn of events, Nepali tea has been gaining a lot of popularity in the Indian market as aging tea bushes in Indian tea estates have led to a significant decline in tea acreage and output.188 Due to the increased demand, a report by the Nepal Rastra Bank (NRB) positions Nepal for a potential record amount of tea exports this year amounting to NPR 3.93 billion (USD 29.83 million).189

LIVESTOCK UPDATES

Chilling Center to Established to Increase Milk’s Shelf Life

In Galkot, Baglung, milk production has been increasing, attributed to the growing practice of keeping indigenous buffalo breeds such as Lime and Parkote 190 These indigenous buffalo breeds are renowned for their nutritious milk, which has bolstered overall milk production. This surge in the supply of milk has necessitated proper milk handling to ensure the increased

Outlook

shelf life of the milk. For this reason, the local milk cooperative in the region decided to establish a chilling center. The initiative has been supported by Galkot Municipality, which contributed NPR 900,000 (USD 6841.53) while the required balance of NPR 400,000 (USD 3,043.61) was raised by farmers.191 With the chilling center's impending operation, Galkot Agricultural Cooperative aims to significantly amplify milk collection efforts to up to 300 liters per day.192

GOVERNMENT PLAN UPDATES

Minimum Support Prices Set for Crops

The Cabinet meeting in the first week of July made a decision to raise the minimum support price (MSP)  for paddy by over 7.5% for the fiscal year 2022/23 AD (2079/80 BS).193 Following the decision, the price floor for common paddy has been set to NPR 3365 (USD 25.57) per quintal, whereas the price floor for mota dhan (small paddy grain) has also been increased to NPR 3198 (USD 24.30) per quintal.194 This marks the first time since 199 that minimum support price

has been set during the paddy transplantation season which was abandoned after the government launched the 20-year Agriculture Perspective Plan.195 For context, the MSP is the minimum, fixed and guaranteed price below which the prices of the commodities cannot fall. It ensures that farmers get adequate income for their produce from the government.196

Gandaki Province Government Launching Artificial Insemination Program

The Gandaki Province government is launching an artificial insemination program to enhance livestock breeding and boost productivity. The goal is to make the province selfsufficient and commercial in milk production by improving the breeding of cows and buffaloes. This initiative is part of the province's annual policy and program for the FY 2080/81 BS (2023/24 AD).197 Further, to support this, agriculture, livestock, and fishery resource centers will be established at private and community levels to ensure the availability of seeds, saplings and high-quality livestock breeds.198

In light of the declining utilization of indigenous crops, it is crucial to promote their increased cultivation. The government can bring forward programs to increase cultivation of indigenous crops, so as to encourage self-reliance and reduce dependency on food imports. The loss of indigenous crops not only disrupts markets and consumption patterns but also diminishes their cultural significance to local communities. Furthermore, challenges remain regarding the import and export of agricultural products. The government can prioritize implementing appropriate policies regarding the export of Nepali tea, paddy and other crops, so as to increase the agricultural revenue and boost the economy as a whole.

Following the remarkable progress achieved in enhancing education accessibility through the School Sector Development Plan, the government has formalized the financial agreement for the Plan this quarter. The Government of Nepal has also increased the education budget for the current fiscal year 2023/24 AD (2080/81 BS), with a significant portion allocated to local governments. These local bodies have introduced initiatives such as free education and scholarship programs, aimed at fostering a more inclusive education system. Additionally, the government has decided to amend the Education Act, but has encountered considerable resistance from the private sector. Critics argue that the suggested provisions are excessively restrictive and impractical, resulting in heated debates and challenges in reaching a consensus

PLANS AND PROGRAMS

Government Increases

Education Allocation by NPR 1 billion (USD 7.6 million)

The Government of Nepal has allocated NPR 197.29 billion (USD 1.5 billion) to the Ministry of Education, Science, and Technology (MoEST) for FY 2023/24 AD (FY 2080/81 BS). This is an increase of approximately NPR 1 billion (USD 7.6 million) from last financial year’s budget of NPR 196.38 billion (USD 1.49 billion).204 Out of the amount allocated, NPR 56.82 billion (USD 445.74 million), which is around 29.71% of the total budget mentioned above, has been allocated to the federal level for education-related activities.205 The provincial level has been allocated NPR 4.66 billion (USD 35.43 million) or

2.36% of the total budget.206 Meanwhile, the local level has been allocated NPR 135.80 billion (USD 1.03 billion), which is around 68.8% of the budget.207 In accordance to this, several local level governments have paid special attention to increasing the inclusion of girls and marginalized ethnic communities through scholarships and free education programs. Further, some local governments have implemented English-medium education in community schools in an attempt to retain students from transferring to private English-medium schools.208

School Sector Development Plan Achievements

According to a report released by the World Bank, the School Sector Development Program

FACTSHEET

Mean years of schooling199 5.1 Net enrolment rate at secondary level (class 9–12)200 54.03% Retention rate up to grade 12201 35.6% Literacy rate (5 years and above)202 76.2% Estimated gender equality indicator (based on the secondary net enrolment rate)203

(SSDP) 2016-2022 was able to achieve great results. The SSDP was funded by the Government of Nepal and ten joint financing partners, including the World Bank, with the aim of improving quality and inclusiveness of education. It introduced scholarships, helping girls and vulnerable children stay in school to complete their schooling, and further strengthened assessment systems.209 The results SSDP received surpassed the set target for multiple indicators. Some of the achievements that have overachieved their targets are as follows: 210

• Increased the survival rate1 to Grade 12 from 11.5% in 2016 to 33.1% in 2022.

1 Percentage of students enrolled in Grade 1 who are expected to reach Grade 12.

• Reduced the number of outof-school children by 6.76%.

• Increased the net enrollment rate (NER) in grades 1-8 in the 15 most-disadvantaged districts to 92.2% in 2022 from 85.1% in 2016.

• Increased the NER for secondary education in 15 most-disadvantaged districts to 44.1% in 2022 from 29.1% in 2016.

• Over 99% of the funds disbursed to schools followed eligibility and utilization guidelines according to audit observations.

Government Formalizes Cooperation for School Education Sector Plan

The Government of Nepal and eight development partners have finalized the signing of a joint financial arrangement for implementing the School Education Sector Plan (SESP) 2023-2032 in a recent press conference.211 The plan has goals similar to the SSDP such as supporting additional reforms to enhance the quality of the education sector, recovering learning losses, and increasing accessibility.212 The SESP has funding requirements of around USD 7.2 billion (NPR 946.87 billion) for the initial five years of the project.213 Out of this, the Government of Nepal will be providing USD 6.3 billion (NPR 828.51 billion).214 Meanwhile, the eight development partners — the Asian Development Bank, European Union, Government of Finland, Global Partnership for Education, Government of Norway, United Nations Children’s Fund (UNICEF), United

States Agency for International Development (USAID), and the World Bank — have committed a combined support of USD 780 million (NPR 102.58 billion) over the next five years.215

Education Bill to be Revised After Facing Backlash

The Council of Ministers’ approval of the Education Bill has paved the way to replace the 52-yearold Education Act 2028 BS (1971 AD). The bill has proposed that the new act be called “School Education Act 2079 BS” (2023 AD). According to the MoEST, this act is crucial to strengthen the quality of education and clarify the rights of the three levels of the government under the federal structure.216

However, there have been many objections against the new bill. For one, the bill states that it requires private schools to be established and operated under an educational trust within five years.217 This has caused quite a controversy and uproar among private school operators who claim that the provision goes against the fundamental right to property.218 Local bodies have further protested the bill’s plans to revive the District Education Offices, stating it takes away their rights.219 Following the intense pressure, the government has agreed to revise some of the provisions before registering it in the House of Representatives but has not specified the exact provisions it will be looking at.220

KEY DEVELOPMENTS

Multiple Private Schools Relocate Outside of KMC for Easier Operations

Many private schools in the Kathmandu metropolitan area have started relocating to neighboring municipalities as a result of Kathmandu Metropolitan City (KMC) requiring schools to operate in accordance with the School Management Regulations 2074 BS (2017 AD).221 In accordance to existing requirements, schools need to have a hexagram logo with the school’s name or other symbols in the middle of the hexagram in order to bring uniformity to all school logos. Further, it requires schools to be named after individuals who have made significant contributions to society and the nation, historical figures, deities, or in a way that reflects Nepali heritage. KMC has also stipulated a fee of NPR 50,000 (USD 380.20) for renaming the schools.222 Additionally, after receiving complaints about the low salaries of private school teachers, KMC mayor Balen Shah has directed private schools to provide the salary and facilities to their teachers as determined by the government for public schools.223 Due to these rules, in the current academic session itself, four private schools – Little World English School, Rainbow International Boarding School, Greenwich Academy Secondary School, and Saraswoti Kunj Secondary School – have moved out of KMC’s jurisdiction area.224

Government Increases Tax on Money Sent to Foreign Educational Institutions

Despite the government increasing its investment in education consistently for the past 12 years, it has not been able to deter students from

seeking opportunities in foreign countries. In FY 2022/23 AD (FY 2079/80 BS), 110,217 people took No Objection Certificates for around 70 different countries –the majority of whom were recent Grade 12 graduates.225 In the same fiscal year, Nepali students spent around NPR 100.42 billion (USD 763.59 million) for education abroad.226 To discourage the trend of education abroad, and also to increase its revenue base, the government has levied a 3% tax on the money students send from banks in Nepal to the foreign academic institutions. This is an increase from the 2% tax in the previous year.227

Students Protest Tribhuvan University’s Engineering Fee Hike

Engineering students held protests against Tribhuvan University’s Institute of Engineering’s (IOE) decision to increase tuition fees for undergraduate programs from NPR 318,000 (USD 2418.06) to NPR 775,420 (USD 5896.28). The increased fees will be applicable to all affiliate colleges from the academic session 2023/24 AD (2080/81 BS).228 Following the decision by the university, multiple student unions condemned the campus for the steep hike. The Nepal Students Union (NSU), affiliated with the Nepali Congress, even staged a continuous relay hunger strike at IOE.229 To combat the protests, IOE has formed an 11-member committee to review the fee hike and subsequently submit a report on the topic.230

names in its final list for its Grade 11 Scholarships on August 16, 2023.231 However, only around 2328 students received the letters of selection for the scholarship program, meaning 2245 seats have been left vacant in various higher secondary institutions around the metropolis.232 Reportedly, some students were unable to navigate the online process used.233 On the other hand, some students recommended by KMC were ineligible for their chosen faculties as they did not meet the prerequisites of the course.234 Some students also abandoned their scholarships after not getting admission into the college of their choice, increasing the number of vacant seats.235 Of the students who received their letters of selection, 1456 students applied in the science faculty, 747 in management, and 73 in technical subjects such as computer and engineering, 43 in law, 5 in education and 4 in humanities.236

EXAMINATION RESULTS

Half of the Students Score

Below 2.40 in SEE

This has drawn criticism from education experts who state that SEE results cannot be considered an improvement when the majority of students continue to score such low points.239 Supplementary tests for students who got a ‘C’ or lower have been announced for August 11-12, 2023.240

Around 49% of Students Score Less than 1.61 GPA in Grade 12 Exams

The National Examination Board (NEB) recently published the results of Grade 12 exams. Of the 372,637 students who appeared in the examination, 182,926 (49.09%) scored less than 1.61 GPA and were categorized as non-graded.241 This prevents them from pursuing higher education unless they are able to improve their grades. The NEB has scheduled supplementary examinations for these students on September 23 and 24.242 On the other hand, around 6976 students secured a GPA of above 3.60, which is a 0.72% increase compared to the results of the previous year.243 Further, the 50.91% pass rate is a slight increase from the 48.1% of the previous year, which NEB officials have expressed happiness about. However, similar to their reaction to SEE results, education experts have stated that close to half the students failing to even score a GPA of 1.61 is a matter of great concern.244

KMC Selects 2300 Students

for Higher Secondary Scholarships

KMC published around 4550

The Secondary Education Examination (SEE) results were published in early-July, 2023. Of the 485,299 students who had given the examination, 22,475 (4.63%) achieved a Grade Point Average (GPA) of 3.60 or above.237 This is an increase from the 1.94% of students who achieved GPAs in the same range in the previous year. Further, around 55,069 students (11.35%) scored a GPA between 3.0 and 3.60, which is also an increase from the 41,727 or 9% of students last year.238 However, 50.66% of students still had GPAs lower than 2.40.

The high failure rates in two major examinations overshadow the marginal year-on-year increase in high-achieving students. It underscores a systemic issue in the quality of education in the country. This is reflected in a growing trend of students seeking higher education abroad, often at substantial costs. The government's recent imposition of a 3% tax on funds sent to foreign educational institutions is unlikely to deter out-migration of students. Instead, it could compound the financial burden faced by students and their families. To foster meaning retention, the government must prioritize substantial improvements in the domestic education system and offer competitive courses on a broader scale, aligning with the goals outlined in the SESP and the Education Bill. However, the successful implementation of the Education Bill may be hindered by protests from various stakeholders, mainly the private sector. This highlights a lack of stakeholder engagement and consultation during bill drafting, restricting discussions to a relatively small group of individuals. The lack of clarity surrounding KMC’s Grade 11 scholarship program is another example of the government's poor coordination with key stakeholders. To strengthen and streamline plans and initiatives, the government must enhance its communication and coordination efforts with both, internal and external stakeholders.

Energy and Environment

The latest economic survey of Nepal has highlighted the country’s remarkable progress towards achieving selfsufficiency in electricity generation. A total of 2684.4 MW of electricity has been connected to the national grid, which is a 494.8 MW increase compared to FY 2021/22 AD (2078/79 BS). Compared to the FY 2021/22 AD (2078/79 BS), the hydropower plants’ contribution to the electricity produced has also increased from 2075.4 MW to 2537.9 MW whereas the share of solar energy increased from 54.8 MW to 87 MW. The upside to the added electricity is that the country has achieved 95% electricity access, with a plan to reach 100% within two years, surpassing the target set for 2030 through Sustainable Development Goals (SDGs).

As electricity is becoming more accessible, fourwheeled electric vehicles are also gaining popularity in the country. According to the Department of Customs, a total of 4050 electric vehicles were imported in the FY 2022/23 AD (FY 2079/80 BS) which is a significant increase from 1877 in the last fiscal year. In line with these figures, the annual per capita energy consumption of the country has reached 380 units. However, despite the increased electricity production and increased per capita consumption, the country’s electricity import still outweighs the export. One of the primary reasons for the existing electricity trade deficit is the inefficacy of hydropower plants as a result of damages incurred during extreme climate events such as floods and landslides. In order to overcome this and realize the full potential of hydropower generation, Nepal needs to invest in building climate resilient hydro- infrastructures.

CLIMATE CHANGE RISKS

Extreme Temperatures Lead to School Closures, Health Concerns, and Water Scarcity

Rising temperatures in Terai districts, including Sunsari, Itahari, Tanahun, and Chitwan, resulted in the temporary closure of all public schools for a week in June.250,251,252,253 During the same month, several regions in Nepal including Jhapa, Okhaldhunga, Sunsari, Illam, Nawalparasi, and Nepalgunj experienced historically high temperatures, with some areas reaching as high as 43.8 degrees.254,255

The Department of Hydrology and Meteorology (DHM) has also expressed concern that temperatures are rising more rapidly in the hills and mountains compared to the Terai region. For instance, the daily measurement of temperature confirmed that Kathmandu and Pokhara experienced extreme heat, breaking previous records.256,257

Prolonged exposure to high temperatures often leads to symptoms such as headaches, nausea, weakness, dizziness, and fainting, with heat stroke being the most dangerous and necessitating medical attention.258  Due to the heatwave i.e., high minimum and maximum temperature for three days, healthcare facilities in Terai region have witnessed a surge in number of patients suffering from diarrhea, food poisoning, viral fever, and snakebites.259 Moreover, higher temperatures have also led to water scarcity in different areas of Nepal. This is distressing, especially in hospitals, as health

authorities advise people to stay hydrated in order to overcome heat-related illnesses.260

Flooding and Landslides Result in Infrastructural Damage

According to the Independent Power Producers Association Nepal (IPPAN), early monsoon floods and landslides caused an estimated NPR 8.5 billion (USD 64.63 million) in damages to 30 hydropower projects located in eastern Nepal.261 Among the 30 projects that had a combined capacity of 463 MW, 13 projects totaling 132 MW were already in operation and incurred a direct loss of NPR 6 billion (USD 45.62 million).262 Damages to the hydroprojects not only affects revenue but also extends the project construction timeline, requiring additional investment. Besides the impact on hydropower infrastructure, the MuglingNarayanghat highway and sections of the Prithvi Highway were obstructed by heavy rains and landslides. Similarly, the sections of the Beni-Jomsom road and the AryabhanjyangRamdi road faced various traffic disruptions due to mudslides. Certain road sections of the BP Highway, Madan Bhandari Highway, and Lal Highway were also significantly impacted by landslides.263

CLIMATE CHANGE MITIGATION AND ADAPTATION

Narayani River Management Project Initiated to Mitigate Flood Risks

According to the DHM, on August 14, water level in the Narayani

River exceeded the danger level of 7.7 m in Devghat and 11.15 m in Narayanghat, resulting in significant damage to lives and properties, particularly in Chitwan and Nawalparasi.264 In order to control these increasing flood incidents, especially during the monsoon season, the federal government has initiated the Narayani River Management Project. The almost-completed project includes constructing a 21 km embankment on the Chitwan side and a 9 km one on the East Nawalparasi side, both seven meters high with 7.5-meter-wide gravel roads on top. The construction work for the Chitwan and Nawalparasi sides has been allocated budgets of NPR 2.25 billion (USD 17.11 million) and NPR 1.27 billion (USD 9.66 million) respectively.265

Dharan Drinking Water Campaign Addresses Acute Shortage of Drinking Water

The Dharan Drinking Water Campaign has successfully brought water from the Kokaha stream to the sub-metropolis of Dharan, addressing the acute shortage of drinking water in the area. The project, led by the mayor of Dharan Sub-Metropolitan City, Harka Sampang Rai, will supply water through a 42 km long pipeline that will benefit around 30,000 people. The drinking water project received NPR 40 million (USD 304,159) in financial support from domestic and international donors. Despite the huge success of a 98-day voluntary labor campaign, the project’s long-term sustainability is in question due to the vulnerability of temporary plastic

pipes to damage from monsoon rains.266

HYDROPOWER

Nepal and India Forge Agreements on Long-Term Power Trade

A joint press conference between Prime Minister Pushpa Kamal Dahal of Nepal and Prime Minister Narendra Modi of India took place on June 2, 2023. During this, Nepal and India reached an agreement on long-term power trade, wherein India will import 10,000 MW of power from Nepal over the next decade.267 Currently, Nepal exports only 454 MW of power to India while the actual realized export potential is 1,200 MW, including power from the 456 MW Upper Tamakoshi project. Both countries also signed agreements for the development of the 669 MW Lower Arun Hydropower Project and the 480 MW Phukot Karnali Hydropower Project. Additionally, a Memorandum of Understanding (MoU) to extend trade and transit as well as to construct the Siliguri-Jhapa Petroleum Pipeline was also signed.268

Pancheshwar Multipurpose Project Advances After Three Decades

The Pancheshwar Multipurpose Project is a part of the Mahakali Treaty which Nepal and India had signed in 1996 aiming to construct a hydroelectric power project on the Mahakali River, which forms the border between two countries. The Detailed Project Report (DPR), prepared

by India’s state-owned Water and Power Consultancy Services (WAPCOS) in 2016, faced disagreements on several issues which delayed the project’s overall momentum. Despite this, after three decades, Nepali and Indian officials have finally come to an agreement on finalizing the DPR and the implementation modality within a year. The 6480 MW project’s dams will generate electricity and mitigate flood risk in India. Additionally, water from India’s Kali and Sharada rivers, which originate from the Mahakali River, will irrigate India’s larger land mass of 240,000 hectares compared to the 130,000 hectares of land in Nepal.269 These project benefits, including India’s gains in irrigation and flood control, are quantified in the existing DPR, with India’s profit standing at 65% for irrigation and 82% for flood control.270 As per the treaty, both sides agreed to share the costs in proportion to the benefits. Thus, India has agreed to mobilize more financial resources given that it will attain a higher proportion of the benefits.

Nepal and Bangladesh Agree on Long-Term Electricity Export Deal

According to the Nepal Electricity Authority (NEA), officials from Nepal and Bangladesh have reached an agreement to sign a long-term deal for the export of 40-50 MW of electricity from Nepal to Bangladesh. While the tariff for electricity is yet to be negotiated, the agreement’s duration has been set at 25 years, ensuring a stable market for Nepal’s electricity in Bangladesh.271 As India is responsible to facilitate this cross-border power trade,

an Indian agency, NTPC Vidyut Vyapar Nigam Ltd. (NVVN), will be paid the transmission charge and service fee.272 The agreement will be formalized once a tripartite agreement is signed between Nepal, Bangladesh, and India.

Nepal’s Electricity Imports Outweigh Exports

According to NEA, in the last FY 2022/23 AD (2079/80 BS), Nepal imported 1833 GW hours of power resulting in expenses of NPR 19.44 billion (USD 147.52 million) as compared to an export of only 1333 GW hours of power resulting in revenues of NPR 10.10 billion (USD 79.08 million).273 This trade deficit highlights Nepal’s continued reliance on India for electricity, as the prolonged drought in Nepal has significantly diminished domestic power generation, resulting in higher imports compared to exports.

RENEWABLE ENERGY Promotion of Renewable Energy to Support Food Security

With an aim to promote renewable energy solutions to support food security, the Royal Norwegian Embassy in Kathmandu and the United Nations Development Programme (UNDP) entered into a USD 8.2 million (NPR 1.08 billion) partnership. The Government of Norway and UNDP will be contributing USD 6.97 million (NPR 916.62 million) and USD 0.9 million (NPR 118.36 million), respectively, to the project named “Energy for Food”. The project will be executed in eleven local governments in the Karnali and Sudurpaschim provinces of Nepal which face significant food security challenges due to the impact of climate change and

underdeveloped infrastructure. The project aims to utilize reliable and affordable energy solutions for food production and irrigation, benefitting over 150,000 people through enhanced local food supply and increased employment opportunities.

Solar Drinking Water Projects Implemented in Madhesh Province Districts

The successful implementation of seven Solar Drinking Water projects, powered by solar pumps with a combined capacity of 186-kilowatt power (kWp), made clean drinking water accessible to more than 11,000 residents in Sarlahi and Siraha districts of Madhesh province. The project was jointly supported by the Government of Japan, the Alternative Energy Promotion Centre (AEPC), and UNDP.274

Biomass-to-Methane Gas Project Aims to Reduce LPG Imports

Nepal imported a staggering USD 455.73 million (NPR 59.93 billion) worth of Liquified Petroleum Gas (LPG) from India in the last FY 2021/2022 AD (2078/2079 BS).275

Realizing the need to reduce Nepal’s reliance on its southern neighbor, a project worth USD 151,917 (NPR 19.98 million) is underway that converts biomass waste to flammable methane gas. The pilot phase of the project in Ghorahi, the headquarter of Dang district, focuses on providing sustainable energy solutions to 1500 households by utilizing the abundant biomass waste, primarily consisting of kitchen waste, farm residue, and livestock dung, while the second phase aims to extend dung-generated

methane gas supply to an additional 750 households.276 The gas plant will be able to produce up to 2000 cubic meters of gas daily when operating at full capacity, requiring 30 tons of garbage every day. After finalizing 20-year agreement with the implementing institution, Alternative Energy and Nepal Energy Development Company, the responsibility for the gas production and distribution facility will be transferred to the Ghorahi Sub-Metropolitan City. During this period, Ghorahi will receive a 5% share of the profits generated from the facility, fostering a sustainable and environmentally friendly management solution.

PLANS AND PROGRAMS Budget Priorities and Allocation

The Ministry of Energy, Water Resources, and Irrigation has been allocated NPR 87.45 billion (USD 664.97 million), of which NPR 38.32 billion (USD 291.38 million) is assigned to the improvement and expansion of transmission systems. Meanwhile, a sum of NPR 1.74 billion (USD 13.23 million) has been administered to the promotion of alternative energy. The Ministry of Water Supply, on the other hand, has been allotted a budget of NPR 28.16 billion (USD 214.13 million), of which NPR 2.05 billion (USD 15.59 million) has been given to climate-adapted drinking water supply projects in drought-prone areas.277

Similarly, the Ministry of Forests and Environment has been issued NPR 15.56 billion (USD 118.32 million), of which NPR 1.05 billion (USD 7.98 million) has been assigned to the President Chure-

Terai Madhesh Conservation Area Program which includes activities like bamboo plantation as well as water and land conservation.

Nepal Announces Bans of Thin Plastic Bags to Combat Plastic Pollution

The Ministry of Federal Affairs and General Administration of Nepal announced a ban on plastic bags and products below 40 microns in thickness on July 6, 2023. The ban includes the production, import, sale, distribution, and use of these plastic bags. As alternatives, the government has encouraged the use of cotton, jute, or paper bags. However, the effectiveness of the ban remains uncertain, as past attempts have faced challenges in implementation and enforcement.278 Notably, according to the Waste Management Baseline Survey of 2020 conducted by the Central Bureau of Statistics, the plastic waste constituted a significant portion of the overall garbage production. Specifically, plastic waste accounted for 12% of household, 21% of institutional waste, and 22% of waste generated by establishments.279 Thus, this is a welcome step to mitigate the problems caused by excessive plastic usage.

Government Initiates Ambitious Tree Planting Campaign

On June 29, the Ministry of Forest and Environment celebrated the 6th National Tree Plantation Day with a series of nationwide events at safeguarding and advancing our forests and environment. According to the Department of Forest and Soil Conservation,

a total of 157,580 saplings from various species were planted nationwide. Additionally, as part of a reforestation initiative, the government has aimed to plant 30 million saplings in FY 2023/24 AD (2080/81 BS).280 A similar initiative has also been undertaken by the Division Forest Office in Gorkha which is actively involved in the afforestation program with the goal of distributing 90,000 saplings of various tree species such as timber-producing trees, spices, and other varieties within the region. The objective of such an initiative is to utilize uncultivated land and encourage individuals to participate in tree planting that also has the potential to generate income at the community level.281

2023 Climate Change Summit Convened

The 2023 Summit on Climate Change (SCC), jointly organized by the US Alumni Network (NUSAN) and the Institute for Strategic and Socio-Economic Research (ISSR), took place on June 28 and 29 in Pokhara.282 The United States Embassy in Nepal supported the two-day event which brought together more than 70 stakeholders and experts actively engaged in addressing climate change issues in the country.283 The main objective of the summit was to initiate discourse to devise innovative solutions for a sustainable future.

Bharatpur’s Wildlife Attraction Project Gears up for 2024

The Bharatpur Metropolitan City in Chitwan has announced plans to construct a zoo alongside the under-construction Wildlife Rescue Center in Devnagar.284

The Chitwan National Park will facilitate the display of tigers in the zoo during the Bharatpur Visit Year 2024. Infrastructural development including construction of a compound wall, living quarters for technical staff, enclosures for various animals, and sheds for elephants, is already underway at the site and is expected to be completed in time for the Visit Year 2024. The overall objective of this initiative is to attract a significant number of tourists, with the aim of bringing 200,000 foreign tourists and 700,000 domestic tourists to Bharatpur Metropolitan City in the upcoming year.285

NEW DEVELOPMENTS

Water Projects Transforming Access to Clean Drinking Water in Kavrepalanchowk

In Kavrepalanchowk district, a significant series of drinking water projects is underway, constituting one of the largest water initiatives since the Melamchi Drinking Water Supply Project. Among these projects, the Kavre Valley Integrated Water Project is currently in its trial operation phase, with the goal of providing safe water to approximately 93,000 residents in Banepa, Dhulikhel, and Panauti. Additionally, the Panchkhal Urban Water and Sanitation Project, which is 85% complete, aims to deliver water access to 7000 families. The Temal water project, designed to provide safe water to 55,000 people, is also expected to conclude within the next three months. Furthermore, progress is being made on the Mandan Deupur Water Supply Project, which will serve nine wards in the region. Once all

these water supply projects are fully operational, it is anticipated that approximately 80% of the district’s population will have access to clean and safe drinking water.286

Mobile Application Improves Waste Management

Birgunj Metropolitan City has been making headway in waste management through the use of the “Safa Nepal” mobile application, as residents use it to report garbage-related issues in the area. Developed with the backing of Birgunj Metropolitan City, the application has proven highly effective since its launch in March 2023, receiving an average of 15 to 20 daily notifications related to garbage-related complaints. When complaints are filed, the garbage collection team is mobilized to resolve the issues promptly. To further enhance the efficiency of waste management, the garbage collecting tractors are equipped with GPS trackers. These GPS trackers play a crucial role in data collection, allowing for the monitoring of various aspects such as the time taken by tractors to reach their designated destinations, the total duration of their trips, and the real-time progress of the vehicles as they approach their intended collection points. This technological integration ensures a more systematic approach to garbage collection which aids the resolution of complaints. Since the adoption of the application, over NPR 1.5 million (USD 10,000) has been collected by the city in fines from offenders.287

Outlook

Nepal’s environmental and energy-related developments look both promising and challenging. As the fourth most vulnerable country to climate change, Nepal grapples with a range of environmental issues such as extreme weather patterns, water pollution, ineffective waste management practices, and monsoon-induced natural disasters.288 These challenges have significant implications, affecting sectors of public health, education, infrastructural development. For instance, rising temperatures lead to health issues, while monsoon-induced disasters disrupt lives and infrastructure projects. However, it is not all doom and gloom. On the positive side, Nepal is actively pursuing initiatives in renewable energy, disaster risk reduction, waste-to-energy projects, and hydropower development. By tapping into these opportunities, Nepal is paving its path to long-term sustainability in the realm of energy and environment. For instance, efforts to mitigate plastic pollution through measures like banning plastic bags signify Nepal’s commitment to safeguarding the environment. However, successful implementation and enforcement of such initiatives remain a challenge. Overall, although Nepal faces a complex landscape of challenges, its commitment to renewable energy and sustainable practices offers hope for addressing these issues and move towards resilient and environment friendly future.

Health

During the review period, Nepal faced an outbreak of dengue and conjunctivitis, likely exacerbated by water contamination and poor sanitation. Their risks have been compounded as people are still recovering from infectious disease outbreaks in the previous quarter. Furthermore, deteriorating air quality has added significantly to Nepal's healthcare burden by increasing the incidents of respiratory illnesses necessitating immediate government action. The country also saw an increasing number of cases of mental health conditions, mainly depression and anxiety, further contributing to the high suicide rate. While efforts have been made to bolster mental health services, a shortage of skilled professionals in the field poses a hurdle. Additionally, the migration of doctors and nurses to seek opportunities abroad further complicates the implementation of Nepal's healthcare initiatives by reducing access to proper healthcare, especially in rural areas.

PLANS AND PROGRAMS Budget Allocation to Health

Ministry Increased by NPR 14 billion

The Government of Nepal has allocated NPR 83.99 billion (USD 638.65 million) to the Ministry of Health and Population (MoHP) for FY 2023/24 AD (FY 2080/81 BS). This is an increase of NPR 14.61 billion (USD 111.09 million) from the amount allocated in FY 2023/24 AD (FY 2080/81 BS).295 Of this, NPR 49.80 billion (USD 378.68 million), which is around 59% of the allocated health budget, has been allocated for the federal level health budget.296 The

lowest budget allocation among the three tiers of government has been to the provincial governments at around NPR 6.06 billion (USD 46.08 million) or 7% of the total healthcare budget for its health activities.297 Conversely, local level governments have been allocated NPR 28.13 billion (USD 213.9 million), which is around 34% of the budget.298 Notably, health has emerged as a prioritized sector for many local governments. Kathmandu Metropolitan City, the local level government of Nepal’s capital and most populous city, has allocated NPR 926 million (USD 7.04 million) for the health

sector.299

Health Ministry Takes Action to Reduce Neonatal and Maternal Mortality

In a bid to lower the neonatal mortality rate, MoHP has decided to set up a “special newborn care unit” in all district hospitals across Nepal. The units will be designed to constantly monitor and tend to sick newborn children.300 This decision is in line with Nepal’s attempts to meet its Sustainable Development Goals (SDGs) as Nepal has pledged to reduce the neonatal mortality rate from the current 21 deaths to 12 deaths per 1,000 births by 2030 as part

of its commitment to the SDGs. However, a lack of neonatal death surveillance across all 77 districts presents a significant challenge. Currently, only 32 districts have maternal and perinatal death surveillance in place.301 Among the various steps to combat these problems, MoHP has plans to strengthen surveillance though verbal autopsies on neonatal deaths with support from United States Agency for International Development (USAID).302 This would allow the government to be able to determine the cause of newborn deaths and plan effective preventative measures.

In August 2023, the government also launched “Mero Poshan Sathi” — a mobile app designed with technical support from USAID to assist people in making informed nutritional and health choices. MoHP hopes that the app will promote better antenatal and postnatal care and disseminate information to help people at various stages of their life, including those that are pregnant, lactating, and caregiving.303 Nepal’s focus on maternal care is necessary to be able to achieve its 2030 SDG target of reducing maternal mortality rate to 75 deaths per 100,000 births. Currently, this number stands at 151 deaths per 100,000 births, the majority of which are caused due to postpartum hemorrhage.304 In order to combat this, MoHP has also decided to purchase nonpneumatic anti-shock garments to reduce maternal deaths from excessive bleeding during childbirth. According to officials, the garment, which costs USD 70 (NPR 9,205) per unit, will be available in all public hospitals

and ambulances.305

PEN-Plus Project Being Expanded to Four Additional Districts

The Package of Essential Non-communicable Diseases Intervention-Plus (PEN-Plus) is an integrated care delivery strategy that targets noncommunicable diseases (NCDs) by increasing access to required health care facilities.306 Under the program, health workers in the selected hospitals are trained to screen NCDs and accordingly provide treatment. Initiated by the NCDI Poverty Network and composed of over 20 national commissions and various support partners, PENPlus was put in place in hospitals in Damak and Bardia since 2021 through the Kathmandu Institute of Child Health in partnership with MoHP.307 The pilot has also been supported by the United Nations Children's Fund and Eli Lilly and Company.308 Following the understanding of the need of the project, the ministry has decided to expand the piloting of the program to four more district hospitals in Bajhang, Dailekh, Gulmi and Siraha. The program will be expanded nationwide if the pilots show a positive impact.309

HEALTH RISKS

Conjunctivitis Spreads Across All Seven Provinces

In late-June to August, Nepal saw an outbreak of viral conjunctivitis, or pink eye disease, across all seven provinces. Healthcare professionals have speculated that the rise in humidity and contamination of water has fueled the spread of the infection.310

To further avoid the spreading the infection, schools in Pokhara Metropolitan City had closed down for three days. Around half the patients who visited hospitals for eye infections were being found to be suffering from conjunctivitis.311 The sudden increase in conjunctivitis and the surge in demand for eye medication has caused a shortage in the markets in various districts, including Banke.312 MoHP has asked people not to panic and take precautions such as maintaining physical distance from infected people and refraining from touching one’s eyes. They have also encouraged proper homecare and stated that the infection is most likely to clear off within two weeks of initial infection.313

Deteriorating Air Quality

Decreasing Life Expectancy by 4.6 Years

According to a report by the Air Quality Life Index, air pollution, on average, shortens the life of Nepali residents by 4.6 years.314 Life expectancy is further reduced by 6.8 years, on average, in nine districts with the highest concentration of particulate pollution. These districts (Kapilvastu, Rupandehi, Nawalparasi West, Parsa, Bara, Rautahat, Sarlahi, Mahottari, Siraha, and Saptari) lie in Southern Nepal and share borders with India.315 Over the years, transboundary pollution has greatly contributed to the deteriorating air quality across Nepal, constantly crossing 40µg/m3 - which is much higher than the 5µg/m3 benchmark for PM2.5 concentration set by the World Health Organization (WHO).316 If Nepal were to reduce

particulate pollution to meet WHO guidelines, residents in the most-populated Mid- and

Eastern-Terai region would gain 6.5 years in life expectancy and residents of Kathmandu would

gain 3.5 years.317

Contaminated Water Increases Risk of Food Poisoning and Water-borne Diseases

Almost all water samples collected by the Health Office from ten different places in Kathmandu, mostly from jar water, has been found to be contaminated with fecal coliform or sewage. The presence of deadly microbes, especially in a water source believed to be safer to drink like botted or jar water, suggests that treating the water is essential before ingestion.319 Additionally, the contamination of drinking water sources has been exacerbated by factors like floodwaters and leaks. Among its various consequences, the proven contamination of water has increased the risk of food poisoning and water-borne diseases such as diarrhea, dysentery, typhoid, hepatitis, and cholera, especially as the festive season nears. For instance, in a case of food poisoning in Gokarneshwar Municipality of

Kathmandu, around 47 people had to be hospitalized after consuming food at a family ceremony.320

Nepal Sees Dengue Outbreak for Second Consecutive Year

Nepal has reported a major outbreak of dengue fever for the second consecutive year, with there being 23,127 reported cases and 14 confirmed deaths so far in 2023.321 There have been many steps taken to combat this outbreak. In Dharan, for example, the BP Koirala Institute of Health Services (BPKIHS) set up a separate dengue ward with 30 beds in operation. It also temporarily converted its 100-bed capacity COVID-19 hospital into a dengue hospital.322 Additionally, MoHP alerted the Central Blood Transfusion Service about the situation and the probability of an increased demand for platelet-rich plasma and platelet concentrate.323 The decision comes after blood

banks in Kathmandu Valley faced an acute crisis of blood components after a sudden increase in demand last year. MoHP also sought support from the World Health Organization (WHO) to impart denguerelated case management training to Nepali healthcare professionals.324 However, healthcare professionals have expressed their dissatisfaction of the response authorities have shown to the issue stating the measures were not effective at targeting the root causes.

KEY DEVELOPMENTS

Multiple People Arrested for Acquiring Fake Academic Certificates for Medical Studies

The Central Investigation Bureau (CIB) has arrested eight individuals accused of forging academic certificates to pursue further medical studies under its “Foxtrot Charlie” operation.325

Table 7. Potential impact of pollution reduction on life expectancy in major districts in Nepal Source: Air Quality Life Index318

Among them is Nepali Congress lawmaker Sunil Sharma who was arrested on charges of acquiring a fake academic certificate and pursuing medical education with the same.326 Sharma also serves as the director for Nobel Medical College and Kathmandu Medical College. However, the Kathmandu District Court ordered CIB to release Sharma from their custody and continue with investigations as Sharma is a member of Parliament.327 Others arrested under the operation include Ranjit Kumar Yadav, Amit Chaudhary, Rambabu Yadav, Manit Chaudhary, Erina Shah, Shraddha Shilpkar, Punam Thapa, and Nasim Akhtar.328 Among them, Ranjit Kumar Yadav has been released after being wrongly arrested. Following the wrongful arrest, the Nepal Medical Association has voiced its dissatisfaction with the CIB regarding the incident, demanding accountability and proper document verifications before making arrests.329

Declining Bed Occupancies at Private Hospitals

Multiple private hospitals across Nepal have reported a huge decline in the number of patients, which has caused them to struggle to cover running costs and bank installments. For instance, Lalitpur-based Alka Hospital’s occupancy rate declined to between 50–60% from over 90%. It also saw a decline in its outpatient department.330 A decline in economic activities and an increase in doctors’ fees have been postulated to be the reasons behind the decreasing

bed occupancies. It has also been speculated that people are compromising on their health due to rising living costs.331 Additionally, another possible reason for the decline could be the government’s decision to not conduct its health insurance program in private hospitals and medical colleges. Officials from the Ministry of Finance state that this decision is a result of allegations of private hospitals and medical colleges engaging in fraudulent billing practices and prescribing unnecessary drugs and tests to abuse the program.332 To address such concerns and discourage malpractice, MoHP has decided to conduct an audit of doctors’ prescriptions.333

Nepal and the United Kingdom Launch Nursing Recruitment Pilot Program

The Ministry of Labor, Employment and Social Security of Nepal and the United Kingdom (UK) Department of Health and Social Care have launched a nursing recruitment pilot program enabling the recruitment of Nepali nurses to the UK National Health Service (NHS). During the pilot, UK will recruit up to 100 nursing professionals into the NHS.334 This has been seen as a lucrative opportunity as healthcare professionals in Nepal are paid significantly lower compared to in many foreign destinations. The inability to create an attractive proposition to healthcare workers further contributes to the shortage of skilled medical professionals as many seek to either remain in urban areas or migrate to foreign lands for more

lucrative opportunities.335

Japan Hands Over Mental Health Therapeutic Center to Government

The Government of Japan handed over the Mental Health Therapeutic Center in Kathmandu on July 14, 2023. The construction of the center was supported with a USD 296,856 (NPR 39.04 million) grant under the Government of Japan’s Grant Assistance for Grassroots Human Security Projects (GGP).336

Mental health has become a growing issue in Nepal with around one in eight Nepalis facing mental health issues.337 In FY 2022/23 AD (FY 2079/80 BS) alone, 6993 people died by suicide.338 Moreover, Nepal’s lack of qualified mental health professionals has served as a challenge to implement effective mental health programs. The few mental health professionals that exist are mainly available in urban areas and are costly, further limiting access to mental health facilities.339 Thus, in order to combat these problems, in addition to projects like the therapeutic center, the government is planning on launching a nationwide mental health campaign. This will include an awareness drive, free medication distribution, training to health workers, and programs aimed at lowering the current suicide rate.340

The expansion of the PEN-Plus pilot project and the accessible release of the Mero Poshan Sathi app signal a dedicated effort to enhance public health awareness. If these initiatives yield positive outcomes, they could potentially alleviate the healthcare burden of non-communicable diseases, a prominent cause of death in Nepal. Furthermore, MoHP has taken commendable steps to address neonatal and maternal mortality rates, including the establishment of specialized newborn care units, verbal autopsy procedures, and the procurement of anti-shock garments. These actions not only enhance surveillance but also provide crucial data to inform the respective authorities to build better-targeted and effective preventive measures.

On the other hand, the lapse in in maintaining sanitation and safeguarding a fundamental necessity like clean water, especially in an area as densely populated as Kathmandu, is concerning. Moreover, the government has not being able to effectively tackle the root cause of water- and vectorborne diseases, causing annual outbreaks. It is urgent to address this recurring problem through proactive measures that extend beyond mere adaptation to also encompass robust mitigation strategies. All of this underscores the pressing need for comprehensive intervention and effective implementation to avert a looming health crisis.

Information and Communication Technology

FACTSHEET

Tele density

117.91%341

Internet data subscribers

39.3 million342

Number of smartphone users 33.83 million343

Internet penetration

134.76%344

ICT goods import NPR 81.87 billion (USD 622.53 million) 345

Total digital payment transaction NPR 5.786 trillion (USD 43.99 billion) 346

Nepal's information and communication technology sector is growing and advancing in terms of quality and accessibility. As of this quarter, various information technology (IT) development and quality assurance projects are underway with significant domestic and external investments. IT service exports are thriving and growing with the improvement in the quality of the labor force through international cooperation and a surge in IT education. Additionally, the export of IT services in the last fiscal year have contributed to increasing the foreign exchange reserves and job creation in Nepal. However, Nepal is still struggling to contain challenges in the IT sector such as unreliable internet, price increases by the ISPs, and a surge in tax and regulatory burden to IT firms and freelancers.

As in previous quarters, Nepal Telecom and Ncell were the two largest operators in terms of market shares. Nepal Telecom, the government-owned company, occupied the majority of the market share while Ncell, a private multinational company, covered most of the remaining market share. Similarly, in terms of Internet Service Providers (ISPs), World Link Communications held more than a quarter of the market share with Nepal Telecom being the second largest.

Figure 12. Market share of telephone operators

Source: NTA MIS Report Baishakh 2080 (Mid-April to Mid-May 2023)

NTA Sets a Budget of NPR 11 billion (USD

83.64 million) for FY 2023/24 AD (2080/81 BS)

The Nepal Telecommunications Authority (NTA) has allocated a budget of NPR 11 billion (USD 83.64 million) for FY 2023/24 AD (2080/81 BS) as part of expanding and improving telecom services in Nepal.347 NTA has been involved in a diverse range of communication infrastructure and development projects and is further planning to spend NPR 11.53 billion (USD 87.67 million) on them from the budget.348

Among these various projects, a notable one is to facilitate free broadband for health centers, wards, community schools and colleges, etc. which makes use of the Rural Development Telecommunication Fund (RDTF) collected by contributions of service providers. In the budget, funds from RDTF had the highest share i.e., 73% of the budget. Besides this, NTA has identified 13 different priority areas to invest the budget including policy-making, providing basic telecom services across the

country, increasing industry competitiveness, acquiring and maintaining equipment, frequency management, and the research and study of new technologies.349

Integrated IT Policy to be Implemented

Nepal is planning to create a comprehensive integrated ICT policy to boost the IT sector. This integrated policy was driven by Nepal's promotion of the Digital Nepal Framework for the post-COVID-19 era. It aims

Figure 13. Market share of Internet Service Providers (ISPs) in Nepal

Source: NTA MIS Report Baisakh 2080 (Mid-April to Mid-May 2023)

Figure 21. Growth Trend of Voice and Data Services

Source: NTA MIS Report Falgun 2079 (Mid-Feb to Mid-Mar 2023)

to fulfill the need to update previous IT policies (such as the 2071 broadband policy, 2060 Telecommunications Policy, and 2072 ICT Policy) with the current ICT advancements.350 Through this policy, the government intends to bridge the digital divide, providing broadband to remote areas through adequate infrastructure and subsidized services.351 This comes at a crucial time as COVID-19 has accelerated digital transformation, especially in sectors like banking, finance, education, and healthcare.

Nepal’s IT Sector Flourishing

Research conducted by the Institute for Integrated Development Studies (IIDS) shows that Nepal's exports of IT services were approximately worth USD 515 million (NPR 67.72 billion) in 2022.352 The report, launched in July 2023, indicated that the this export was marked by a significant growth of 64.2% compared to the previous year of 2021 when services worth USD 313 million (NPR 41.16 billion) were exported.353 The study further highlighted that a total of 106 IT companies and 66,509 freelancers contributed to this service exports.354 To foster the growth of the IT sector in the country, the study recommended enhancing the skills and capabilities of professionals in this field and improving access to reliable high-speed internet and uninterrupted electricity.355

NTA Trying to Implement TERAMOX

The Nepal Telecommunications Authority (NTA) has recently started trying to implement the Telecommunications

Traffic Monitoring and Fraud Control System (TERAMOX).

For this, NTA has allocated NPR 3 billion (USD 22.81 million) to improve telecommunications credibility and quality by tracking telecommunications traffic and call bypass.356 However, Nepal Telecom and Ncell are reluctant to embrace the technology citing problems of privacy. To combat this, NTA clarified TERAMOX's purpose, refuting claims that it intercepts personal data. They emphasized its aim to enhance quality, not gather call or SMS information. The NTA also elucidated that it cannot intercept customer data without a court order and service provider cooperation.357 In further developments, a report by the Nepal Police’s Central Investigation Bureau highlighted that call bypass due to lack of TERAMOX caused Nepal to lose over NPR 12 billion (USD 91.24 million) in revenue from 2068 BS (2011/12 AD) to 2076 BS (2019/20 AD).358

to adhere to the approved tariff rates and has cautioned them about repercussions for noncompliance.361 Additionally, NTA also stressed that authorized telecommunication service providers must gain approval from the authority and publicly announce the implementation of fees and tariffs for their services. This announcement should explicitly state the approval date for the fees and comply with the tariffs set by the authority.362

Ncell's 4G Service Extended to Jumla

ISPs

Secretly Increasing Internet Prices

Internet Service Providers (ISPs) in Nepal have found to be discreetly increasing the costs of their basic internet plans.359 This shift indicates a joint decision among ISPs to cease the internet price battle that emerged after CG Net's debut in 2021. A notification by the NTA highlights that the ISPs' united intent to elevate fees for internet services contradicts the Telecommunications Act, 2053 (1997), and the Competition Promotion and Market Protection Act, 2063 (2007).360 As a result of this, the Nepal Telecommunications Authority (NTA) has urged ISPs

Ncell Axiata has expanded its 4G coverage to Jumla, Karnali Province as a part of its commitment to improving services such as offering mobile broadband to everyone.363 The company added three new towers in Chandhanath Municipality, Tila Rural Municipality, and Tatopani Rural Municipality which lie in the strategic areas of the district.364 The expansion has greatly benefitted residents of these municipalities. Now, through Ncell’s V-SAT technology, mobile coverage with 4G services has reached 91.39% in the three municipalities.365 In totality, in FY 2022/23 AD (2079/80 BS), Ncell added 4G services in 338 new locations across the nation and achieved capacity of almost 1450 towers in 60 districts.366

Nepal Collects NPR 100 million (USD 760,398.44) in Digital Service Tax

Nepal's implementation of the Digital Service Tax (DST) has yielded positive outcomes, with the tax department reporting the collection of approximately NPR 100 million (USD 760,398.44)

in taxes from six foreign e-businesses registered in Nepal during FY 2022/23 AD (2079/80 BS).367 The DST is a tax designed for non-resident e-businesses offering services, such as those of online advertising, streaming,

e-learning and cloud computing, to Nepali consumers. To comply, e-businesses must pay 2% of their transaction value as DST, with exemptions for transactions under NPR 2 million (USD 15,207.96) annually. While Google, LinkedIn,

Outlook

Amazon, and NCS Pearson have paid the DST, Meta and Microsoft have registered but are yet to pay leading to substantial revenue losses for the government.368

Nepal has significant potential for development in the digital and IT sector. The budget allocated by NTA can be helpful in improving the access of telecommunication services throughout the country in the future. Along with the budget, relevant policy reforms might bolster the Digital Nepal Framework and reduce the nation's digital divide. Additionally, customers and telecom operators will continue to raise concern with TERAMOX. Therefore, NTA should move cautiously for its smooth implementation.

Additionally, the integration of IT services in civil service will help streamline government operations, improve transparency, and enhance public service delivery in the future. On the other hand, the price increase by the internet service providers can be extremely detrimental in reducing internet usage and coverage. The price hikes by ISPs underscore the need for stricter controls and regulations over prices and collusions by the telecommunications authority. Similarly, to continue the growth in the export of IT services, the government will need to support firms and freelancers through policy reforms, regulatory changes and digital infrastructural development. Finally, a stern enforcement of Digital Service Tax for overseas social media and internet firms could be possible through comply or close approach.

Infrastructure and Real Estate

The infrastructure and real estate sector in Nepal witnessed a positive outlook in the last three months, from June to August 2023. The sector has benefited from the implementation of a progressive monetary policy and the successful completion of several projects such as the development of roads and cable cars. In the past quarter, one of the major projects that started its execution in the sector is the Millennium Challenge Compact (MCC), funded by the US government. The project, which faced significant political and public opposition before its approval, aims to enhance Nepal’s electricity transmission network and road development over a period of five years. Besides this, Nepal and India also held bilateral talks focused on joint infrastructure developments, trade agreements and strengthening bilateral relations and cooperation between the two countries.

Work on Nepal’s First Tunnel Project Progresses

The Nagdhunga-Sisnekhola tunnel project, initiated in 2019, has made notable progress as it successfully concluded the excavation phase of the tunnel construction. The main tunnel, which is 2.68 km long, is expected to be completed within the next four months.370 Constructed by the Japanese company HazamaAndo Corporation, the tunnel runs under the western rim of Kathmandu Valley, providing motorists with a route to bypass hazardous hills prone to landslides. For the tunnel project, the Japanese government agreed to provide a soft loan of NPR 15.28 billion (USD 116.08

million) which has a total cost of NPR 22 billion (USD 167.20 million).371 The repayment period for the loan is 40 years, including a grace period of 10 years when the government will not have to pay any interest or repayment installments. This project aims to improve transportation and facilitate future development in Nepal's infrastructure sector.

India and Nepal Strengthen Ties with New Agreements and Projects

Prime Minister of Nepal, Mr. Pushpa Kamal Dahal, and Prime Minister of India, Mr. Narendra Modi, held a bilateral delegationlevel talk at Hyderabad House in New Delhi on June 2, 2023.372

Several topics were discussed and reviewed during this meeting with both parties expressing commitment to strengthen between the two countries. These topics primarily included trade and transit; hydropower, power trade and transmission lines; cross-border railways, motorable bridges, petroleum pipelines and ICPs; irrigation, river training, inundation and flood control; agriculture; culture and civil aviation. During this event, projects such as the Kurtha-Bijalpura Railway Line, the Integrated Check Post at Nepalgunj (Nepal) / Rupaidiha (India), the 400 kV ButwalGorakhpur Transmission Line, and others were inaugurated.373

2022/23 AD (2079/80 BS) up to mid-July 2023

Similarly, documents such as an MOU for the development of the Integrated Check Post at Dodhara-Chandani, the Treaty of Transit between Nepal and India, an MOU for the development of the Phukot-Karnali 480 MW hydroelectricity project, and others were exchanged.

MCC Nepal Implementation Commences

The Millennium Challenge Corporation (MCC) Nepal Compact has officially started its implementation amidst controversy on topics such as whether it is part of the Indo Pacific Strategy (IPS) or is above Nepal’s constitution.374 On August 30 2023, Finance Minister, Prakash Sharan Mahat and MCC's Vice President of Compact Operations, Cameron Alford, exchanged the 'Entry into Force' (EIF) letter, marking the beginning of the program. The compact involves building a 315 km 400 kV transmission line and upgrading a section of the Mahendra Highway. For this, MCC is providing USD 500 million (NPR 65.67 billion) in funding, while Nepal contributes USD 197 million (NPR 25.93 billion).375 The EIF signifies a major milestone in terms of project preparation as it marks the fulfillment of prerequisites to ensure completion of the projects within a five-year timeline.

IBN’s Board Meeting Convenes with Strategic Investments in Nepal's Renewable Energy Sector

During its 55th board meeting, the Investment Board Nepal (IBN) approved a substantial investment of NPR 36.37 billion

(USD 276.97 million) for four hydropower projects: Rolwaling River, Chujung River, Dana River, and Saniveri.376 In the same meeting, a high-level committee was established to provide valuable recommendations concerning the project's future trajectory, an essential step towards ensuring its success. Additionally, the meeting brought forth other noteworthy developments. It included the endorsement of a study permit for Delma Himalayan Energy, facilitating a comprehensive assessment of solar energy projects encompassing an impressive 245 MW of solar capacity. Notably, the IBN's decisions extended to matters of critical importance as they resolved to propose to the cabinet the execution of a directive issued by the Supreme Court concerning the Upper Karnali Hydropower Project.377

Progressive Monetary Policy Introduced for House Buyers

In a move aimed at bolstering housing construction and supporting individuals and families, Nepal Rastra Bank (NRB) has introduced a progressive monetary policy for the fiscal year 2080/81 BS (2023/24 AD). The focus on housing is significant, given that banks and financial institutions have historically prioritized lending to the real estate and housing sectors, which accounted for 12.25% of total loans issued until the end of FY 2079/80 BS (2022/23 AD).378 These loans amounted to a substantial NPR 597.56 billion (USD 4.54 billion), with houses and land used as collateral.

NRB's progressive approach to

this sector involves a notable change: an increase in the housing loan limit by five million rupees. This enhancement allows prospective homeowners to access up to NPR 20 million (USD 151,920) for realizing their dream homes, representing a substantial rise from the previous limit of NPR 15 million (USD 114,029).379 The move toward higher loan limits aims to make housing loans more accessible to a wider segment of the population. NRB has further employed mechanisms such as the loan-to-value (LTV) ratio. This approach strikes a balance between responsible lending and the management of market risks, thereby ensuring financial stability in the housing and real estate sectors. These measures collectively signal the central bank's commitment to fostering a robust and sustainable housing environment while safeguarding the overall health of the financial system.380

Government Allocates Limited Funds for New Town Project

Under Government of Nepal’s policy and program 2067/68 BS (2010/11 AD), the New Town Project was implemented to halt migration to bigger cities and foster regional balance by constructing new towns in 10 different locations touched by the Pushpalal (Mid-Hill) highway. This number has now expanded to 54 new towns.381 However, even though new towns are expanded every year, the progress seem to be sluggish with only 5% or the work completed for the entire project. According to the Project Director of New Town Project, Yek Raj Adhikari, the slow progress is attributed to the lack of funding for this project with

sometimes only NPR 10 million (USD 76.9 thousand) allocated to some towns which is insufficient for the construction of a single building.382Acknowledging all these problems, the Minister for Urban Development, Sita Gurung, affirmed that, out of 54 new cities, Basantapur and Tehrathum will be given high priority for the fiscal year 2023/24 AD (2080/81 BS) for a faster pace.

11,500 Smart Street Lamps Installed Under the Bright City Initiative

As part of the ‘Bright City Initiative’, initiated in 2021, the Nepal Electricity Authority (NEA) installed 11,500 smart streetlamps across diverse urban centers over two years. These lights, through collaborative financial agreements with local authorities, have incurred an approximate expenditure of NPR 420 million (USD 3.16 million) for their installation.383 The primary objectives of this initiative encompass elevating urban aesthetics, stimulating the demand for electricity, and optimizing surplus nighttime energy resources. The installment of streetlights has already been successfully executed in multiple cities, with further installation agreements secured with numerous municipal bodies.

The initiative proposes a costsharing model for different areas between the NEA and local governments, with NEA covering 25% of the cost in metropolitan areas, 30% in sub

metropolitan regions, 35% in the municipalities and 40% in the rural municipalities.384 NEA has and will also continue to assume a supervisory role in the estimation of costs, selection of technology, and project construction, while the maintenance aspect will be entrusted to construction firms for a period of five years.

India Grants Clearance for Instrument Landing System

India has granted clearance for the operation of an Instrument Landing System (ILS) at Gautam Buddha International Airport in Bhairahawa after Prime Minister Pushpa Kamal Dahal’s official visit to India in May.385 Previously, flights at the airport were canceled due to the lack of Indian clearance for the system installation near the Nepal-India border. Now, with its installation, the ILS system is expected to enhance the safety and capacity of flights at the airport as it will enable aircrafts to land in adverse weather conditions by reducing cancellations caused by low visibility, thereby improving operational efficiency at Gautam Buddha International Airport, which commenced operations last year.

Transforming Farming and Transport in Rukum (East)

The lives of farmers in wards 4 and 8 of Bhume Rural Municipality in Rukum (East) have become a lot easier with the recent introduction of a 1144 m ropeway by Gravity Goods Ropeway 386 This transport

facility has significantly eased the process of getting farmers’ domestic product to the market. Previously, it took the locals three to four hours of walking to reach Kandabagar from Kuchibang with their products. But now, with the ropeway, it takes just two minutes on average to transport the goods. Around 242 households in various areas have benefited from this project, which was funded by UK Aid and local labor contributions. Following the ropeway’s success, there are plans to develop Kuchibang into a model agricultural village with the ropeway supporting farmers in selling their agricultural products.

Land Transactions Gaining Momentum

As seen in Figure 14, the total number of land transactions reached a maximum of 156,107 in June 2023. This is a slight increase of 38% since February 2023 compared to the previous half-yearly average. Additionally, the land revenue generated amounted to NPR 22.91 billion (USD 173.96 million) from February to July 2023, which is a 25.61% improvement compared to the total revenue generated between August to January 2023.

Figure 14. Revenue from land transactions and number of land transactions

Source: Department of Land Management and Archive

Outlook

Nepal's progress in its inaugural road tunnel project, the Nagdhunga-Sisnekhola tunnel, is a significant achievement that bodes well for the country's transportation infrastructure. This will ease the traffic congestion, reduce distance, and save hours of time spent on traffic jams, leading to a reduction in trade costs. Likewise, the implementation of the MCC Nepal Compact is a noteworthy milestone, despite facing delays and controversies. This collaboration represents a significant opportunity for Nepal to enhance its energy and transportation sectors. Transmission lines that will be built in this project will help Nepal export its surplus electricity to its neighbors, which usually goes unused during certain seasons due to a lack of domestic demand. Additionally, the roads will facilitate regional trade and reduce the cost of trade, accelerating economic growth for Nepal. Moving forward, in order to strengthen Nepal’s infrastructure, a combination of efficient project management between key institutions, international collaboration, innovative financing, and a commitment to long-term sustainability is required for sustained economic development.

Tourism

The tourism industry has continued experiencing an increasing influx of tourists since the beginning of 2023. In numbers, the inflow of tourists increased to 862,992 tourists in FY 2022/23 AD (2079/80 BS) from 374,147 tourists in FY 2021/22 AD (2078/79 BS). The number of tourism-related infrastructure like hotels and airports have also been expanding. And, a nationwide campaign named ‘Nepal Ghumaun, Nepal Chinaun’ (Tour Nepal, Know Nepal) is soon going to be initiated to promote domestic travel.398 On the other hand, the tax department has decided to impose a 13% value-added tax on air tickets which has made air travel more expensive. Additionally, the government has proposed to increase the cost of a permit to climb Mt. Everest for foreign visitors from USD 11,000 to USD 15,000 by the beginning of 2025. This might lead to a decrease in tourist arrivals in the following years.

TOURIST ARRIVAL UPDATES

Flourishing Influx of Tourists

The tourism industry has been recovering significantly from the impact of the COVID-19 pandemic. According to the Nepal Tourism Board (NTB), the total number of tourist arrivals increased significantly to 862,992 in FY 2022/23 AD (2079/80 BS) as compared to 374,147 in the FY 2021/22 AD (2078/79 BS).399 However, despite the significant increase, tourist numbers have not yet reached up to even half of the pre-pandemic level as in 2019 when Nepal received a total

of 1.20 million tourist arrivals.400 During FY 2079/80 BS (2022/23 AD), the average stay of tourists was 13.1 days - a decrease from 15.5 days in the FY 2078/79 BS (2021/22 AD). Additionally, in the past financial year, the average spending per day per tourist was USD 40.5 (NPR 5,326.155).401 According to the Economic Survey 2079/80 BS (2022/23 AD) published by the Ministry of Finance, the foreign currency earnings from foreign tourists increased by 190% to a total of NPR 47.76 billion (USD 360 million) in FY 2022/23 as compared FY 2021/22 (2078/79 BS).

No. of tourist arrivals (as of August 2023) 67,153387

Outstanding credit to the tourism industry NPR 24.40 billion (USD 185.5 million) 388

Number of hotels listed in NEPSE 6389

Consumer Price Inflation (for restaurants and hotels) 14.42%390

The average stay of a tourist 13.1 days391

Average spending per tourist per day USD 40.5 (NPR 5,326.16)392

Number of registered hotels (with star rating) 173393

Number of tourist standard hotels 1228394

Total number of beds 53,365395

Number of registered casinos 24396

Number of registered travel agencies 4773397

MOUNTAINEERING UPDATES

Everest Permit to Cost USD 15,000 (NPR 1.97 million) from 2025

The current cost of a permit to climb the 8,848.86 m Mt. Everest is USD 11,000 (NPR 1.5 million) for foreigners and NPR 75,000 (USD 570.3) for Nepalis.403 In order to manage tourist numbers amidst various ongoing complaints regarding congestion and the rising number of deaths, the

Department of Tourism has proposed a new fee of USD 15,000 (NPR 1.97 million) per foreigner without any changes for the cost for Nepalis. The proposed change will be implemented by the beginning of 2025.404

FINANCIAL SITUATION

Hotels in Nepal Growing Since Covid-19

The Nepal Stock Exchange (NEPSE) is a platform for Nepal’s stock exchange and

secondary market that allows listed companies to raise capital. Currently, a total of six hotels are listed under NEPSE as shown in Table 1.405 The total market capitalization of hotels has increased by 128.36% from NPR 45 billion (USD 342 million), as of mid-July 2022, to NPR 104 billion (USD 790 million), as of mid-July 2023. This shows a significant increase compared to the previous review period and accounts for 3.4% of the total market capitalization of NEPSE.406

Table 8. Profits made by hotels listed in NEPSE

Source: Current Macroeconomic and Financial Situation Based on Annual Data (As of Mid-July 2023)402

Figure 15. Tourist influx in FY 2022/23 AD (2079/80 BS)

Source: Current Macroeconomic and Financial Situation Based on Annual Data (As of Mid-July 2023)

Hotels listed in NEPSE

of FY 2022/23 AD (2079/80 BS)

of FY 2021/22 AD (2078/79 BS)

Tourism Named as Priority Area for FY 2022/23 AD (2080/81 BS) Budget

In the budget released for FY 2080/81 BS (2023/24 AD), tourism has been named as a priority area. As per this, NPR 11.96 billion (USD 91 million) of the total budget has been allotted to the Ministry of Culture, Tourism, and Civil Aviation.407 Among the various undertakings following the budget, the Civil Aviation Authority of Nepal (CAAN), with the budget allocation of NPR 36.67 billion (USD 278.8 million), has made capital expenditure a priority. With this, it is aiming to support the development and improvement of civil aviation infrastructure and services in the nation.408 Moreover, as per the annual report of Nepal Rastra Bank 2079/80 BS (2022/23 AD), a nationwide campaign called “Nepal Ghumaun, Nepal Chinaun” (Tour Nepal, Know Nepal) is going to be introduced to promote domestic travel. Similarly, another

Outlook

notable program, as part of the budget, is that a hill station will be built in each of the provinces of Lumbini, Koshi, and Sudurpaschim during FY 2080/81 BS (2023/24 AD) to boost tourism.409

NEW DEVELOPMENTS

Rock Climbing Trail Inaugurated in Dolakha

In an attempt to attract adventure-seeking youths, the Shokla Rock climbing trail was launched in Bhimeshwor Municipality-02 in June, 2023.410 The trail was developed in collaboration with the Nepal Tourism Board, Bhimeshwor Municipality and Shoklashwari Tourism Development Society. The total height of the cliff is 400 meters but only 25 meters is available for climbing.411 As Shokla village lags far behind in infrastructure and human development, this project is expected to help in the development of the area as well as add to Dolakha’s attempts

to develop adventure tourism. When it was launched, around 200 youths climbed the trail in a rock-climbing festival organized on June 1 and 2, 2023.412

POLICIES AND REGULATIONS

Tax Department Launches New VAT on Air Travel

The tax department launched FY 2080/81 BS (2023/24 AD) by imposing a 13% value-added tax (VAT) on air tickets. The addition of VAT on flights has made air travel more expensive than before.413 It violates the commitment of the country to the International Civil Aviation Organization (ICAO) as, according to the organization’s rules, no tax should be levied on the sales or use of air transport internationally.414 Moreover, the charge of only NPR 700 (USD 5.32) to travelers flying within South Asia, in the spirit of regional solidarity, has also been removed.415

Over the years, Nepal's tourism industry has undergone a lot of changes in response to global tourism. Nepal is putting a lot of effort into promoting eco-friendly and responsible tourism practices, like building eco-lodges and working to protect the environment. Adventure tourism is still a big part of the country's economy as seen with the launch of a new rock-climbing trail. And in additional moves to promote tourism, the country is improving online booking platforms, digital marketing, and mobile apps for travelers as part of its digital transformation. However, the mismanaged increase of tourists has created challenges of waste management as well as congestions in some of the remotest parts of Nepal, particularly the Everest region. As a result, the government’s plans to increase the permit cost to climb Mt. Everest will hopefully control congestion, ensure the safety of climbers and provide a better experience. Moreover, the tax department’s addition of VAT on air tickets might make Nepal a costly destination which might drop the number of tourist arrivals. This might be harmful to the country as most of the Nepali outbound travelers already choose to travel across the border to the closest airports of India as the air tickets are cheaper. And this comes at a time when the inflow of tourists has not even reached up to 50% of the pre-pandemic level. In short, Nepal's tourism outlook needs to keep changing to keep up with global trends, with a focus on sustainability, diversity, and better infrastructure to make sure it keeps growing in the global tourism market.

4 Market Review

Financial Market

During FY 2022/23 AD (2079/80 BS), Nepal's Balance of Payments (BoP) not only maintained a surplus but also marked a significant improvement compared to the deficit observed in the same period in the previous year. To support economic growth, the Nepal Rastra Bank (NRB) capitalized on the current liquidity abundance within banks and financial institutions (BFIs) by adopting strategic monetary measures. The central bank also reduced policy rates by 50 basis points and reinstated the 'counter-cyclical buffer' provision to ensure the robust capital adequacy of BFIs. Additionally, the NRB raised the ceiling on working capital loans for manufacturing companies, aiming to stimulate economic activity. Furthermore, the Nepal Bankers Association (NBA) took a noteworthy step by discontinuing the interest rate agreement, demonstrating a commitment to fostering healthy competition within the banking sector. This decision has provided commercial banks with greater flexibility in adjusting long-term deposit interest rates, potentially benefiting depositors and the stability of the overall financial sector.

Annual Performance Analysis of Commercial Banks

As per the unaudited fourth quarterly results of commercial banks for FY 2022/23 AD (2079/80 BS), the operating profit of commercial banks increased by 5.86%, while the net profit grew by 4.26%, compared to operating profit and net profit of the same period in the last FY 2021/22 AD (2078/79 BS).

At the end of FY 2022/23 AD (2079/80 BS), Nabil Bank bagged the highest net profit of NPR 7.52 billion (USD 57.16 million), followed by Global IME Bank and Rastriya Banijya Bank with a net profit of NPR 7.25 billion (USD

55.72 million) and NPR 4.91 billion (USD 37.3 million) respectively. The net profit of Standard Chartered Bank and Nabil Bank increased significantly by 55.31% and 51.37%, respectively, compared to their net profits in the review period last FY 2021/22 (2078/79 BS). On the other hand, Machhapuchchhre Bank registered the lowest net profit of NPR 1.85 billion (USD 14.04 million).

In terms of reserves and surplus, Rastriya Banijya Bank held the highest amount of reserves of NPR 36.59 billion (USD 277.98 million) followed by Nabil Bank and Nepal Investment Mega Bank with NPR 27.07 billion (USD 205

Consumer Price Index (mid-July 2023)

7.74%

Gross foreign exchange reserve (mid-July 2023)

NPR 1539.56 billion (USD 11.71 billion)

Buying exchange rate per USD (mid-July 2023)

NPR 131.17

Weighted average 91-day treasury bill rate (mid-July 2023)

6.35%

Weighted average interbank transaction rate (mid-July 2023)

2.98%

Weighted average deposit rate (mid-July 2023)

7.86%

Weighted average lending rate (mid-July 2023)

12.30%

Average base rate of commercial banks (mid-July 2023)

10.03%

million) and NPR 23.89 billion (USD 181.5 million) respectively. In totality, seven banks fared better than the NPR 12.06 billion (USD 91.90 million) average of the reserves and surplus industry.

Overall, in FY 2022/23 AD (2079/80 BS), deposits at commercial bank grew by 29.32%, compared to the corresponding period in the previous period of FY 2021/22 AD (2078/79 BS), with the highest deposits being mobilized by Global IME Bank,

Nabil Bank and NIMB with NPR 426.32 billion (USD 3.24 billion), NPR 396.84 billion (USD 3.02 billion) and NPR 354.41 billion (USD 2.69 billion) respectively. On the other hand, Standard Chartered Bank recorded the lowest deposits from customers of only NPR 117.50 billion (USD 893.21 million). As opposed to this, Kumari Bank had the highest increase in deposits by 78.79% compared to its deposits in the corresponding period last FY 2021/22 AD (2078/79 BS).

In-terms of credit growth, the total credit growth of commercial banks is 14.42%, compared to 15.31% in the previous FY 2022/23 AD (2078/79 BS). At present, among the commercial banks, Global IME Bank holds the highest loan and advances portfolio of NPR 356.39 billion (USD 2.71 billion), followed by Nabil Bank and Nepal Investment Mega Bank at NPR 332.69 billion (USD 2.53 billion) and NPR 303.65 billion

(USD 2.31 billion), respectively. Meanwhile, Standard Chartered Bank had the lowest credit disbursement of NPR 77.85 billion (USD 590.27 million).

The average Non-Performing Loans (NPL) of commercial banks stood at 2.97% as compared to 1.06% in the last FY 2021/22 AD (2078/79 BS). Furthermore, the average cost of funds was 7.83% against the 7.15% in the corresponding period last FY 2021/22 AD (2078/79 BS). Similarly, the average base rate stood at 10.14% during the review period which was 9.43% in the last FY 2021/22 AD (2079/79 BS), the highest being 10.9% of Kumari Bank followed by Himalayan Bank at 10.86%. On the other hand, Rastriya Banijya Bank Limited had the lowest base rate at 7.79%.

KEY INDICATORS

Some of the key macroeconomic indicators as per the Current Macroeconomic and Financial

Situation report published by Nepal Rastra Bank (NRB) are highlighted below. These are based on annual data ending in mid-July of FY 2022/23 AD (2079/80 BS) as published by the NRB.417

Deposit and Credit Mobilization

The deposits at BFIs grew by 12.3% as compared to 9.0% in the same period last FY 2021/22 AD (2078/79 BS). Furthermore, on a year-on-year basis, deposits at BFIs experienced a substantial expansion of 24.74% by midJuly 2023. Among the total number of deposits, demand deposits, saving deposits, and fixed deposits accounted for 7.7%, 26.6%, and 58.9% respectively. These proportions have experienced a slight change compared to a year ago when the respective shares were 8.9%, 27.6%, and 55.8%.

Source: Current

Figure 16. Deposit mix at banks and financial institutions (percentage share)

Macroeconomic and Financial Situation based on annual data, Nepal Rastra Bank, FY 2022/23

Similarly, in the FY 2022/23 AD (2079/80 BS), credit provided by BFIs to the private sector

witnessed a rise of 3.8%. This increase contrasts with the previous year’s corresponding

period, where credit grew by 13.1%.

Additionally, BFIs witnessed an increase in outstanding loans to various sectors. The agricultural sector experienced a growth of 6.8%, the industrial production sector saw an increase of 8.3%, and the construction sector witnessed a rise of 6.7%, while the transportation, communication, and public sectors observed a substantial growth of 21.0% in outstanding loans, compared to last FY 2021/22 AD (2078/79 BS). Moreover, the wholesale and retail trade sector experienced a modest increase of 3.9%, while the service industry sector by 3.7%, and the consumable sector saw a rise of 6.8% in outstanding loans from BFIs.

BFIs also experienced changes in the extension of various types of loans. Term loans witnessed a significant increase of 32.0%, while real estate loans, including residential personal home loans, saw a more modest growth of 9.3% compared to last FY 2021/22

AD (2078/79 BS). Furthermore, hire purchase loans increased by 1.3%. On the contrary, trust receipt loans for imports experienced a decrease of 6.2%, overdraft loans decreased by 67.7%, primarily due to the reclassification of loans from the previous year. Lastly, margin nature loans decreased by 5.2%.

Liquidity Management

During FY 2022/23 AD (2078/79 BS), the NRB injected a total liquidity of NPR 5.52 trillion (USD 41.96 billion) based on turnover. This liquidity injection consisted of NPR 414.47 billion (USD 3.15 billion) through repo, NPR 89.70 billion (USD 682.3 million) through outright purchase auction, NPR 2.72711 trillion (USD 20.27 billion) through the standing liquidity facility (SLF), and NPR 2.29 trillion (USD 17.36 billion) through the Overnight Liquidity Facility (OLF). Additionally, NRB absorbed NPR 108.20 billion (USD 822.57

million) liquidity including NPR 88.20 billion (USD 670.15 million) through reverse repo auction and NPR 20 billion (USD 151.11 million) through deposit collection auction. Furthermore, in the FY 2022/23 AD (2078/79 BS) NRB injected NPR 5.41 trillion (USD 41.14 billion) net amount of liquidity through various instruments. Contrasting, in the corresponding period of the last FY 2021/22 AD (2078/79 BS), NPR 9.64 trillion (USD 73.30 billion) net amount of liquidity was injected through various instruments. Compared to last FY 2021/22 AD (2078/79 BS) the net amount of liquidity injected has decreased by NPR 4.23 trillion (USD 32.14 billion) this FY 2022/23 (2078/79).

Moreover, NRB injected liquidity amounting to NPR 712.50 billion (USD 5.41 billion) through the net purchase of USD 5.45 billion (NPR 717.06 billion) from the foreign exchange market. In comparison, in the corresponding period of the

Figure 17. Sector-wise outstanding credit of banks and financial institutions (amount in NPR billion)

Source: Current Macroeconomic and Financial Situation based on annual data, Nepal Rastra Bank, 2022/23

previous year, liquidity injection of NPR 355.57 billion (USD 2.7 billion) occurred through the net purchase of USD 2.91 billion (NPR 382.86million).

Additionally, NRB purchased Indian currency (INR) equivalent to NPR 596.37 billion (USD 4.53 billion) through the sale of USD 4.56 billion (NPR 600.07 million) in the FY 2022/23 AD (2078/79 BS). Last year, INR equivalent

to NPR 595.23 billion (USD 4.52 billion) was purchased through the sale of USD 4.92 billion (NPR 647.24 billion).

Foreign Exchange Reserves and Adequacy

In the FY 2022/23 AD (2078/79 BS), the total value of foreign exchange reserves rose by 26.6% to NPR 1.53 trillion (USD 11.69 billion), compared to NPR 1.22

trillion (USD 9.25 billion) in midJuly 2022. Similarly, the reserves held by BFIs, excluding the NRB, increased by 21.4% to NPR 193.59 billion (USD 1.47 billion) in midJuly 2023 from NPR 159.41 billion (USD 1.21 billion) in mid-July 2022. Within this, the proportion of Indian currency in the total reserves amounted to 22.5% as of mid-July 2023.

Table 13. Foreign Exchange Adequacy Indicators

Source: Current Macroeconomic and Financial Situation based on annual data, Nepal Rastra Bank, 2022/23

Based on the imports in FY 2022/23 AD (2079/80 BS), the foreign exchange reserves of the banking sector have been deemed sufficient to cover approximately 11.7 months of prospective merchandise imports and 10 months of both merchandise and services imports.

Interest Rates

In the twelfth month of FY 2022/23 AD (2079/80 BS), the weighted average rate for the 91-day treasury bills remained

steady at 6.35%, compared to 10.66% in the corresponding month of the previous financial year. Meanwhile, the weighted average inter-bank transaction rate among commercial banks, which was 6.99% a year ago, decreased to 2.98% in FY 2022/23 AD (BS 2079/80). Additionally, the average inter-bank rate of BFIs, which serves as the operating target of monetary policy, stood at 3.14% in the last month of FY 2022/23 AD (BS 2079/80).

In the same period, the average

base rate of commercial banks experienced an increase, rising from 9.54% a year ago to 10.03%. Furthermore, the weighted average deposit rate and lending rate of commercial banks in the twelfth month of FY 2022/23 AD (2079/80 BS) stood at 7.86% and 12.30% respectively. Comparatively, these rates were 7.41% and 11.62%, respectively, one year ago.

Balance of Payment

During the review period, the Balance of Payments (BoP) was

FY 2021/22 AD (2078/79 BS) (Mid-July)

FY 2022/23 AD (2079/80 BS) (Mid-July)

at a surplus of NPR 290.52 billion (USD 2.20 billion), a significant improvement compared to the deficit of NPR 255.26 billion (USD 1.94 billion) recorded in the corresponding period of the previous year.

KEY DEVELOPMENTS

Nepal Barely Avoids Being “Grey Listed” by FATF

At the 23rd annual meeting of the Asia Pacific Group (APG) on money laundering, in Canada from July 9-14, Nepal narrowly avoided being added to the Financial Action Task Force’s (FATF) 'grey list'. Being on the grey list signifies "strategic deficiencies" in a country's anti-money laundering measures, signalling potential transactional risks for international banking.418 The country faced the risk of being grey listed by the Financial Action Task Force (FATF) due to its shortcomings in combating money laundering as assessed in three onsite inspections.419 These onsite inspections assessed both technical compliance with the FATF international standards and the effectiveness of Nepal's implementation of anti-money laundering and counter-terrorist financing (AML/CFT) measures and found various faults.420 This comes after Nepal was previously grey listed by FATF from 2008 to 2014 but was removed in the wake of implementing improvements, including

changes to the AntiMoney Laundering Act 2008.421

To address the concerns posed by APG, a 28-member team led by Nepal's Governor visited Canada to brief the APG forum. This led to Nepal being granted an extension until October 2024 to meet the required criteria and

avoid potential grey listing.422

NRB Re-Introduces Counter Cyclical Buffer for Banks

A "counter-cyclical buffer" refers to a regulatory requirement or policy tool designed to help commercial banks build up additional capital during periods of economic growth and prosperity, which can then be used to absorb losses during economic downturns or financial crises. In a circular issued on July 28, 2023, the NRB announced the reinstatement of this 'countercyclical buffer' provision, which had been suspended since FY 2019/20 AD (2076/77 BS) due to the COVID-19 pandemic. Under these changes, all banks, with the exception of nationallevel development banks, are required to adhere to the provisions regarding countercyclical buffers as outlined in the Capital Adequacy Framework of 2015. The rate for the buffer is determined based on the disparity between Gross Domestic Production (GDP) and net credit flow and serves as a safeguard against excessive loan issuance, designed to mitigate potential crises within banks and financial institutions.423

NRB Relaxes Ceiling on Working Capital Loans for Manufacturers

On August 28, 2023, NRB raised the ceiling on working capital loans for manufacturers, granting them the flexibility to access up to NPR 30 million (USD 228, 976). This is an increase from the previous ceiling of NPR 10 million (USD 75, 976). This change, outlined in the revised Working Capital Loan Guidelines

2022, responds to the demands of the private sector as working capital loans are crucial for dayto-day business operations. NRB's decision is expected to benefit the productive sector and stimulate economic activity by allowing banks to provide loans up to 50% of a company's maximum annual turnover, an increase from the previous 40% limit.424

Banks Able to Determine Interest Rates as Coalition Ends

Nepal Bankers Association has decided to terminate the gentleman's agreement on interest rates, effectively ending the coalition created due to uncontrolled liquidity. All 20 commercial banks' representatives convened to promote fair competition and transparency through this move. Starting July 17, banks could being to independently set fixed deposit interest rates - previously at 9.99% - within a 10% range. This change allows banks to adapt to market conditions and better serve customer preferences, signalling increased competition in the banking sector as liquidity stabilizes.425

Monetary Policy for FY 2023/24 AD (2080/81 BS) Unveiled

NRB unveiled its monetary policy for FY 2023/24 AD (2080/81 BS) on July 23, 2023, featuring an adjustment in key interest rates. Within this, the policy rate was reduced from 7% to 6.5%, a move aimed at stimulating economic growth. This reduction in the policy rate is expected to lower the cost of short-term loans for banks accessing funds from the central bank which could, in

turn, compel banks to decrease interest rates for borrowers. However, the bank rate limit, the rate at which the central

bank lends money to BFIs for liquidity management, remains unchanged at 7.5%. Furthermore, deposit collection rates have

Key Highlights of Monetary Policy 2023/24 AD (2080/2081 BS)427

Key highlights from the monetary policy

been revised downward, dropping from 5.5% to 4.5%.426

The estimated inflation rate set by NRB for FY 2023/24 AD (2080/81 BS) is at 6.5%. The growth rate of the private sector credit to private sector is projected to be 11.5%.

Overnight loan rates have been lowered to 6.5%, a 50-basis points reduction from the previous rate.

While the bank rate remains steady at 7.5%, the deposit collection rate has been lowered from 5.5% to 4.5%.

The current arrangement regarding share securities remains unaltered. Consistent with the prior monetary policy, a maximum limit of NPR 120 million (USD 911,971.61) has been established as the margin loan limit of a single customer, whether obtained from one or multiple licensed financial institutions.

The risk weightage of margin loans up to NPR 5 million (USD 37, 980) has been reduced to 100% from 150%, while it remains the same for loans above NPR 5 million (USD 37, 980) at 150%.

An additional 1% interest has been applied to remittances deposited into bank accounts.

According to the Government of Nepal's budget statement for the FY 2023/24 AD (2080/81 BS), the NRB will play a facilitating role in establishing a dedicated and specialized regulatory agency to enhance the effective regulation and supervision of saving and credit cooperatives.

The provision of maintaining the standing liquidity facility (SLF) at the bank rate and the overnight liquidity facility (OLF) at the policy rate remains unchanged. The current SLF and OLF rates are 7.5% and 6.5% respectively.

Both the Cash Reserve Ratio (CRR) and the Statutory Liquidity Ratio (SLR) have been left unaltered. The current CRR and SLR are 4% and 12% respectively.

The central bank's monetary policy for the current financial year remains cautiously accommodative, prioritizing economic vitality and stability in prices and the external sector. This policy emphasizes effective oversight of significant credit activities to maintain financial stability. It also seeks to direct financial resources towards boosting domestic production, particularly in Small and Medium Enterprises (SMEs). Additionally, the monetary policy aims for a private sector credit growth rate of 11.5%, a notable increase from the 3.6% growth observed last fiscal year, although slightly below the anticipated 12.6% growth.

Despite some short-term interest rate improvements, average interest rates remain high. Banking liquidity has eased, but credit demand remains low due to strict policies and limited government spending, particularly for the private sector. Businesses and industrialists are reluctant to borrow due to low confidence in the business environment and uncertainty about investment returns. Moreover, Nepal's overall business climate has deteriorated, marked by weak demand and supply, policy instability, and government coordination issues. Until these challenges are comprehensively addressed, including reforms to the interest rate determination process, significant interest rate reductions and increased credit demand are unlikely.

However, credit demand is expected to rise after the festive season and monsoon period, but the extent of this increase depends largely on current interest rates. Lower rates can encourage both individuals and businesses to borrow for investments and post-monsoon agricultural activities. Conversely, higher rates may restrict borrowing and reduce overall credit demand, highlighting the crucial role of interest rate policies in shaping the lending environment for financial institutions.

Capital Market

During the review period spanning from June 1 to August 30, 2023, both the primary and secondary capital markets emerged as favorable avenues for investors. The primary market continued to be robust, with an exceptional number of companies raising funds from the general public. All of the issuances were oversubscribed, with their share prices surging significantly shortly after the listings. During the given review period, the Nepal Stock Exchange (NEPSE) index rose by 6.66%. This was driven by improved liquidity as well as positive sentiments among equity investors due to the lowered interest rate on loans caused by NRB’s decision to reduce interest rate spread. Among all the sub-indices, the Hotels and Tourism index shows substantial growth, surging by 50.47%. Despite challenges and sector-specific variations, the NEPSE Index demonstrated resilience and renewed optimism throughout the review period, with all sectors achieving good gains with an exception of the hydropower sector which saw a decline of 12.30%.

Secondary Market

During the review period (June 1 to August 30, 2023), the NEPSE index increased by 6.66%, closing at 1990.59 points. The total market capitalization at the end of the review period amounted to NPR 3.03 trillion (USD 23.43 billion). Within this, all sectors experienced gains except for the hydropower sub-index which saw a significant decrease of 12.30%. Meanwhile, the hotel and tourism sub-index observed the highest substantial growth of 50.47%.

FACTSHEET428

Table 10. Key Market Indicators NPR 3.082 trillion (USD 23.43 billion) Number of companies listed at NEPSE (mid-July 2023) 254

Primary Market

During the review period, the Securities board of Nepal (SEBON) granted initial public offering (IPO) approval to Hathway Investment Nepal Ltd, Mid-Solu Hydropower Ltd, Sun Nepal Life Insurance Company Ltd, Chirkhwa Hydro Power Ltd, Mathillo Mailun Khola Jalvidhyut Limited, Sonapur Minerals and Oil Ltd and Vision Lumbini Urja Company Ltd (see Table 2). From these IPOs, about NPR 6.26 billion

(USD 47.64 million) is anticipated to be raised from the market.

Likewise, during the review period, companies such as Mandu Hydropower Limited, Bhagawati Hydropower Development Company Limited, Sun Nepal Life Insurance Company Limited, Manakamana Engineering Hydropower Limited, Reliable Nepal Life Insurance Limited, Upper Lohore Khola Hydropower Company Limited, Ghorahi Cement Industry Limited, Kutheli

Bukhari Small Hydropower Limited, IME Life Insurance Company Limited, Upper Syange Hydropower Limited, Three Star Hydropower Limited, Nepal Republic Media Limited, and Rawa Energy Development Ltd successfully raised funds from the general public. These companies were able to collect NPR 10.96 billion (USD 83.56 million) billion from the primary market.

Source:

Source: Nepal Stock Exchange (NEPSE)

SEBON, Initial Public Offerings Approved

Table 11. Public Issue Size of IPO-Approved Companies

Figure 18. NEPSE Index Movement

Name of the company

KEY DEVELOPMENTS

Central Banks’s Revised Risk Weightage for Share Mortgage

Nepal Rastra Bank (NRB) issued a circular on August 22, 2023 to implement changes outlined in the Monetary Policy for the fiscal year 2080/81 BS (2023/24 AD). The circular specifically addresses the risk weighting associated with share mortgage loans. Under the new regulation, share mortgage loans exceeding NPR 5 million (USD 38,000) will be subject to a 150% risk weight whereas loans below that will have a risk weight of 100%.429 This represents a change from the previous policy, where the 100% and 150% risk weight applied to loans below and above NPR 2.5 million (USD 19,000) respectively.430 The monetary policy also indicates to bring forth new amendment to the system which aims to make it more convenient for banks to provide loans secured by share securities by revising the current NPR 12-crore limit.

Government Revenue from the Capital Gain Tax on Shares Doubles

In the span of one month between mid-May and mid-June 2023, the government earned NPR 259.52 million (USD 1.97 million) in capital gains tax from share transactions. This amount is twice that of the previous month between mid-April to mid-May, which was NPR 135.48 billion (USD 1.03 million). The significant rise in capital gains tax collection is due to a substantial increase in turnover volume at the Nepal Stock Exchange (NEPSE).431

Government Approves Securities Registration and Issuance (Seventh Amendment) Regulations 2080

The government granted approval for the Seventh Amendment of the Securities Registration and Issuance Regulations for the year 2080 BS (2024/25 AD). According to the updated regulations, companies with paid-up capital exceeding NPR 1 billion (USD 7.61 million) can now issue primary shares once they convert into public companies. However, if a company's capital drops below that threshold, the existing three-year waiting period remains in effect. The previous prerequisite mandating a one-year waiting period to issue IPO after transitioning from a private to a public company has been eliminated. In addition, companies can now opt for premium pricing if they have two consecutive years of profits. Meanwhile, companies with a total business operation period of less than 10 years are no longer eligible to apply for the IPO issuance, with a primary focus on targeting productive sectors like hydropower companies. Furthermore, the government has opened the doors for companies to issue the green bonds with funds raised set aside for sustainable development projects and initiatives addressing climate change as per the latest amendments of IPO regulations by SEBON. 432

E-Sewa Prepares to Issue Shares to the General Public

E-Sewa, a licensed payment service provider facilitating digital transactions, has initiated

the procedure to offer its shares to the general public through an IPO on August 14th 2023. Previously a private company, E-Sewa embarked on the IPO process following approval from Nepal Rastra Bank to transition into a publicly listed company. As per the rules of NRB, E-Sewa will now be allowed to issue shares from 20% to 49% of its paid-up capital.433

SEBON Proposes NRN Investment Facilitation

The Securities Board of Nepal (SEBON) has proposed a set of recommendations to improve investment prospects for non-resident Nepalis (NRN) in the secondary market as per the ‘NRN Entry to Secondary Market Study Report’ release by the board on September 10, 2023. These recommendations highlight provisions such as unrestricted withdrawals of the initial investment, the ability to repatriate profits and dividends up to NPR 1 million (USD 7603.98) annually, a focus on productive sectors, and the establishment of dedicated foreign currency bank accounts for NRNs in custodian members bank. The board believes that if these measures are implemented effectively, both the investors and the Nepali economy will reap significant benefits in the future.434

SEBON Grants Stock Broker License to Five More Firms

The Securities Board of Nepal (SEBON) recently granted stockbroker licenses to an additional five companies. Among these newly licensed entities, three have been authorized to

conduct limited operations, while two have received approval for full-fledged business activities. Notably, Himalayan Securities Limited and Sunny Securities Company Limited have been

granted permission to engage in comprehensive brokerage operations. Concurrently, Easy Broker Limited, Rodso Securities Limited and Benny Securities Pvt Ltd received licenses for limited

Outlook

brokerage capacity. Thus far, SEBON has granted licenses to 37 new stock brokerage firms out of the 43 that were issued the Letter of Intent (LOI).435

During the review period, the NEPSE index surpassed 2200 points to close at 2,227 points in July 2023. Nonetheless, the market couldn’t sustain the surge as investors’ confidence was somewhat affected by new provisions in the monetary policy for the current FY 2023/24 AD (2080/81 BS). Many investors were disheartened by the monetary policy, primarily due to the lack of new revisions to acquire a margin loan limit, thereby maintaining the status quo from the prior policy. Additionally, lower-than-expected annual earnings of the key listed companies, created due to rising nonperforming loans, impairments, charges, and provisions in depository financial institutions, further eroded investor confidence. In other news, the Nepal Bankers Association’s decision to end the gentleman's agreement regarding uniform interest rates has led to apprehension in the investment sector, resulting in persistent selling pressure on the secondary market.

On a positive note, the amendments made by SEBON to the Securities Registration and Issuance Regulations has made it attractive for well-established companies to raise funds from the primary market. Currently, the market capitalization of NEPSE is dominated by the Banks & Financial institutions but this progressive change is expected to attract companies from a variety of emerging sectors and established sectors like Information Technology (IT) and raise funds from the market at a premium price. Already, due to the revised regulation, companies like E-Sewa and World Link are expected to float shares to the general public soon. Additionally, SEBON’s NRN study’s recommendations are a major development that should be implemented at the earliest as this will likely pave the way to channel NRNs’ investment into the market formally, which will further help to strengthen the market's depth and breadth.

Fueling Regional Connectivity

INTRODUCTION

Over the years, Nepal’s energy sector has been developing at a rapid rate. As of FY 2022/23 AD (2079/80 BS), Nepal, through the Nepal Electricity Authority, had an installed capacity of 2,684.62 MW, whereas it was only 280 MW in 1992, along with acquisition from Independent Power Producers (IPPs) and subsidiaries. Due to Nepal’s natural advantages in terms of plentiful resources and beneficial topography, there has been a growing focus towards making hydropower a major source of energy and trade. The last few years, in particular, have witnessed growth in the generation capacity, along with the expansion of transmission and distribution lines and enhancement of domestic consumption and profit earning from surplus electricity exports. This is in stark opposition to the Nepal that experienced load shedding of up to 18 hours a day.

However, despite the progress, as of now, petrol still comprises a majority of 65% of Nepal’s energy consumption, while electricity makes up about 15%, with the remaining 20% coming from other sources like coal. Additionally, petroleum imports currently account for 20% of total imports, surpassing the value of all exports combined This is due to problems of fluctuations in energy production across seasons along with a lack of proper infrastructure to tap into Nepal’s hydropower potential. This excessive use of petroleum products and the lack of infrastructure not only creates major problems of trade deficit but also leads to hindrances in Nepal’s efforts to mitigate climate change and adds to the global burden of climate change.

Realizing this, recently, the Government of Nepal, along with various allies, has been engaged in multiple avenues to tap into regional connectivity through hydropower to combat the issues mentioned above. This has included agreements with India, China and Bangladesh as well as efforts to build Nepal’s hydropower infrastructure. However, these have also been met with their own set of obstacles.

Thus, given the recent developments in the sector, this section of ‘Fueling Regional Connectivity’ has articles by experts in the field elucidating the past, present and future of they hydropower sector of Nepal. They give a run-down on the development of the sector over the years, the challenges that it is facing and the need of regional connectivity along with insight on what the next steps should be.

Nepali Scenario

Benefits of a Regional Position for Energy Trade in Nepal

By Narendra Prajapati Managing Director, N.P. Associates Pvt. Ltd.

Ever since the nascent Nepali Energy industry was opened to the private sector following the

promulgation of the Electricity Act in 1992, it has been growing rapidly over the years. Back in 1992, Nepal only had an installed capacity of 280 MW. But as of

2023, it has an installed capacity of 2680 MW as portrayed in Table 12.

Table 12. Nepal's Installed Hydropower Capacity

This amount is further estimated to grow to 8414 MW in the system by adding 5734 MW from projects that are under construction – projects with both concluded and awaiting ‘Financial Closures’.437 This 8414 MW only includes projects that have concluded and/or are awaiting Power Purchase Agreements (PPAs) with the Nepal Electricity Authority (NEA) – the only buyer in the present-day monopsony that is the Nepal Power Sector. Besides this, the other projects that will be developed are those under the government-togovernment (G2G) model. Among these, India has expressed an interest in acquiring licenses to develop seven different hydroelectric power projects in Nepal with the planned total capacity of 4639 MW.438

While the aforementioned facts and figures show the present scenario of energy development in Nepal, they also illustrate the energy availability scenarios for coming years. On the other hand, the energy forecast for Nepal by the NEA, though a suppressed demand forecast, shows a peak load requirement of 23,590 GWh and 4,143 MW by 2029/30.439 It also clearly demonstrates the excess availability over requirement in this time horizon.

It is noteworthy here that Nepal has an estimated total potential of over 84,000 MW of Green Energy – Hydropower which some energy experts are saying could well surpass 200,000 MW with an optimized Probability of Exceedance (PoE) design.440

Regional Scenario

Nepal's strategic location

and abundant hydroelectric power potential offers a unique opportunity for the country to benefit from regional energy connectivity and trade. The regional connectivity will further enhance the possibility of energy trade with other countries too. However, realizing this potential requires careful planning, investment, and cooperation with its giant energy-hungry neighbors – China and India –as well as with other regional partners. These countries have a growing demand for clean energy to support their economic development and reduce their carbon footprint. Thus, effective energy trade can bring economic benefits to the country, help meet the energy demands of its neighbors, while also contributing to a more sustainable energy future for the entire region.

A snapshot of the Power scenarios of our giant neighbors is as follows:

India: India's total installed power generation capacity reached 416 GW in the financial year 2022/23, of which 125 GW came from renewable energy and only 47 GW was from hydro.441

China: China's total installed power generation capacity reached 2710 gigawatt (GW) in 2023 August, rising 10.8% year on year. The country has enhanced its renewable energy investment over the years as part of its pursuit of green development and has installed a renewable energy capacity of approximately 1300 GW.442

There is a high level of energy

demand in our neighboring countries as well as great potential of clean energy share in their energy mix. Besides these countries, others countries in the region, like Bangladesh, who heavily rely on their gas fired energy source, also provide opportunities as markets for green energy trade. Therefore, Nepal Green Energy could contribute significantly to the regional energy sustainability through energy connectivity and trade.

The Prerequisites

However, to be able to participate and exploit the potential market, Nepal must ensure its capability to be at par with the regional market prerequisites, which can be summarized as follows:

1. Development of the hydropower generation capacity to the fullest in the earliest possible time to be able to meet domestic demand and to exploit the regional green energy demand.

2. Building adequate energy infrastructures like transmission lines and substations that will be ready for regional connectivity and trade.

3. Formulation and implementation of regulatory frameworks in compliance with regional connectivity and trade.

4. Government of Nepal’s commitment to policy stability and continual support for the timely execution of all aforementioned prerequisites.

Present State of Preparedness

As of now, Nepal has signed a power trade agreement with India allowing Nepal to trade 10,000 MW of power in 10 years.443 The agreement has been recently endorsed by Indian Parliament thereby opening avenues for Nepal Power market for regional trade.444

However, Nepal so far has obtained approval from the Government of India only for the export of about 452 MW to the day-ahead market of the Indian Energy Exchange (IEX).445 Additionally power trading of 180 MW was approved recently on September 7, 2023.446 The NEA and the National Thermal Power Corporation of India, Vidyut Vyapar Nigam Ltd (NVVN), also signed a mediumterm agreement for the sale of 200 MW of power to Haryana, India, on 23 May 2023 in their first-ever longer-term power trade deal.447 It was followed by another milestone Power Purchase/Sale Agreement signed between NEA and the Power Trading Corporation of India Limited on 28 June, 2023 for the purchase/sale of power of up to 300 MW through the power exchange or bilateral mechanism (noncommercial) using Bihar’s transmission infrastructure and the 132 kV Nepal-Bihar transmission lines.448

Furthermore, NEA, NVVN and the Bangladesh Power Development Board (BPDB) are almost in the final stage of signing a tripartite agreement on medium-term basis for the export of 40 MW of hydropower from Nepal to Bangladesh by using the Indian grid.449 This could be a landmark

event since Nepal will be embarking on sub-regional cross border power trading with India and Bangladesh on board.

On the cross-border transmission infrastructure front, the Dhalkebar-Mujaffarpur 400 kV transmission line is already operational and another 400 kV cross-border transmission line of New Butwal-Gorakhpur has entered into the implementation phase after NEA and the Power Grid Corporation of India Limited (PGCIL) signed a Joint Venture & Share Holders’ Agreement (JVSHA) followed as well as the Implementation and Transmission Service Agreement (ITSA).

WAY FORWARD

Now that Power Trade between Nepal and India has opened for up to 10,000 MW in 10 years and the tripartite agreement to trade power with Bangladesh is in its final leg, Nepal must work diligently and diplomatically with its neighboring countries to further power trade for the economic benefit of Nepal and for regional energy sustainability. The energy trading will perhaps address the present massive trade deficit with the neighbors. With successful trading with regional grid connectivity in the future, it can also be an impetus in improving the country’s balance of payment.

In the meantime, NEA should focus on upgrading and expanding its transmission and distribution infrastructure for ensuring reliability and quality of supply to domestic consumers and enhancing the quantum of power export for the future.

Connectivity to India

More high-capacity transmission interconnections between Nepal and India must be executed to enable flow of more power in the regional grid. For this, as of now, the Indian portion of the ButwalGorakhpur cross-border line is under implementation through the Joint Venture Company established between NEA and PowerGrid, India. Additionally, the Joint Steering Committee (JSC) meeting between Nepal and India has decided to implement two more 400 kV cross-border transmission lines to connect New Inaruwa, Nepal to Purnia, India and Dodhara, Nepal to Bareli, India, by FY 2027/28 AD and 2028/29 AD respectively.

Connectivity to China

A high voltage transmission line from Ratamate, Nepal to Kerung, China will pave the path to NepalChina power trading in the coming days. The feasibility study of Nepal’s side of transmission line has already been completed and environmental studies are being carried out. This transmission line will further connect China to the Southeast Asian Region.

Power Trading

In terms of power trading, Nepal Power Trading Company, an NEA subsidiary, has recently obtained the transaction approval for its operationalization.450 Until now, no private entities were granted power trading permission. Therefore, until the private sector is allowed for power trading, NEA shall be responsible for the power trading business through it in both domestic and cross border markets.

Past, Present and Future of Energy in Nepal

By Pratik Pradhan Vice President, Butwal Power Company

Nepal, located in the Himalayas, is naturally endowed with abundant water resources. In addition to these resources, the Himalayan rivers, due to their steep gradient, provide great potential for the generation of hydroelectricity. And along with the steep topography, fragile geology and intense rainfall have led to large flow volume and exceedingly high sediment transport in these rivers during the rainy season. This large flow volume has provided large potential for hydropower development. However, due to the seasonality of rainfall variability, while electricity generation is at full capacity during the monsoon rains, it reduces to a minimum during the dry winter period. The variability of flow also poses a challenge to many hydropower plants with respect to complete sediment exclusion at headworks and severe sand erosion of turbines leading to a loss in energy generation. Despite these obstacles and due to the natural advantages, Nepal has greatly developed its hydropower infrastructure over the years and has a long way to go, as is discussed in this article.

The Past

Though Nepal has a history of generating hydroelectricity starting with the first power

plant in Pharping established some 110 years ago, it was only from the 1980s that the country saw a gradual and consistent rise in hydro-development installed capacity both from the government as well as the private sector.451 However, due to the lack of proper planning and implementation of phasewise hydropower development during the first two decades of the early 2000s, Nepal faced a severe energy crisis leading to load shedding of up to 18 hours in a day.452 Because of this energy crisis, hydropower development became a hot agenda among the government, political parties, development organizations and citizens. The sector was seen as a potential source to power the country as well as bolster Nepal’s struggling economy. And this interest resulted in a sudden rise of private sector participation in the hydropower industry over the last two decades which was bolstered by access and incentives provided by the government.

The Present and the Future453

Currently, a total of close to 3000MW of installed capacity is already in operation.454 This constitutes only about 7% of the techno-economical potentiality of Nepal’s hydropower

development. At present, Nepal is intending to prioritize its use of hydropower primarily for internal consumption like in energy-intensive industries as well as for the large-scale usage of electric vehicle charging stations and electric cooking. Only then is it prioritizing the export of electricity. For this, it has an ambitious pipeline of projects under preparation and development which includes under-construction hydroinstallations of more than 7000 MW that are expected to come into operation in the next six to eight years.455

Regional Connectivity

Though the current installed capacity of hydropower is around 3000MW, the internal demand for consumption hovers slightly below 2000 MW.456 Thus, there is a surplus power, part of which has been evacuated through existing high voltage cross-border transmission lines to India. To add to the existing power trade, as of now, India has agreed to buy around 631 MW of power from Nepal as per the Government of India Guideline for Import/Export of Electricity (Cross Border) 2018 and Central Electricity Regulatory Commission (Cross Border Trade of Electricity) Regulations, 2019 457 It is these recent

guidelines and regulations that have allowed India to facilitate the building of dynamic and robust electricity infrastructure, promote transparent regulatory mechanisms and create reliable grid operation and transmission for the import and export of electricity between the country and its neighbors, including Nepal. In the context of Nepal, this has been further highlighted in a recent endorsement by the Indian cabinet to purchase 10 GW of power in 10 years from Nepal.458

Additionally, the regulation mentioned above also has a provision of trilateral power trade, leading to the potential export of power from Nepal to Bangladesh via the Indian grid. As a result of the tripartite agreement, Nepal is at the advanced stage of exporting an initial 50 MW of hydropower to Bangladesh.459 Once this materializes, Nepal would be in a beneficial position to export power not only to India but also to other regional countries via India. This is a significant development as it creates a huge market for Nepali

hydropower with Bangladesh itself willing to procure close to 9000 MW of hydropower energy to meet its future demand through the usage of clean energy. 460

The Need for Regional Connectivity in Hydropower

As is common knowledge, we are currently observing the major impact of climate change around the world. In the context of South Asia, among the various ramifications of climate change, the most obvious one has been a rise in unprecedented rainfall in the Himalayan region over the last few years which has led to excessive flooding and subsequent damages. In order to combat climate change and its consequences, a global shift to renewable energy is of paramount importance. To support the global cause for the development of renewable energy as well as individual countries’ quest to reach Net Zero Emissions in the next 30 to 40 years, the development of hydropower and other clean energy is absolutely imperative.

In the Indian subcontinent, countries are still highly reliant on non-clean energy with India using huge amounts of fossil fuels to drive its industry and economy and Bangladesh similarly using natural gas. Only Nepal and Bhutan have a predominantly huge potential of hydropower development –more than what the country may need – that can be tapped into to combat the effect of climate change.461 Thus, it is a win-win situation in the region to supply hydropower-generating-energy from Nepal and Bhutan to India and Bangladesh. However, at present, these cross-border interconnecting transmission lines have a limited capacity for power evacuation and trade.462 Therefore, it is essential for these countries to set up a number of high voltage cross-border transmission access points for regional integrated grid connectivity.

Nepal’s Benefits from Cross-Border Energy Trade

Sucharita Bhattacharjee Policy Analyst, CUTS International

Leveraging the cross-border interconnections in the energy sector of the Bay of Bengal region has the potential to influence the regional energy supply situation, facilitate connectivity and infrastructural development, and bring in significant socioeconomic improvement to the people of the countries in this region. Nepal, with its tremendous potential for hydropower generation and a rich history of power-export across the border, stands out as an ideal example of how to achieve climate goals while enhancing regional energy cooperation.

The energy sector in Nepal, which is the backbone of all other sectors of an economy, remains at the core of this climate agenda. Owing to the external shocks like the COVID-19 pandemic and the Russia-Ukraine conflict in the recent past, Nepal faced a scenario that brought two major challenges – furtherance of its import dependency and associated expenditure, and fewer sources of foreign exchange generation. Ramping up its energy export would be a crucial strategy to address this situation.

Based on past experience, the emphasis is now being given on relatively new areas of importance. This includes building the capacity of electricity users to

improve regulatory participation, evaluating the regulatory impact on cross-border power trade, exploring the potential for crossborder electricity trade to ensure better energy security in Nepal and in this region through clean energy access, etc.

The energy transition in Nepal is aiming at changing the current situation into a cleaner and more environmentally friendly scenario. The government’s goals are rightly focused on evaluating the proposed transition's social, economic, and environmental implications, as well as the sensitivity of relevant policies and stakeholders within and beyond the border. However, the question of securing sufficient investments for the much-envisaged energy transition and trade across the border and creating significant employment in the process have been a concern. An adoption of a strategic approach by the Government of Nepal regarding this matter should help in addressing the situation.

At the same time, according to a recently done survey by CUTS International on political economy dimensions of crossborder electricity trade in the Bangladesh, Bhutan, India, and Nepal (BBIN) subregion,

Bipul Chattopadhyay Executive Director, CUTS International

it is the political mindset that views such trade as a danger to national security and against national self-sufficiency. Other barriers to electricity trade include regional disputes in the political environment, disparities in economic standing and governance frameworks, and challenging transit nation conditions that pose as significant security threats to trade.

To combat this, the Government of Nepal has been in regular talks with its neighbouring countries to scale up such trade in the region. This has included forging a political agreement on the issue of clean energy trade and to create institutions that are capable and motivated enough to quicken energy trading in the area.

While political will and appropriate regulatory regime are necessary, building the right infrastructure for cross-border energy trade is undoubtedly a capital-intensive operation that calls for mobilising sizable amounts of investments. This unequivocally points to the requirement to get the private sector and multilateral donor agency investments on board. An enabling legislative and regulatory environment are essential requirements for a risk-free and sustainable

investment environment. The incremental progress made by Nepal towards fulfilling these requirements includes preparing a connectivity-driven development strategy with short-, medium-, and long-term goals based on a clear knowledge of the imperatives to be met at each stage of cross-border energy trade while leveraging its strategic location.

Over the years, Nepal has been a net exporter when it comes to electricity trade. It has been estimated that, by 2030 and 2045, respectively, Nepal’s exports to India are expected to rise by 12% and 18% more in multilateral trade than in bilateral trade. Several studies show that Nepal will benefit from expanding its hydroelectric potential through trading with India since India will offer a ready market.

Furthermore, with Nepal as a base, India could develop a Green Energy Corridor in the Bay of Bengal region to increase hydropower imports from Nepal

to attain respective renewable energy targets within the projected timeline, which is 2030 for India. Exploiting the latent potential of further collaboration can assist Nepal to produce the least expensive power, handle seasonal energy scarcity, and advance the promotion of renewable energy. The Indian Energy Exchange (IEX) currently provides choices for such energy trade in the day-ahead market. Following Nepal’s request for access to the real-time market to avoid the spillage of electricity, India approved the process for the cross-border power trade in February 2021. Developments like this help to facilitate better regional cooperation in the energy sector across border.

Therefore, Nepal, given its prime geographic location and other unique, positive factors should now emphasise on the following in order to enhance the crossborder energy trade in the region: Analyse the level of domestic preparedness (including specific

political economy hurdles, identification of players/groups influencing such factors and possible solutions to work around them) and that of the neighbouring countries for balancing the political economy dimensions of cross-border energy trade.

Understand measures to draw synergies in clean energy operations amongst nations for each one to fulfil international climate commitments.

Sensitise and build the capacities of institutions which would facilitate cross-border energy trade and help create greater buy-in for the same.

Learn more about other work produced by Nepal Economic Forum

NEF has launched its Economic Dashboard - NEFData! It covers three sectors with a vast array of economic data. Additionally, for the first time, get insights into capital and recurrent expenditure for defense.

Click here to start exploring.

Nefmeet 2023, ‘Economic Transformations and Beyond’ concluded on 18 July 2023 on a thought provoking and inspiring note. It focused on the launch of the latest NEF Publication and NEFData dashboard.

Click here to watch the event

The Neftalk titled ‘Digital Services at the Base of the Pyramid’ was co-organized by the World Bank, and Nepal Economic Forum’s Center for Digital Transformation on 27 April, 2023.

Click here to watch the event.

NEF’s most recent publication, ‘Introspecting Change’ probes into Nepal’s socio-economic journey from 2006 to 2021 – of what has been achieved and what is yet to be achieved. The publication presents a wealth of data spanning over a decade, covering diverse sectors such as tourism, agriculture, energy, and more.

Click here to get the report.

July’s Nefsearch on ‘Nepal’s Tourism and Hospitality Sector’ studied the current scenario of those sectors, analyzing the tourist arrivals, revenue generated by the industry, and the regulatory provisions pertaining to the sector.

Click here to read the report.

Nefport 53, "Data for Good" special, explores the importance of data, digital transformation and data governance as discussed by experts on the field.

Click here to read the report.

Endnotes

1 “Democracy Index 2022”, Economist Intelligence Unit, accessed on June 29, 2023. Retrieved from-https:// pages.eiu.com/rs/753-RIQ-438/images/DI-final-versionreport.pdf?mkt_tok=NzUzLVJJUS00MzgAAAGKV6hEWPB Yk33hD9noCJPpu2O7o-4M8Rvi76pmDQQlZcVTYDjUDlJL DI5EFxR8SYAdh0xNlTo4Fe6yake3lToz4Og9g9e9TjaJbmIAkuHE1ddLw&ref=spectacles.news

2 “Press Freedom Index”, Reporters Without Borders, accessed on June 29, 2023. Retrieved fromhttps://rsf.org/en/country/nepal

3 “Economic Freedom in the World”, heritage.org, accessed on June 29, 2023. Retrieved from-https://www. heritage.org/index/country/nepal

4 “Global Data”, Fragilestatesindex.org, accessed on June 29,2023. Retrieved from-https:// fragilestatesindex.org/global-data/

5 “Corruptions Perceptions Index”, Transparency International, Accessed June 29, 2023, Retrieved fromhttps://www.transparency.org/en/cpi/2022

6 “Nepal’s declaration on MCC compact gets US nod”, The Kathmandu Post, August 30, 2023. https:// kathmandupost.com/national/2023/08/30/nepal-sdeclaration-on-mcc-compact-gets-us-nod

7 Ibid

8 “MCC Nepal Compact kicks off 5-year project implementation”, The Kathmandu Post, August 31, 2023. https://kathmandupost.com/national/2023/08/31/mccnepal-compact-kicks-off-5-year-project-implementation

9 Ibid

10 “Janamat Party rejoins Dahal government”, The Kathmandu Post, August 14, 2023. https:// kathmandupost.com/national/2023/08/14/janamatparty-rejoins-dahal-government

11 Ibid

12 “Ten arrested in one of biggest gold hauls out of Tribhuvan International Airport”, The Kathmandu Post, July 21, 2023. https://kathmandupost.com/ national/2023/07/21/ten-arrested-in-one-of-biggest-goldhauls-out-of-tribhuvan-international-airport

13 “Ten arrested in one of biggest gold hauls out of Tribhuvan International Airport”, The Kathmandu

Post, July 21, 2023. https://kathmandupost.com/ national/2023/07/21/ten-arrested-in-one-of-biggest-goldhauls-out-of-tribhuvan-international-airport

14 “Nepal gets Gold Medal for corruption”, Nepali Times, August 22, 2023. https://nepalitimes.com/ editorial/nepal-gets-gold-medal-for-corruption

15 Ibid

16 “Police seek INTERPOL help in gold smuggling case”, Republica, August 27, 2023. https://myrepublica. nagariknetwork.com/news/police-seek-interpol-help-ingold-smuggling-case/

17 “Nepal seeks support from India, China, Interpol in gold smuggling case probe” , The Indian Express, August 16, 2023. https://indianexpress.com/article/ world/nepal-seeks-support-from-india-china-interpol-ingold-smuggling-case-probe-8894335/

18 “Nepal Police gathering evidence in Hong Kong for probe into gold smuggling”, Republica, August 30, 2023. https://myrepublica.nagariknetwork.com/news/ nepal-police-gathering-evidence-in-hong-kong-for-probeinto-gold-smuggling/

19 “Parties agree to form probe commission to investigate gold smuggling cases”, Republica, August 23, 2023. https://myrepublica.nagariknetwork.com/ news/major-political-parties-agree-to-form-a-probecommission-to-investigate-gold-smuggling-cases/

20 “TRC and CIEDP remain without officebearers for a year”, Republica, August 17, 2023. https:// myrepublica.nagariknetwork.com/news/trc-and-ciedpremain-without-office-bearers-for-a-year/

21 Ibid

22 Ibid

23 “UN special rapporteurs drill holes into TRC amendment bill”, The Himalayan Times, August 11, 2023. https://thehimalayantimes.com/nepal/un-specialrapporteurs-drill-holes-into-trc-amendment-bill 24

2023”, Republica, August 9, 2023. https://myrepublica. nagariknetwork.com/news/govt-approves-national-cybersecurity-policy-2023/

28 “Government’s cybersecurity policy raises privacy and implementation concerns”, The Kathmandu Post, August 17, 2023. https://kathmandupost.com/ science-technology/2023/08/17/government-scybersecurity-policy-raises-privacy-and-implementationconcerns

29 Ibid

30 “Coalition partners drop Gaur massacre probe plan to avoid antagonising Upendra Yadav”, The Kathmandu Post, August 15, 2023. https:// kathmandupost.com/politics/2023/08/15/coalitionpartners-drop-gaur-massacre-probe-plan-to-avoidantagonising-upendra-yadav

31 Ibid

32 “JSP demands formation of high-level probe committee to investigate Gaur massacre”, Republica, August 11, 2023. https://myrepublica.nagariknetwork. com/news/jsp-warns-to-quit-govt-if-gaur-massacreinvestigation-continues/

33 “Coalition partners drop Gaur massacre probe plan to avoid antagonising Upendra Yadav”, The Kathmandu Post, August 15, 2023. https:// kathmandupost.com/politics/2023/08/15/coalitionpartners-drop-gaur-massacre-probe-plan-to-avoidantagonising-upendra-yadav

34 “Election Commission proposes changes in the election act”, Online Khabar, July 3, 2023. https://english. onlinekhabar.com/election-commission-change-electionlaw.html

35 Ibid

36 “Election Commission proposes NOTA, suffrage right for Nepali citizens employed abroad”, The Himalayan Times, August 29, 2023. https://thehimalayantimes.com/ nepal/election-commission-proposes-nota-suffrage-rightfor-nepali-citizens-employed-abroad

37 Ibid

38 “Nepal and Cameroon establish diplomatic relation”, Republica, June 23, 2023. https://myrepublica. nagariknetwork.com/news/nepal-and-cameroonestablish-diplomatic-relation/

39 Ibid

40 “Nepal, EU sign grant agreement of more than Rs 10.5 billion to implement two different programs”, Republica, July 21, 2023. https://myrepublica.

nagariknetwork.com/news/nepal-eu-sign-grantagreement-of-more-than-rs-10-5-billion-to-implementtwo-different-programs

41 Ibid

42 “Status of Thapa's appointment as Koshi CM still uncertain”, The Himalayan Times, August 25, 2023. https://thehimalayantimes.com/nepal/status-of-thapasappointment-as-koshi-cm-still-uncertain

43 Ibid

44 “Sudurpaschim Province Cabinet expanded”, The Himalayan Times, August 2, 2023. https:// thehimalayantimes.com/nepal/sudurpaschim-provincecabinet-expanded

45 Ibid

46 ‘World Economic Outlook’, International Monetary Fund, Accessed August 23, 2023,

47 ‘2023 Global Multidimensional Poverty Index (MPI),’United Nations Development Programme, Accessed August 23, 2023, https://www.undp.org / turkiye/publications/2023-global-multidimensionalpoverty-index-mpi

48 ‘World Population Clock: 8:1 Billion People (Live, 2023),’ Worldometer, Accessed August 23, 2023, https:// www.worldometers.info/world-population/

49 ‘FAO Food Price Index, World Food Situation,’ Food and Agriculture Organization of the United Nations, Accessed August 20, 2023, https://www.fao.org/ worldfoodsituation/foodpricesindex/en/

50 “Global Debt Monitor: Debt in the Time of Geopolitics”, Institute of International Finance, May 18, 2022. https://www.iif.com/Research/Capital-FlowsandDebt/Global-Debt-Monitor

51 ‘Global Crisis,’ UNCTAD, Accessed August 20, 2023, https://unctad.org/global-crisis

52 Ibid

53 Ibid

54 ‘Coronavirus (COVID-19) Vaccinations,’ Our World in Data, Accessed August 20, 2023, https:// ourworldindata.org/covid-vaccinations

55 ‘World Economic Outlook Update, July 2023: Near-Term Resilience, Persistent Challenges,’ International Monetary Fund, Accessed August 20, 2023, https://www. imf.org/en/Publications/WEO/Issues/2023/07/10/worldeconomic-outlook-update-july-2023

56 ‘Global Economic Prospects,’ World Bank,

Accessed August 23, 2023, https://www.worldbank.org/ en/publication/global-economic-prospects

57 ‘Chief Risk Officers Outlook 2023,’ World Economic Forum, Accessed August 23, 2023, https:// www.weforum.org/reports/chief-risk-officers-outlookjuly-2023/

58 ‘World Economic Outlook Update, July 2023: Near-Term Resilience, Persistent Challenges,’ International Monetary Fund, Accessed August 20, 2023, https://www. imf.org/en/Publications/WEO/Issues/2023/07/10/worldeconomic-outlook-update-july-2023

59 Ibid

60 ‘Chief Risk Officers Outlook 2023,’ World Economic Forum, Accessed August 23, 2023, https:// www.weforum.org/reports/chief-risk-officers-outlookjuly-2023/

61 Ibid

62 “IFC and Switzerland Expand Partnership to Build Climate-Resilient Urban Infrastructure in Emerging Markets”, International Finance Corporation, 2 August 2023, https://pressroom.ifc.org/all/pages/PressDetail. aspx?ID=27692

63 Ibid

64 “IEA-IFC Joint Report Calls for Ramping Up Clean Energy Investments in Emerging and Developing Economies”, International Finance Corporation, 20 June 2023, https://pressroom.ifc.org/all/pages/PressDetail. aspx?ID=27608

65 “UNCTAD calls for urgent support to developing countries to attract massive investment in clean energy”, UNCTAD press release, 5 July 2023, https://unctad.org/ press-material/unctad-calls-urgent-support-developingcountries-attract-massive-investment-clean

66 ‘2023 World Investment Report’, UNCTAD, Accessed 24 August, 2023, https://unctad.org /system/ files/official-document/wir2023_key-messages_en.pdf

67 Ibid

68 Ibid

69 ‘2023 World Investment Report’, UNCTAD, Accessed 24 August, 2023, https://unctad.org/system/ files/official-document/wir2023_key-messages_en.pdf

70 Ibid

71 ‘Fostering Effective Energy Transition, 2023’, World Economic Forum, Accessed 25 August, 2023, https://www.weforum.org/reports/fostering-effective-

energy-transition-2023/

72 ‘UNCTAD calls for urgent support to developing countries to attract massive investment in clean energy,’ UNCTAD, Accessed 26 August, 2023, https://unctad.org/ press-material/unctad-calls-urgent-support-developingcountries-attract-massive-investment-clean

73 ‘Fostering Effective Energy Transition, 2023’, World Economic Forum, Accessed 25 August, 2023, https://www.weforum.org/reports/fostering-effectiveenergy-transition-2023/

74 Ibid

75 “Exclusive: India refiners start yuan payments for Russian oil imports”, Reuters, 3 July,2023, https://www. reuters.com/business/energy/india-refiners-start-yuanpayments-russian-oil-imports-sources-2023-07-03/

76 “Indian refiners used yuan to pay for Russian oil imports: official”, Energyworld from The Economic Times, 15 July 2023, https://energy.economictimes. indiatimes.com/news/oil-and-gas/indian-refinersused-yuan-to-pay-for-some-russian-oil-importsofficial/101770687#:~:text=1%20min%20read-,Indian%20 refiners%20used%20yuan%20to%20pay%20for%20 some%20Russian%20oil,the%20dollar%20for%20 settling%20payments

77 Ibid

78 “Spain add their name to the list of women’s world cup winners”, FIFA, 20 August 2023, https:// www.fifa.com/fifaplus/en/tournaments/womens/ womensworldcup/australia-new-zealand2023/articles/ womens-world-cup-champions-winners-1991-2019-usanorway-germany-japan

79 Ibid

80 ‘Taking Practical Action at COP28, Dubai’, Practical Action, Accessed September 22, 2023, https://practicalaction.org/events/ cop28/?gad=1&gclid=Cj0KCQjw06-oBhC6ARIsAG uzdw0GQMtK1I7i9SoOkCHN_Hcmsha1wTjuLqUKwTl3vtJVrNhSoYn3C8aArwEEALw_wcB

81 YP Rajesh and Sakshi Dayal, “Chandrayaan-3 rover rolls onto moon’s surface as ecstatic India celebrates”, Reuters, 29 August, 2023, https://www. reuters.com/technology/space/moon-rover-exitsindias-chandrayaan-3-spacecraft-explore-lunar-surfacetv-2023-08-24/#:~:text=If%20everything%20is%20 known%2C%20what,the%20fun%20in%20doing%20 it%3F%22&text=Accomplished%20with%20a%20 budget%20of,orbiter%20but%20its%20lander%20

crashed.

82 Ibid

83 ‘Key takeaways from the 2023 G20 summit in New Delhi’, Reuters, Accessed September 11, 2023, https://www.reuters.com/world/key-takeaways-2023g20-summit-new-delhi-2023-09-10/

84 Ibid

85 ‘Taking Practical Action at COP28, Dubai’, Practical Action, Accessed September 22, 2023, https://practicalaction.org/events/ cop28/?gad=1&gclid=Cj0KCQjw06-oBhC6ARIsAG uzdw0GQMtK1I7i9SoOkCHN_Hcmsha1wTjuLqUKwTl3vtJVrNhSoYn3C8aArwEEALw_wcB

86 “Current Macroeconomic and Financial Situation (based on annual data of 2022/23)”, Nepal Rastra Bank, https://www.nrb.org.np/category/currentmacroeconomic-situation/?department=red&fy=207980&subcategory=annual

87 Ibid

88 Ibid

89 “Nepal Rastra Bank unveils Monetary Policy for FY 2080-81”, The Himalayan Times, July 23, 2033, https:// thehimalayantimes.com/business/nepal-rastra-bankunveils-monetary-policy-for-fy-2080-81

90 Ibid

91 “Monetary policy: Can it crack the whip on inflation?”, The Himalayan Times, July 6, 2023, https:// thehimalayantimes.com/opinion/monetary-policy-can-itcrack-the-whip-on-inflation

92 “ADB Estimates Nepal’s Economy to Moderate in FY2023”, Asian Development Bank, https://www.adb.org/ news/adb-estimates-nepal-economy-moderate-fy2023

93 “The World Bank in Nepal”, The World Bank, https://www.worldbank.org/en/country/nepal/overview

94 Ibid

Bank, July 23, 2023, https://www.nrb.org.np/contents/ uploads/2023/08/Monetary-policy-in-English-2023_24Full-text.pdf

100 “Monitoring monetary policy”, The Kathmandu Post, July 26, 2023, https://kathmandupost.com/ columns/2023/07/26/monitoring-monetary-policy

101 Ibid

102 “Central Bank Digital Currency (CBDC): identifying appropriate policy goals and design for Nepal”, Nepal Rastra Bank, August 2022, Accessed Aug 24, 2023, https://www.nrb.org.np/contents/uploads/2022/10/ CBDC-for-Nepal.pdf

103 Ibid

104 “Foreign Direct Investment pledges down 25%”, The Kathmandu Post, Accessed August 23, 2023, https:// kathmandupost.com/money/2023/06/21/foreign-directinvestment-pledges-down-25-percent

105 “Corruption Perception Index”, Transparency International, Accessed August 12, 2023, https://www. transparency.org/en/i/2022?gclid=CjwKCAjwo9unBhBTEi wAipC11zk1fNv_A_V8ATqm4I6KDGIPcV-FYGAczLWXFcAmI GDETBEf59Fj3xoClPoQAvD_BwE

106 “Corruption blamed for plunge in foreign investments in Nepal”, The Kathmandu Post, Accessed August 20, 2023, https://kathmandupost.com/ money/2023/08/21/corruption-blamed-for-plunge-inforeign-investments-in-nepal 107

110 “Aid programs for Nepal are not working anymore”, Asia Nikkei, Accessed August 20, 2023, https:// asia.nikkei.com/Opinion/Aid-programs-for-Nepal-aren-tworking-anymore

95

“Consumer Price Index (CPI) Explained: What it is and How’s it is used”, Investopedia, accessed on August 25, 2023, https://www.investopedia.com/terms/c/ consumerpriceindex.asp 96 Ibid 97

99 “Monetary Policy for 2023/24”, Nepal Rastra

111 “Projects that import goods produced in Nepal to not get customs exemption”, Online Khabar, 4 June 2023, https://english.onlinekhabar.com/customsexemption-foriegn-aid-nep.html

113 “China pledges Rs 145 million aid for Nepal’s seven provinces”, The Kathmandu Post, 5 September 2023, https://kathmandupost.com/national/2023/07/25/ china-pledges-rs145-million-aid-for-nepal-s-sevenprovinces

115 “ADB funds rural roads in Nepal”, Asian Development Bank, 14 June 2023, https://www.adb.org/ news/adb-funds-rural-roads-nepal#:~:text=News%20 Release%20%7C%2014%20June%202023&text=The%20 ongoing%20project%2C%20approved%20in,are%20 heavily%20dependent%20on%20agriculture. 116

118 “Cabinet decides to approve ADB’s 300 million USD concessional loan”, Radio Nepal, 6 July 2023, https:// onlineradionepal.gov.np/en/2023/07/06/358367.html

119 “Asian Development Bank approved 50 million loan for Nepal to strengthen customs logistics sector”, The Kathmandu Post, Accessed August 23, 2023, https:// kathmandupost.com/national/2023/06/29/asiandevelopment-bank-approves-50-million-loan-for-nepal-tostrengthen-customs-logistics-sector

120 Ibid

121 “EU grants 16.7 million euros for Nepal’s agriculture, school development”, The Kathmandu Post, 18 July 2023, https://kathmandupost.com/ money/2023/07/18/eu-grants-16-7-million-euros-fornepal-s-agriculture-school-development

122

123

125 “Nepalis working abroad keep home fires burning”, The Kathmandu Post, 10 July 2023, https:// kathmandupost.com/money/2023/07/10/nepalisworking-abroad-keep-home-fires-burning

126 “Esewa Money Transfer, Enjaz Payment Services sign pact to facilitate remittance services”, The Kathmandu Post, 21 August 2023, https:// kathmandupost.com/money/2023/08/21/esewa-moneytransfer-enjaz-payment-services-sign-pact-to-facilitateremittance-services

127 Ibid

128 Ibid

129 “Human rights watchdogs of Nepal, Qatar sign pact to protect migrant worker’s rights”, The Kathmandu Post, 8 June, 2023, https://kathmandupost.com/ money/2023/06/08/human-rights-watchdogs-of-nepalqatar-sign-pact-to-protect-migrant-workers-rights

130

132 ‘National Human rights commission of Nepal and the national human rights committee of Qatar signed a memorandum of understanding, MOU’, SARTUC, Accessed 8 June, 2023, https://www.sartuc.org/news/ national-human-rights-commission-of-nepal-and-thenational-human-rights-committee-of-qatar-signed-amemorandum-of-understanding-mou/

133 “Human rights watchdogs of Nepal, Qatar sign pact to protect migrant worker’s rights”, The Kathmandu Post, 8 June, 2023, https://kathmandupost.com/ money/2023/06/08/human-rights-watchdogs-of-nepalqatar-sign-pact-to-protect-migrant-workers-rights

134 “Nepal Overview: Development News, research, data”, World Bank, Accessed 20, 2023, Nepal Overview: Development news, research, data | World Bank

135

143 “The World Bank in Nepal”, The World Bank, Accessed 20, 2023, https://www.worldbank.org/en/ country/nepal/overview

150 “Nepali traders ‘cautiously optimistic’ as NepalChina border points resume after a hiatus of years”, My Republica, July 30, 2023, https://myrepublica. nagariknetwork.com/news/nepali-traders-cautiouslyoptimistic-as-nepal-china-border-points-resume-after-ahiatus-of-years/

151 “Nepali traders ‘cautiously optimistic’ as NepalChina border points resume after a hiatus of years”, My Republica, July 30, 2023, https://myrepublica. nagariknetwork.com/news/nepali-traders-cautiouslyoptimistic-as-nepal-china-border-points-resume-after-a-

154 “BoP at 67.4 bn deficit in 2018-19”, The Himalayan Times, September 02, 2023, https:// thehimalayantimes.com/business/bop-at-rs-67-4bndeficit-in-2018-19 155

160 “Economic Survey 2079/80,” Ministry of Finance, 2080. Accessed on August 10, 2023.

162

Current Macroeconomic and Financial SituationTables (Based on Annual data of 2022/23) https:// www.nrb.org.np/red/current-macroeconomic-andfinancial-situation-tables-based-on-eleven-monthsdata-of-2021-22/current-macroeconomic-and-financialsituation-tables-based-on-eleven-months-dataof-2021-22/

163 “Current Macroeconomic and Financial Situation” - English (Based on Annual data of 2022/23), Nepal Rastra Bank. August 18, 2023. CurrentMacroeconomic-and-Financial-Situation-English-Basedon-Annual-data-of-2022.23.pdf (nrb.org.np)

176

“Nepali mangoes dominate market with bumper production this year,” The Himalayan Time, Jul 10, 2023, https://thehimalayantimes.com/nepal/nepali-mangoesdominate-market-with-bumper-production-this-year

177 ibid

178 Indigenous crop varieties nearing extinction on large scale from Myagdi, myRepublic, September 3, 2023, https://myrepublica.nagariknetwork.com/news/ indigenous-crop-varieties-nearing-extinction-on-largescale-from-myagdi/

179 Ibid

180 Ibid

181 Ibid

182 Farmers in Gorkha switch to tractors from oxen, The Kathmandu Post, July 5, 2023 https://kathmandupost. com/money/2023/07/05/farmers-in-gorkha-switch-totractors-from-oxen

183 Ibid

184 Nepalis hit by rising prices every which way, The Kathmandu Post, August 27, 2023 https:// kathmandupost.com/money/2023/08/27/nepalis-hit-byrising-prices-every-which-way

185 “Milk has become expensive. Now, it’s the turn of state-owned DDC to hike rates”, The Kathmandu Post, March 11, 2023

https://kathmandupost.com/money/2023/03/11/milkhas-become-expensive-now-it-s-the-turn-of-ddc-to-hikerates

168

Current Macroeconomic and Financial SituationTables (Based on Annual data of 2022/23) https:// www.nrb.org.np/red/current-macroeconomic-andfinancial-situation-tables-based-on-eleven-monthsdata-of-2021-22/current-macroeconomic-and-financialsituation-tables-based-on-eleven-months-dataof-2021-22/ 169

186 Contraband trade causing milk glut in local markets, The Kathmandu Post, August 14, 2023 https:// kathmandupost.com/money/2023/08/14/contrabandtrade-causing-milk-glut-in-local-markets

187 Demand for Nepali tea rises to fill India's output gap, The Kathmandu Post, June 6, 2023 https:// kathmandupost.com/money/2023/06/06/demand-fornepali-tea-rises-to-fill-india-s-output-gap

188 Ibid

189 Current Macroeconomic and Financial Situation-

Tables (Based on Annual data of 2022/23) https:// www.nrb.org.np/red/current-macroeconomic-andfinancial-situation-tables-based-on-eleven-monthsdata-of-2021-22/current-macroeconomic-and-financialsituation-tables-based-on-eleven-months-dataof-2021-22/

190 Farmers in Baglung to brand milk of indigenous buffalos, The Kathmandu, Post, July 16, 2023, https:// kathmandupost.com/money/2023/07/16/farmers-inbaglung-to-brand-milk-of-indigenous-buffalos

191 Ibid

192 Ibid

193 Government raises minimum support price for paddy, The Kathmandu Post, July 12, 2023 https:// kathmandupost.com/money/2023/07/12/governmentraises-minimum-support-price-for-paddy

194 Ibid

195 Ibid

196 Ibid

197 Gandaki province to execute artificial insemination for improving animal breeding, Khabarhub, June 12, 2023, https://english.khabarhub. com/2023/12/307036/

198 Ibid

199 Ministry of Finance. “Economic Survey 2022/23,” Government of Nepal. May 28, 2023. https:// www.mof.gov.np/site/publication-detail/3248

200 Ibid

201 Ibid

202 National Statistics Office. “National Population and Housing Census 2021,” Government of Nepal. March 2023. https://censusnepal.cbs.gov.np/results/files/resultfolder/National%20Report_English.pdf

203 National Statistics Office. “National Population and Housing Census 2021,” Government of Nepal. March 2023. https://censusnepal.cbs.gov.np/results/files/resultfolder/National%20Report_English.pdf

204 Ibid

205 Ministry of Finance. “Budget details 2080/81,” Government of Nepal, May, 2023. https://www. mof.gov.np/uploads/document/file/1685431543_ Redbook_2080%20final.pdf

206 Ibid

207 Ibid

208 Devkota, Khim Lal. “Assessing local government budget,” The Kathmandu Post, June 27, 2023. https:// kathmandupost.com/columns/2023/06/27/assessinglocal-government-budget

209 “Nepal Makes Rapid Improvements in Quality and Inclusiveness of Education,” World Bank Group, August 23, 2023. https://documents1.worldbank.org/ curated/en/099033023181034515/pdf/BOSIB04a1a3d2f0 2409415085713f1db822.pdf

210 Ibid

211 Ministry of Education, Science and Technology. “School Education Sector Plan, 2022/23-2031/32,” Government of Nepal, 2022. https://moest.gov.np/ upload_file/files/post/1668690227_1997409338_ Nepal%20School%20Education%20Sector%20Plan%20 final%202022%20.pdf

212 “Government of Nepal and education development partners formalize cooperation for the School Education Sector Plan,” United Nations Children's Fund, August 17, 2023. https://www.unicef.org/nepal/ press-releases/government-nepal-and-educationdevelopment-partners-formalize-cooperation-school

213 Ibid

214 Ibid

215 Ibid

216 Rauniyar, Ruby. “Education Act to be replaced after 52 years,” myRepublica, August 4, 2023. https:// myrepublica.nagariknetwork.com/news/education-act-tobe-replaced-after-52-years/

217 Ibid.

218 Ghimire, Binod. “Why a hue and cry over Education Bill?” The Kathmandu Post, August 13, 2023. https://kathmandupost.com/national/2023/08/13/why-ahue-and-cry-over-education-bill

219 Ghimire, Binod. “Federal bill proposes reviving the district education offices,” The Kathmandu Post, August 4, 2023. https://kathmandupost.com/ national/2023/08/04/federal-bill-proposes-reviving-thedistrict-education-offices

220 Ghimire, Binod. “Why a hue and cry over Education Bill?” The Kathmandu Post, August 13, 2023. https://kathmandupost.com/national/2023/08/13/why-ahue-and-cry-over-education-bill

221 Rauniyar, Ruby. “Private schools respond to metropolis by relocating,” myRepublica, August 29, 2023.

https://myrepublica.nagariknetwork.com/news/privateschools-respond-to-metropolis-by-relocating/

222 Ibid

223 “Kathmandu Mayor directs private schools to pay to teachers in parity with their public school counterparts,” Nepal Live Today, June 29, 2023. https:// www.nepallivetoday.com/2023/06/29/kathmandu-mayordirects-private-schools-to-pay-to-teachers-in-parity-withtheir-public-school-counterparts/

224 Rauniyar, Ruby. “Private schools respond to metropolis by relocating,” myRepublica, August 29, 2023. https://myrepublica.nagariknetwork.com/news/privateschools-respond-to-metropolis-by-relocating/

225 Rauniyar, Ruby. “Trend of students going abroad continues despite increased investment in education,” myRepublica, July 23, 2023. https://myrepublica. nagariknetwork.com/news/trend-of-students-goingabroad-continues-despite-increased-investment-ineducation/

226 “Nepali students spend Rs 100 billion for overseas education,” Khabarhub, August 18, 2023. https://english.khabarhub.com/2023/18/315034/

227 Ghimire, Binod. “Government increases ‘study abroad levy’ on outbound students,” University World News, July 5, 2023. https://www.universityworldnews. com/post.php?story=20230705085725450

228 “NSU continues strike protesting fee hike by Institute of Engineering, Pulchowk,” Khabarhub, August 27, 2023. https://english.khabarhub. com/2023/27/316138/

229 “NSU leaders protest TU fee hike outside VC’s office,” OnlineKhabar, August 30, 2023. https://english. onlinekhabar.com/nsu-leaders-protest-tu-fee-hike-nepal. html

230 “IoE forms committee to review fee hike,” myRepublica, September 6, 2023. https://myrepublica. nagariknetwork.com/news/ioe-forms-committee-toreview-fee-hike/

231 Office of Municipal Executive, Bagmati Province, “Final Rank List Class 11 Scholarship Examination,” Kathmandu Metropolitan City, August 16, 2023. https:// kathmandu.gov.np/wp-content/uploads/2023/08/FINALRANK-LIST.pdf

232 Office of Municipal Executive, Bagmati Province, “Information about Vacant Seats Regarding Scholarships,” Kathmandu Metropolitan City, August 27, 2023. https:// kathmandu.gov.np/wp-content/uploads/2023/08/रररररररररर-ररररर-ररर-ररररररर-रररररर-ररररर.pdf

233 “50 percent of KMC's scholarships go to waste,” myRepublica, August 30, 2023. https://myrepublica. nagariknetwork.com/news/kmc-s-50-percentscholarships-wasted/?categoryId=81

234 Ibid

235 Ibid

236 Office of Municipal Executive, Bagmati Province, “Class 11 Scholarship Examination, 2023 Second Admission List,” Kathmandu Metropolitan City, August 22, 2023. https://kathmandu.gov.np/wp-content/ uploads/2023/08/रररररर-ररररर-रररर.pdf

237 “NEB Publishes SEE results,” Khabarhub, July 6, 2023. https://english.khabarhub.com/2023/06/309824/

238 Satyal, Ujjwal. “SEE results show improvement,” The Himalayan Post, July 7, 2023. https:// thehimalayantimes.com/nepal/see-results-showimprovement

239 Ghimire, Binod. “National school exam results out. Over half the students score GPAs below 2.4,” the Kathmandu Post, July 7, 2023. https://kathmandupost. com/national/2023/07/07/national-school-exam-resultsout-over-half-the-students-score-gpas-below-2-4

240 “SEE grade improvement examinations on August 11-12,” The Kathmandu Post, July 8, 2023. https:// kathmandupost.com/national/2023/07/08/see-gradeimprovement-examinations-on-august-11-12

241 “Grade 12 examination results published,” The Kathmandu Post, August 15, 2023. https:// kathmandupost.com/national/2023/08/15/grade-12examination-results-published

242 “NEB to hold grade improvement exams for Grade 12 on Sept 23-24,” Khabarhub, August 16, 2023. https://english.khabarhub.com/2023/16/314692/

243 “Grade 12 examination results published,” The Kathmandu Post, August 15, 2023. https:// kathmandupost.com/national/2023/08/15/grade-12examination-results-published

244 Ghimire, Binod. “Grade 12 results worry educators, college operators,” The Kathmandu Post, August 16, 2023. https://kathmandupost.com/ national/2023/08/16/grade-12-results-worry-educatorscollege-operators

245 “Current Macroeconomic and Financial Situation–based on Annual Data of FY 2022/23,” Nepal Rastra Bank. 2023. https://www.nrb.org.np/category/ current-macroeconomic-situation/?department=red&

fy=2079-80&subcategory=annual

246 Ibid

247 Ibid

248 Ibid

249 Ibid

250 "Extreme heat causes schools to shut in Sunsari,” Khabarhub, June 1, 2023.

https://english.khabarhub.com/2023/01/305841/

251 "Schools closed for five days due to scorching heat,” Khabarhub, June 6, 2023.

https://english.khabarhub.com/2023/06/306433/

252 "Six local levels of Chitwan close schools due to excessive heat,” Khabarhub, June 3, 2023.

https://english.khabarhub.com/2023/03/306076/

253 "Terai grapples with health risks from extreme heat conditions,” myRepublica, June 3, 2023.

https://myrepublica.nagariknetwork.com/news/healthhazards-due-to-hot-air-in-terai/

254 "Temperature reaches 'record-breaking' level, likely to increase further,” myRepublica, June 9, 2023.

https://myrepublica.nagariknetwork.com/news/ temperature-reaches-record-breaking-level-likely-toincrease-further/

255 "Hot weather makes life difficult in Tarai,” The Kathmandu Post, June 14, 2023.

https://kathmandupost.com/climateenvironment/2023/06/14/hot-weather-makes-lifedifficult-in-tarai

256 "Soaring temperatures at Kanyam Tea Estate break 50-year record, Dumkauli hottest in 44 years,” The Kathmandu Post, June 11, 2023.

https://kathmandupost.com/climateenvironment/2023/06/11/soaring-temperatures-atkanyam-tea-estate-break-50-year-record-dumkaulihottest-in-44-years

257 "Pokhara records highest temperature after 1999,” myRepublica, June 11, 2023.

https://myrepublica.nagariknetwork.com/news/pokhararecords-highest-temperature-after-1999/

258 "Some Tarai districts face extreme heat as temperatures cross 40 degrees,” The Kathmandu Post,

June 2, 2023.

https://kathmandupost.com/climateenvironment/2023/06/02/some-tarai-districts-faceextreme-heat-as-temperatures-cross-40-degrees

259 "Terai grapples with health risks from extreme heat conditions,” myRepublica, June 3, 2023.

https://myrepublica.nagariknetwork.com/news/healthhazards-due-to-hot-air-in-terai/

260 "Dharan sub-metropolis hit by severe water shortage amid continued heat wave,” The Kathmandu Post, June 8, 2023.

https://kathmandupost.com/province-no-1/2023/06/08/ dharan-sub-metropolis-hit-by-severe-water-shortageamid-continued-heat-wave

261 "Monsoon affects 64 districts with 34 casualties, Khabarhub, July 8, 2023.

https://english.khabarhub.com/2023/08/310005/

262 "Last week flood hit 30 hydropower projects, The Annapurna Express, June 26, 2023.

https://theannapurnaexpress.com/news/last-week-floodhit-30-hydropower-projects-44309/

263 "Floods, landslides affect daily life (With Photos), The Annapurna Express, August 9, 2023.

https://theannapurnaexpress.com/story/45288/

264 “Narayani River's water level still above danger level,” myRepublica, August 14, 2023.

https://myrepublica.nagariknetwork.com/news/narayaniriver-s-water-level-still-above-danger-level/

265 "Narayani River embankment work progressing smoothly,” The Kathmandu Post, June 10, 2023.

https://kathmandupost.com/national/2023/06/10/ narayani-river-embankment-work-progressing-smoothly

266 "Water from Kokaha stream arrives in thirsty Dharan,” The Kathmandu Post, June 14, 2023.

https://kathmandupost.com/province-no-1/2023/06/14/ water-from-kokaha-stream-arrives-in-thirsty-dharan

267 “Nepal, India agree on long-term power trade,” The Himalayan Times, June 2, 2023.

https://thehimalayantimes.com/nepal/nepal-india-agreeon-long-term-power-trade

268 “Nepal, India reach slew of agreements including a long-term energy deal to deepen economic

cooperation,” myRepublic, June 2, 2023.

https://myrepublica.nagariknetwork.com/news/nepalindia-reach-slew-of-agreements-including-a-long-termenergy-deal-to-deepen-economic-cooperation/

269 "KMC resumes garbage collection, management in the Valley after an agreement with locals in Sisdole, myRepublica, July 22, 2023.

https://myrepublica.nagariknetwork.com/news/kmcresumes-garbage-collection-management-in-the-valleyafter-an-agreement-with-locals-in-sisdole/

270 "Nepal & India to convene expert meeting on Pancheshwar Power Plant DPR,” CONSTRUCTION WORLD. in, July 11, 2023.

https://www.constructionworld.in/energy-infrastructure/ power-and-renewable-energy/nepal---india-to-conveneexpert-meeting-on-pancheshwar-power-plant-dpr/42409

271 "Nepal, Bangladesh agree to sign 25-year power sale deal,” The Kathmandu Post, July 9, 2023.

https://kathmandupost.com/money/2023/07/09/nepalbangladesh-agree-to-sign-25-year-power-sale-deal

272 "India, Nepal, Bangladesh finalise tripartite power trade agreement draft,” The Hindustan Times, June 15, 2023.

https://www.hindustantimes.com/india-news/indianepal-bangladesh-finalise-tripartite-power-tradeagreement-draft-101686842536062.html

273 "Nepal continues to be net importer of electricity,” The Kathmandu Times, August 29, 2023. https://kathmandupost.com/national/2023/08/29/nepalcontinues-to-be-net-importer-of-electricity

274 "11,000 residents in Madhesh gain access to clean water, irrigation through solar energy,” The Himalayan Times, June 19, 2023.

https://thehimalayantimes.com/nepal/11000-residentsin-madhesh-gain-access-to-clean-waterirrigation-throughsolar-energy

275 "Sustainable innovations: Dang, Nepal turns dung into energy,” Global Voices, July 28, 2023.

https://globalvoices.org/2023/07/28/sustainableinnovations-dang-nepal-turns-dung-into-energy/

276 Ibid

277 “Budget Speech 2023/24," Ministry of Finance. May 2023. Last updated 29 May, 2023.

https://www.mof.gov.np/site/publication-detail/3263

278 “Nepal announces banning plastic bags for the third time. There are doubts if it will translate to action,” onlinekhabar, June 7, 2023.

https://english.onlinekhabar.com/nepal-announcesbanning-plastic-bags-for-the-third-time-there-are-doubtsif-it-will-translate-to-action.html

279 "Government bans plastic bags below 40 microns,” Khabarhub, July 6, 2023.

https://english.khabarhub.com/2023/06/309841/

280 "As many as 157,000 saplings planted,” Khabarhub, June 30, 2023.

https://english.khabarhub.com/2023/30/309036/

281 “Gorkha Forest Office distributing 90,000 tree saplings for free,” Khabarhub, July 11, 2023.

https://english.khabarhub.com/2023/11/310392/

282 “Climate Change Summit concludes in Pokhara committing to confront unprecedented challenges,” Khabarhub, June 30, 2023.

https://english.khabarhub.com/2023/30/309076/

283 "ISSR, NUSAN organize Summit on Climate Change in Pokhara,” Khabarhub, June 28, 2023.

https://english.khabarhub.com/2023/28/308887/

284 "Zoo to be constructed alongside Wildlife Rescue Center in Chitwan,” myRepublica, August 24, 2023.

https://myrepublica.nagariknetwork.com/news/zooto-be-constructed-alongside-wildlife-rescue-centre-inchitwan/

285 “Efforts underway to announce ‘Bharatpur Visit Year 2024’,” Tourismmail, September 25, 2023.

https://www.tourismmail.com/news/detail/102128/

286 "Feature News: Over half dozen water projects concluding in Kavrepalanchok ensuring safe water supply to residents,” The Rising Nepal, August 17, 2023.

https://risingnepaldaily.com/news/31101

287 "Birgunj shows how to manage waste by utilizing data and technology,” Nepal Live Today, June 27, 2023.

https://www.nepallivetoday.com/2023/06/27/birgunjshows-how-to-manage-waste-by-utilizing-data-andtechnology/

288 "Nepal’s climate change adaptation strategy needs One Health approach (commentary),” Mongabay, August 4, 2023.

https://news.mongabay.com/2023/08/nepals-climatechange-adaptation-strategy-needs-one-health-approachcommentary/#:~:text=Nepal%20is%20a%20small%20 biodiversity,the%20world%20to%20climate%20change.

289 Ministry of Finance. “Economic Survey 2022/23,” Government of Nepal. May 28, 2023. https:// www.mof.gov.np/site/publication-detail/3248 290 Ibid

Housing Census: : Nepal Maternal Mortality Study 2021,” Government of Nepal. January, 2023. https://mohp.gov np/uploads/Resources/Final%20Report-26%20March-%20 2023-UPDATED.pdf

305 Poudel, Arjun. “Anti-shock suits to be used to reduce maternal deaths from postpartum bleeding,” The Kathmandu Post. August7, 2023. https://kathmandupost. com/health/2023/08/07/anti-shock-suits-to-be-used-toreduce-maternal-deaths-from-postpartum-bleeding

306 “PEN-Plus – Integrated chronic care for severe NCDs in poor, rural areas,” NCDI Poverty Network. Accessed on September 5, 2023. https://www. ncdipoverty.org/penplus-1

307 “Introduction to PEN-Plus,” Kathmandu Institute of Child Health. Accessed on September 5, 2023. https:// kioch.org.np/pen-plus

295 Ministry of Finance. “Budget Statement of Fiscal year 2080/81,” Government of Nepal, May, 2023. https:// www.mof.gov.np/site/publication-category/87

296 Ministry of Finance. “Budget details 2080/81,” Government of Nepal, May, 2023. https://www. mof.gov.np/uploads/document/file/1685431543_ Redbook_2080%20final.pdf

297 Ibid

298 Ibid

299 Ojha, Anup. “KMC brings Rs25.54 billion budget for new fiscal year,” The Kathmandu Post, June 26, 2023. https://kathmandupost.com/valley/2023/06/26/kmcbrings-rs25-54-billion-budget-for-new-fiscal-year

300 “Special newborn care unit to be set up in all district hospitals across the country,” The Kathmandu Post, August 29, 2023. https://kathmandupost.com/ health/2023/08/29/special-newborn-care-unit-to-be-setup-in-all-district-hospitals-across-the-country

301 “Ministry plans verbal autopsy in neonatal deaths,” The Kathmandu Post, September 4, 2023. https://kathmandupost.com/health/2023/09/04/ ministry-plans-verbal-autopsy-in-neonatal-deaths

302 Ibid

303 “Mobile app to promote maternal and neonatal health,” The Kathmandu Post, August 28, 2023. https:// kathmandupost.com/health/2023/08/28/mobile-app-topromote-maternal-and-neonatal-health

304 Ministry of Health and Population, and National Statistics Office. “National Population and

308 “A silent threat: Battling the rising tide of NCDs in Nepal,” UNICEF. July 27, 2023. https://www.unicef.org/ nepal/stories/silent-threat-battling-rising-tide-ncds-nepal

309 Poudel, Arjun. “PEN-Plus project to be piloted in four more district hospitals,” The Kathmandu Post, September 5, 2023. https://kathmandupost.com/ health/2023/09/05/pen-plus-project-to-be-piloted-infour-more-district-hospitals

310 Adhikari, Ramesh Chandra and Shyam Sundar Sashi, “Conjunctivitis spreading fast hinting at national outbreak,” The Kathmandu Post, August 8, 2023. https:// kathmandupost.com/national/2023/08/08/conjunctivitisspreading-fast-hinting-at-national-outbreak

311 Pariyar, Deepak, “Pokhara closes schools for three days to curb conjunctivitis infection,” The Kathmandu Post, August 8, 2023. https://kathmandupost. com/health/2023/08/08/pokhara-closes-schools-forthree-days-to-curb-conjunctivitis-infection; “50 percent of patients visiting hospitals found suffering from conjunctivitis,” myRepublica, August 9, 2023. https:// myrepublica.nagariknetwork.com/news/50-percentof-patients-visiting-hospitals-found-suffering-fromconjunctivitis/?categoryId=81

312 “Banke reports shortage of eye medicines amidst growing cases of conjunctivitis,” myRepublica, August 16, 2023. https://myrepublica.nagariknetwork. com/news/banke-reports-shortage-of-eye-medicinesamidst-growing-cases-of-conjunctivitis/

313 “Conjunctivitis: No need to panic, will clear off in 1-2 weeks, says MoHP,” The Himalayan Times, August 9, 2023. https://thehimalayantimes.com/nepal/ conjunctivitis-no-need-to-panic-will-clear-off-in-1-2weeks-says-mohp

314 “Nepal Fact Sheet,” Air Quality Life Index, August 29, 2023. https://aqli.epic.uchicago.edu/wp-content/ uploads/2023/08/Nepal-FactSheet-2023_Embargoed.pdf

315 Ibid

316 “Air quality in Nepal deteriorating way beyond WHO standard,” The Himalayan Times, July 8, 2023. https://thehimalayantimes.com/nepal/air-quality-innepal-deteriorating-way-beyond-who-standard

317 “Nepal Fact Sheet,” Air Quality Life Index, August 29, 2023. https://aqli.epic.uchicago.edu/wp-content/ uploads/2023/08/Nepal-FactSheet-2023_Embargoed.pdf

318 Ibid

319 Poudel, Arjun. “Faecal coliform rife in water samples tested in Kathmandu,” The Kathmandu Post, July 31, 2023. https://kathmandupost.com/ health/2023/07/31/faecal-coliform-rife-in-water-samplestested-in-kathmandu

320 Poudel, Arjun. “Rains raise alarm over water contamination, food poisoning,” The Kathmandu Post, August 22, 2023. https://kathmandupost.com/ health/2023/08/22/rains-raise-alarm-over-watercontamination-food-poisoning

321 Epidemiology and Disease Control Division. “Situation Report on Dengue in Nepal- 2023,” Ministry of Health and Population, Government of Nepal. September 4, 2023. https://edcd.gov.np/public/news/denguesituation-update-4th-september-2023

322 Menyangbo, Pradeep. “BPKIHS sets up separate dengue treatment facility on its premises,” The Kathmandu Post, July 23, 2023. https://kathmandupost. com/health/2023/07/23/bpkihs-sets-up-separatehospital-inside-its-premises-for-dengue-patients

323 Poudel, Arjun. “Blood bank asked to be prepared for repeat of last year’s dengue epidemic,” The Kathmandu Post, August 9, 2023. https://kathmandupost. com/health/2023/08/09/blood-bank-asked-to-beprepared-for-repeat-of-last-year-s-dengue-epidemic

324 Poudel, Arjun. “Health ministry sought WHO help for dengue case management,” The Kathmandu Post, July 22, 2023. https://kathmandupost.com/ health/2023/07/22/health-ministry-sought-who-help-fordengue-case-management

325 “Foxtrot operation: Seven more arrested for making fake certificates,” Khabarhub, August 19, 2023. https://english.khabarhub.com/2023/19/315096/

326 “Police arrest Nepali Congress lawmaker Sunil Sharma,” The Kathmandu Post, August 10, 2023. https://

kathmandupost.com/national/2023/08/10/police-arrestnepali-congress-lawmaker-sunil-sharma

327 Giri, Anil. “District Court frees Nepali Congress lawmaker Sharma,” The Kathmandu Post, August 12, 2023. https://kathmandupost.com/national/2023/08/12/ district-court-frees-nepali-congress-lawmaker-sharma

328 “Foxtrot operation: Seven more arrested for making fake certificates,” Khabarhub, August 19, 2023. https://english.khabarhub.com/2023/19/315096/

329 Sunar, Pabitra. “Wrongfully detained despite being innocent, Dr Ranjit Kumar Yadav says he hopes this does not happen to anyone,” myRepublica, August 15, 2023. https://myrepublica.nagariknetwork.com/news/ wrongfully-detained-despite-being-innocent-dr-ranjitkumar-yadav-says-he-hopes-this-does-not-happen-toanyone/

330 Poudel, Arjun. “Bed occupancies at private hospitals across the country decline to almost half,” the Kathmandu Post, July 19, 20203. https://kathmandupost. com/health/2023/07/19/bed-occupancies-at-privatehospitals-across-the-country-decline-to-almost-half

331 Ibid

332 Chaulagain, Puspraj. “The government’s health insurance programme is failing. It is time to restructure it,” OnlineKhabar, July 9, 2023. https://english. onlinekhabar.com/health-insurance-nepal-hospital.html

333 Poudel, Arjun. “Audit on cards to discourage prescription of unnecessary testing and medicines,” The Kathmandu Post. August 4, 2023. https://kathmandupost. com/health/2023/08/04/audit-on-cards-to-discourageprescription-of-unnecessary-testing-and-medicines

334 “Nepal, UK launch nursing recruitment pilot programme,” The Kathmandu Post, July 20, 2023. https:// kathmandupost.com/national/2023/07/20/nepal-uklaunch-nursing-recruitment-pilot-programme

335 Chaulagain,Pusparaj. “Deprived of respect and remuneration, nurses in Nepal leave in droves,” OnlineKhabar. June 8, 2023. https://english.onlinekhabar. com/nurses-in-nepal-leave-money-respect.html

336 “Japan hands over the mental health therapeutic center in Kathmandu,” myRepublica, July 14, 2023. https://myrepublica.nagariknetwork.com/news/ japan-hands-over-the-mental-health-therapeutic-centerin-kathmandu/

337 Nepal Health Research Council. “Report of National Mental Health Survey 2020,” Government of Nepal, 2021. https://nhrc.gov.np/wp-content/ uploads/2022/10/National-Mental-Health-Survey-

Report2020.pdf

338 Ibid

339 Mahat, Manushree. “Mental health patients in Nepal suffer due to shortage of qualified experts,” The Kathmandu Post, July 22, 2023. https://kathmandupost. com/health/2023/07/22/mental-health-patients-in-nepalsuffer-due-to-shortage-of-qualified-experts

340 “Poudel, Arjun. “Government launching nationwide campaign to address growing mental health problem,” The Kathmandu Post, August 10, 2023. https:// kathmandupost.com/health/2023/08/10/governmentlaunching-nationwide-campaign-to-address-growingmental-health-problem

341 Telecommunication Indicators. 14 April-14 May, 2023, MIS Report. Nepal Telecommunications Authority. Accessed August 24, 2023. https://www.nta.gov.np/ uploads/contents/MIS-2080-Baishakh.pdf

342 Ibid

343 Ibid

344 Ibid

345 “Current Macroeconomic and Financial Situation (based on annual data of 2022-23)”, Nepal Rastra Bank, Accessed Aug 24, 2023, https://www.nrb.org.np/ category/current-macroeconomic-situation/?department =red&fy=2079-80&subcategory=annual

346 Ibid

347 “NTA sets Rs 11 billion budget for telecom service improvement and expansion”, Nepal Telecom, August 22, 2023, https://www.nepalitelecom. com/2023/08/nta-budget-fy-2080-81-for-telecom-service. html

348 Ibid

349 Ibid

350 “Nepal government to implement an integrated ICT policy”, Nepal Telecom, July 6, 2023, https://www. nepalitelecom.com/2022/01/integrated-ict-policy-innepal.html

351 Gajurel, Abhinash, “Bridging the digital divide in Nepal”, Nepal Live Today, July 6, 2023, https://www. nepallivetoday.com/2023/07/06/bridging-the-digitaldivide-in-nepal/

352 “Unleashing IT: Advancing Nepal’s Digital Economy”, Institute for Integrated Development Studies (IIDS), July 2023, https://iids.org.np/images/ publications/15c4487b777dcf3239cd6af6dd15c2c1.pdf

353 Ibid

354 Ibid

355 Ibid

356 “TERAMOX not for tapping calls but for quality service: NTA Chair Khanal”, myRepublica, August 22 2023, https://myrepublica.nagariknetwork.com/news/teramoxnot-for-tapping-calls-but-for-quality-service-nta-chairkhanal/

357 Ibid

358 Ibid

359 “ISPs in Nepal Quietly Raise Prices of Their Base Internet Plans”, Techlekh, June 1, 2023, https://techlekh. com/isps-nepal-raise-prices-internet-plans/

360 Ibid

361 Ibid

362 Ibid

363 “Ncell’s 4G service reaches Jumla”, The Kathmandu Post, August 23, 2023, https:// kathmandupost.com/money/2023/08/25/ncell-s-4gservice-reaches-jumla

364 Ibid

365 Ibid

366 Ibid

367 “Nepal collects Rs 100 million in Digital Service Tax from platforms like Google and LinkedIn”, Techsaathi, August 10 2023, https://techsathi.com/nepal-collects100-million-digital-service-tax-google-linkedin

368 Ibid

369 Economic Survey of Nepal 2079/80. Ministry of Finance, Government of Nepal. Kathmandu, 2023. PDF

370 Breakthrough in evacuation route of Nepal’s first tunnel project achieved, The Kathmandu Post, August 7, 2023, https://kathmandupost.com/money/2023/08/07/ breakthrough-in-evacuation-route-of-nepal-s-first-tunnelproject-achieved

371 Ibid

372 Press Release on Rt.-Hon. Prime Ministers Visit to India, Nepal Embassy in India, June 2, 2023, https:// in.nepalembassy.gov.np/wp-content/uploads/2023/06/ Press-Release-on-Rt.-Hon.-Prime-Ministers-Visit-to-India-. pdf

373 Ibid

374 MCC Nepal Compact enters implementation phase today, The Himalayan Times, August 30, 2023, https://thehimalayantimes.com/nepal/mcc-nepalcompact-enters-implementation-phase-today

375 MCC Nepal Compact, September, 2017, https:// www.mcc.gov/where-we-work/program/nepal-compact

376 IBN approves Rs 36.37 billion investment in four hydropower projects, myRepublica, August 25, 2023, https://myrepublica.nagariknetwork.com/news/ibnapproves-rs-36-37-billion-investment-in-four-hydropowerprojects/

377 IBN Press Release, August 25, 2023, https://ibn. gov.np/ibn-notices/details/ibn-55th-board-meeting-1864

378 Monetary Policy for 2023/24. Nepal Rastra Bank. August 12, 2023, https://www.nrb.org.np/contents/ uploads/2023/08/Monetary-policy-in-English-2023_24Full-text.pdf

379 Ibid

380 Ibid

381 Introduction of New Town Project Coordination office website, http://ntpco.dudbc.gov.np/en/

382 Govt allocates only Rs 2.4 billion in FY 2023/24 for New Town Project, myRepublica, June 20, 2023, https://myrepublica.nagariknetwork.com/news/govtallocates-only-rs-2-4-billion-in-fy-2023-24-for-new-townproject/

383 Annual Report 2023, Nepal Electricity Authority, September 11, 2023, https://www.nea.org.np/annual_ report

384 NEA installs 11,500 smart street lights in collaboration with local authorities, myRepublica, September 4, 2023, https://myrepublica.nagariknetwork. com/news/nea-installs-11-500-smart-street-lights-67high-mast-lights-in-collaboration-with-local-authorities/

385 India grants clearance for ILS system operation at Gautam Buddha International Airport, Khabarhub, June 1, 2023, https://english.khabarhub. com/2023/01/305974/

386 Ropeway brings cheers to farmers in Rukum (East), Khabarhub, August 25, 2023, https://english. khabarhub.com/2023/25/315865/

387 ‘Total Number of Tourists arrival in each month of 2023’, Nepal Everest Himalaya Hiking, September 1, 2023, https://www.nepaltrekkinginhimalaya.com/pages/ total-number-of-tourists-arrival-in-each-months-of-2023

388 ‘Current Macroeconomic and Financial

Situation-Tables (Based on Annual data of 2022/23)’, Nepal Rastra Bank, August 18, 2023, https://www.nrb.org. np/red/current-macroeconomic-and-financial-situationtables-based-on-annual-data-of-2022-23/currentmacroeconomic-and-financial-situation-tables-based-onannual-data-of-2022-23-3/

389 ‘Listed Securities: Hotels and Tourism’, Nepal Stock Exchange, August 31, 2023, https://www. nepalstock.com/company

390 "Current Macroeconomic and Financial Situation: English Based on Annual data of 2022/23", Nepal Rastra Bank, August 18, 2023, https://www.nrb.org. np/contents/uploads/2023/08/Current-Macroeconomicand-Financial-Situation-English-Based-on-Annual-dataof-2022.23.pdf

391 "Nepal tourism statistics 2022", Ministry of Culture, Tourism and Civil Aviation, Accessed July 2, 2023, https://www.tourism.gov.np/files/NOTICE%20MANAGER_ FILES/Setting_Nepal%20Tourism%20Statistic_2022.pdf

392 "Nepal tourism statistics 2022", Ministry of Culture, Tourism and Civil Aviation, Accessed July 2, 2023, https://www.tourism.gov.np/files/NOTICE%20MANAGER_ FILES/Setting_Nepal%20Tourism%20Statistic_2022.pdf

393 "Nepal tourism statistics 2022", Ministry of Culture, Tourism and Civil Aviation, Accessed July 2, 2023, https://www.tourism.gov.np/files/NOTICE%20MANAGER_ FILES/Setting_Nepal%20Tourism%20Statistic_2022.pdf

394

397 "Nepal tourism statistics 2022", Ministry of Culture, Tourism and Civil Aviation, Accessed July 2, 2023, https://www.tourism.gov.np/files/NOTICE%20MANAGER_ FILES/Setting_Nepal%20Tourism%20Statistic_2022.pdf

399 "Current Macroeconomic and Financial Situation: English Based on Annual data of 2022/23", Nepal Rastra Bank, Accessed August 18, 2023, https:// www.nrb.org.np/contents/uploads/2023/08/CurrentMacroeconomic-and-Financial-Situation-English-Basedon-Annual-data-of-2022.23.pdf

400 "Nepal tourism statistics 2022", Ministry of Culture, Tourism and Civil Aviation, Accessed July 2, 2023, https://www.tourism.gov.np/files/NOTICE%20MANAGER_ FILES/Setting_Nepal%20Tourism%20Statistic_2022.pdf

401 "Nepal tourism statistics 2022", Ministry of Culture, Tourism and Civil Aviation, Accessed July 2, 2023,

https://www.tourism.gov.np/files/NOTICE%20MANAGER_ FILES/Setting_Nepal%20Tourism%20Statistic_2022.pdf

402 ‘NEPSE Alpha Earnings Scoreboard,’ NEPSE Alpha, Accessed September 1, 2023, https://nepsealpha. com/

403 “Everest permit to cost $15K from 2025”, The Kathmandu Post, September 6, 2023. https:// kathmandupost.com/money/2023/08/12/everest-permitto-cost-15k-from-2025

404 “Everest permit to cost $15K from 2025”, The Kathmandu Post, September 6, 2023. https:// kathmandupost.com/money/2023/08/12/everest-permitto-cost-15k-from-2025

405 ‘Listed Securities: Hotels and Tourism,’ Nepal Stock Exchange, August 31, 2023, https://www. nepalstock.com/company

406 "Current Macroeconomic and Financial Situation: English Based on Annual data of 2022/23", Nepal Rastra Bank, Accessed August 18, 2023, https:// www.nrb.org.np/contents/uploads/2023/08/CurrentMacroeconomic-and-Financial-Situation-English-Basedon-Annual-data-of-2022.23.pdf

407 "Current Macroeconomic and Financial Situation: English Based on Annual data of 2022/23", Nepal Rastra Bank, Accessed August 18, 2023, https:// www.nrb.org.np/contents/uploads/2023/08/CurrentMacroeconomic-and-Financial-Situation-English-Basedon-Annual-data-of-2022.23.pdf

408 ‘CAAN allocates budget of NPR 36.5 billion for FY 2080/81’, Share Sansar, Accessed August 30, 2023, https://www.sharesansar.com/newsdetail/caan-allocatesbudget-of-npr-365-billion-for-fy-208081-2023-09-08

409 ‘Nepal Budget 2080,’ International Centre for Academics, Accessed August 20, 2023, https://ica.edu.np/ blogs/nepal-budget-2080#:~:text=A%20budget%20of%20 NRs.,year%20by%20thirty%20billion%20rupees

410 Kedar Shiwakoti, ‘Rock Climbing trail aims to boost adventure tourism in Dolakha,’ The Kathmandu Post, June 11, 2023, Accessed August 20, 2023, https:// kathmandupost.com/money/2023/06/10/rock-climbingtrail-aims-to-boost-adventure-tourism-in-dolakha

411 Ibid

412 Ibid

413 ‘Taxman launches new fiscal year with VAT on air travel,’ The Kathmandu Post, Accessed August 20, 2023, https://kathmandupost.com/money/2023/07/18/taxmanlaunches-new-fiscal-year-with-vat-on-air-travel

414 ‘Convention on International Civil AviationNinth Edition, 2006’, International Civil Aviation Organization, Accessed September 12, 2023, https:// www.icao.int/publications/Documents/7300_cons.pdf

415 ‘Taxman launches new fiscal year with VAT on air travel,’ The Kathmandu Post, Accessed August 20, 2023, https://kathmandupost.com/money/2023/07/18/ taxman-launches-new-fiscal-year-with-vat-on-air-travel

416 “Nepal Rastra Bank, Current Macroeconomic and Financial Situation of Nepal Based on annual data ending Mid-July, 2022/23”, August 18, 2023.

Current-Macroeconomic-and-Financial-Situation-EnglishBased-on-Annual-data-of-2022.23.pdf (nrb.org.np)

417 Ibid

418 Ibid

419 “Nepal risks being ‘greylisted’ for abetting money laundering”, The Kathmandu Post, January 2, 2023

Nepal risks being ‘greylisted’ for abetting money laundering (kathmandupost.com)

420 “Mutual Evaluation Onsite of Nepal - 5 to 16 December 2022”

Asia / Pacific Group On Money Laundering (apgml.org)

421 Ibid

422 “Nepal narrowly escapes FATF ‘grey listing’”, My Republica, July 20, 2023

Nepal narrowly escapes FATF ‘greylisting’ - myRepublica - The New York Times Partner, Latest news of Nepal in English, Latest News Articles (nagariknetwork.com)

423 “NRB amends unified directives, re-introduces counter cyclical buffer for banks”, My Republica, July 28, 2023

NRB amends unified directives, re-introduces counter cyclical buffer for banks - myRepublica - The New York Times Partner, Latest news of Nepal in English, Latest News Articles (nagariknetwork.com)

424 “NRB relaxes the ceiling on the working capital loans for manufacturers”, My Republica, August 29, 2023

NRB relaxes the ceiling on the working capital loans for manufacturers - myRepublica - The New York Times Partner, Latest news of Nepal in English, Latest News Articles (nagariknetwork.com)

425 “Banks can determine interest rates as cartelization ends”, Online Khabar, July 13, 2023

Banks can determine interest rates as cartelisation endsOnlineKhabar English News

426 “NRB unveils monetary policy for FY 2023/24”, My Republica, July 23,2023

NRB unveils monetary policy for FY 2023/24myRepublica - The New York Times Partner, Latest news of Nepal in English, Latest News Articles (nagariknetwork. com)

427 “Monetary Policy for 2023/24”, Nepal Rastra Bank, July 23, 2023

Monetary-policy-in-English-2023_24-Full-text.pdf (nrb. org.np)

428 “Current Macroeconomic and Financial Situation of Nepal Based on Annual Data of 2022/23”, Nepal Rastra Bank

https://www.nrb.org.np/contents/uploads/2023/08/ Current-Macroeconomic-and-Financial-Situation-EnglishBased-on-Annual-data-of-2022.23.pdf

429 “Nepal Rastra Bank unveils Monetary Policy for FY 2080-81”, TheHimalayan (website), July23,2023

https://thehimalayantimes.com/business/nepal-rastrabank-unveils-monetary-policy-for-fy-2080-81

430 Nepal Rastra Bank unveils Monetary Policy for FY 2079-80”, NRB, August 25,2022

https://www.nrb.org.np/contents/uploads/2022/08/ Monetary-policy-in-English-2022_23-Full-text.pdf

431 “ Collection of capital gains tax on shares transactions”,myRepublic, July 1,2023

https://myrepublica.nagariknetwork.com/news/ collection-of-capital-gains-tax-on-shares-transactionsdoubled-to-rs-260-million-last-month/

432 “ SEBON Amends IPO Regulations: Key Changes Unveiled”, ShareSansar, September 7, 2023

https://www.sharesansar.com/newsdetail/sebon-amendsipo-regulations-key-changes-unveiled-2023-09-07

433 “E-sewa prepares to open IPO for up to 49 percent”, myRepublica (website), August 14,2023

https://myrepublica.nagariknetwork.com/news/e-sewaprepares-to-open-ipo-for-upto-49-percent/

434 SEBON Recommends New Measures to Facilitate NRN Investments in Nepal’s Secondary Market”, ShareSansar, Sptember 7, 2023

435 “ SEBON grants stockbroker licenses to five

firms”, myRepublica, August 18, 2023

https://myrepublica.nagariknetwork.com/news/sebongrants-stockbroker-licenses-to-five-firms/

436 NEA Annual Report. (2023). Nepal Electricity Authority. Retrieved from https://www.nea.org.np/ annual_report

437 Ibid

438 Kantipur. (2023, July 18). HYDEL development by India.

439 Nepal Electricity Authority, System Planning Department, Load Forecast Report. Retrieved from: https://www.nea.org.np/admin/assets/uploads/ supportive_docs/LoadForecast2014_15.pdf

440 Nepal Infrastructure Bank Ltd. (NIFRA), Our sectors, Energy, retrieved from: https://www.nifrabank. com/projects/energy#:~:text=As%20such%2C%20 Nepal%20is%20expected,been%20identified%20as%20 economically%20viable

441 “Power Sector at a Glance ALL INDIA”, Government of India, Ministry of Power. Retrieved from: https://powermin.gov.in/en/content/power-sectorglance-all-india

442 “China’s installed renewable energy capacity up in Jan-July”, The State Council Information , The People’s Republic of China, Retrieved from: http://english.scio.gov. cn/pressroom/2023-08/21/content_105640610.htm

443 “Nepal to export 10000 MW power to India in the next 10 years: Prime Minister Prachanda “, The Economic Times, Retrieved from: https://economictimes. indiatimes.com/industry/energy/power/nepal-toexport-10000-mw-power-to-india-in-next-10-yearsprime-minister-prachanda/articleshow/102841639. cms?from=mdr

444 “India Cabinet okays plan to buy Nepal’s 10,000 MW power”, The Kathmandu Post, Accessed on: 28 September 2023, Retrieved from: https://kathmandupost. com/national/2023/09/06/india-cabinet-okays-plan-tobuy-nepal-s-10-000-mw-power

445 “India endorses MoU to purchase 10000 MW power from Nepal in ten years”, The Himalayan Times, Accessed on: 28 September 2023, Retrieved from: https:// thehimalayantimes.com/business/india-endorses-mouto-purchase-10000-mw-power-from-nepal-in-ten-years

446 “India, Nepal development partnership has gathered further momentum: Embassy in Kathmandu”, Times of India, accessed on: 28 September 2023, Retrieved from: https://timesofindia.indiatimes.com/

india/india-nepal-development-partnership-hasgathered-further-momentum-embassy-in-kathmandu/ articleshow/103887588.cms?from=mdr

447 “Nepal to sell 200MW under 5-year deal”, The Kathmandu Post, accessed on: 28 September 23, retrieved from: https://timesofindia.indiatimes. com/india/india-nepal-development-partnership-hasgathered-further-momentum-embassy-in-kathmandu/ articleshow/103887588.cms?from=mdr

448 “New Deal opens door for another 300MW electricity to India via Bihar”, The Kathmandu Post, accessed on: 28 September 2023, retrieved from: https:// kathmandupost.com/national/2023/07/13/new-dealopens-door-for-export-of-another-300mw-electricity-toindia-via-bihar

449 “Tripartite agreement soon to supply electricity from Nepal to Bangladesh via India”, Economic Times, accessed on: 28 September 2023, retrieved from: https:// economictimes.indiatimes.com/industry/energy/power/ tripartite-agreement-soon-to-supply-electricity-fromnepal-to-bangladesh-via-india/articleshow/102811174. cms?from=mdr

450 “Draft bill on granting power trading license to private sector reaches cabinet”, The Kathmandu Post, accessed on: 28 September 2023, retrieved from: https:// kathmandupost.com/national/2023/08/09/draft-bill-ongranting-power-trading-licence-to-private-sector-reachescabinet

451 “Hydropower Development in Nepal”, Deepak Adhikari, Nepal Rastra Bank (NRB), Economic Review, retrieved from: https://www.google.com/ search?client=opera-gx&q=Nepal+hydropower+developm ent&sourceid=opera&ie=UTF-8&oe=UTF-8

452 “How sustainable is hydropower development in Nepal?”, myRepublica, accessed on: September 28, 2023, retrieved from: https://myrepublica.nagariknetwork.com/ news/how-sustainable-is-hydropower-development-innepal/

453 Nepal Electricity Authority Annual Report 2023, accessed on: 28 September 2023, retrieved from: https:// www.nea.org.np/admin/assets/uploads/supportive_docs/ NEA_Annual_Report_2023.pdf

454 “Nepal’s electricity production reaches 2,689.83 MW; capacity to cross 2800 MW by this FY end”, myRepublica, accessed on: 28 September 2023, retrieved from: https://myrepublica.nagariknetwork.com/news/ nepal-s-electricity-production-becomes-2-689-83-mwcapacity-to-cross-2-800-mw-by-this-fy-end/

455 “228 Hydropower Projects Under Construction

in Nepal; To Generate 8434 MW Electricity”, Investopaper, accessed on: 17 May 2023, retrieved from: https:// www.investopaper.com/news/hydropower-projectswith-construction-license/#:~:text=In%20total%2C%20 these%20hydropower%20are,MW%2C%20and%20 285%20MW%20respectively.

456 Nepal Electricity Authority Annual Report 2023, accessed on: 29 September 2023, retrieved from: https:// www.nea.org.np/admin/assets/uploads/supportive_docs/ NEA_Annual_Report_2023.pdf

457 “Implementation of Nepal-India deals reached during PM Dahal’s visit gains momentum”, myRepublica, accessed on: 29 September 2023, retrieved from: https:// myrepublica.nagariknetwork.com/news/implementationof-nepal-india-deals-reached-during-pm-dahal-s-visitgains-momentum/

458 “India Cabinet okays plan to buy Nepal’s 10000 MW power”, The Kathmandu post, accessed on: 29 September 2023, retrieved form: https://myrepublica. nagariknetwork.com/news/implementation-of-nepalindia-deals-reached-during-pm-dahal-s-visit-gainsmomentum/

459 “Nepal, Bangladesh agree on energy cooperation, beginning with 50MW power trade”, The Kathmandu Post, accessed on: 29 September 2023, retrieved from: https://kathmandupost.com/ national/2022/08/26/nepal-bangladesh-agree-on-energycooperation-beginning-with-50mw-power-trade

460 “Preliminary agreement on supplying power from Nepal to Bangladesh, 40 MW to be exported in first phase”,myRepublica, accessed on: 29 September 2023, retrieved from: https://myrepublica.nagariknetwork. com/news/preliminary-agreement-on-supplying-powerfrom-nepal-to-bangladesh-40mw-to-be-exported-in-firstphase/

461 Energy, South Asia Subregional Economic Cooperation, retrieved from: https://www.sasec.asia/ index.php?page=energy#:~:text=Key%20Facts,Bhutan%20 and%20Nepal%20have%20hydropower

462 “Nepal, Bangladesh to discuss two options for dedicated cross-border transmission lines”, The Kathmandu Post, accessed on: 29 September 2023, retrieved from: https://kathmandupost.com/ national/2023/05/15/nepal-bangladesh-to-discuss-twooptions-for-dedicated-cross-border-transmission-lines