NRB UNVEILS MONETARY POLICY
Nepal Rastra Bank (NRB) unveiled the Monetary Policy for fiscal year 2007/08, on Monday, relaxing the limit for long-term and high volume loan investment for commercial banks.
Earlier, the commercial banks could only invest up to 25 percent of their primary capital on such projects. The new policy has relaxed this provision without fixing the actual limit or project duration. The banks had been complaining that they could not invest in long term projects due to earlier provision. The new provision would ease banks’ investment in hydropower and infrastructure projects.
The Monetary Policy, as in the past, has stressed on attaining price stability and external stability. It envisages 5.5 percent inflation rate and aims to achieve Rs 8 billion as Balance of Payment surplus. Likewise, the policy further eases the foreign exchange regime.
Acting governor of the central bank, Krishna Bahadur Manandhar said it focuses on managing the liquidity and stabilizing the overall economy. The policy has projected the gross domestic product (GDP) to grow by 4.5 to five percent in 2007-08. However, NRB has stated that the set growth rate is achievable only if weather favored agricultural production and political stability prevailed in the country.
Like in the past, the bank has taken more steps to liberalize the foreign exchange regime. The policy has added a new mechanism making imports possible using documents against payment in addition to the existing letter of credit (LoC) or draft/TT facilities.
Now on, traders can import raw materials and intermediate products from India against payment of US dollar. It has also made an arrangement of the exchange facility of $5,000 per individual directly through bank or financial institution for those going abroad under immigrant visa. Stating that the current rate of two percent service charge on purchase of foreign currency is high, the bank has lowered it to one per cent. The ongoing financial reform programs will continue. NRB plans to establish an Industrial Reconstruction Fund of Rs 2 billion to support sick industries. The central bank is implementing a ‘Scripless Securities Settlement System’, which will reduce paper work and procedural hassles free transaction of treasury bills, development bonds and debentures.
HOUSE ASKS GOVT TO GET FREE POWER
The parliamentary Natural Resource Committee has directed the government to obtain free power (10 percent) from the West Seti hydropower project.
Minister of State for Water Resources Gyanendra Bahadur Karki has said that the government will abide by the instruction by the parliamentary committee to obtain free power from the West Seti project.
Talking to BBC Nepali Service, Thursday (July 19), Karki said he was confident that the Snowy Mountain Engineering Corporation (SMEC), which is developing the 750-MW strong mega hydroproject, will be willing to accept this demand. "I think they will be positive towards this demand," Karki said.
Earlier, the Parliament Natural Resource Committee had approved the decision of the government to award the 750-MW strong West Seti hydropower project to Snowy Mountain Engineering Corporation (SMEC) opening the door for starting construction of the mega power project, which is designed to export power to India on commercial basis.
However, the parliamentary committee had instructed the government to get 10 percent free power from the West Seti project. As per the understanding, the SMEC had agreed to give either 10 percent free power or equivalent amount of money to the government. The SMEC had said it could build a separate 75 MW project if Nepal wants free power since it finds there will be technical difficulty in providing 10 percent power from the West Seti project itself due to lack of transmission facilities in the project site, which is located in Doti district.
The parliamentary committee, however, has instructed the government to get the free power from the West Seti project itself instead of equivalent amount of money.
"The committee has asked the government to hold necessary talks with concerned parties to obtain free power from the project instead of equivalent royalty," Ram Sharan Ghimire, Secretary at the committee, told media.
Ghimire added that the committee has also instructed the government not to award both the Upper Karnali (300MW) and Arun III (402 MW) to the same Indian company, GMR. Earlier, the taskforce headed by former finance secretary Bhanu Acharya had identified GMR's proposal as most attractive for both the projects
The construction of West Seti was earlier expected to begin later this year.
