UPDATE OF BIG THREE MEET
Kathmandu, 20 Nov.: A meeting of the Big Three Sunday agreed to form a seven-member state restructuring commission by Monday with the summit of the UCPN (Maoist), NC and UML will be held again.
The meeting concluded with an agreement to appoint members by Monday.
The top three parties also agreed to invite a front of Madeshbadi parties in government to join the talks.
The meeting authorized Prime Minister Baburam Bhattarai to hold dialogue with the Madeshbadi front and invite them for talks Monday.
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NEW MUSK DEER SPECIES FOUND IN MANANG
Kathmandu, 20 Nov.: A two-member research team claimed to have discovered a new species of the endangered musk deer (Moschus chrysogaster), locally known as ‘Kasturi Mriga’, in the mountainous area of the Annapurna Conservation Area Programme (ACAP) about a week ago, shIVA Sharma writes in The Kathmandu Post from Kaski..
Conservation Officer Paras Bikram Singh and Ranger Uttam Chapagain at the ACAP, who have been conducting research in Manang and Mustang districts for the past two years, discovered the new deer species inside the jungle located between Khangsar and Pakkharka in Manang.
Singh claimed that the recently spotted deer is a new species of the musk deer found in Nepal. So far, Nepal is home for three different species of the musk deer—golden-necked, white-necked and black musk deer.
“The new species, which has two distinct strips on the neck and looks similar to Siberian musk deer, is not recorded in the country so far,” said Singh. “We will conduct a DNA test of the new deer species to verify our claim.”
The musk deer, one of six deer species found in Nepal, belongs to the Moschidae family. It is found in Kanchenjunga and Manaslu conservation areas and Sagarmatha, Langtang, Shey Phoksundo, Rara, Khaptad and Makalu Barun national parks, besides the ACAP area, in Nepal.
According to the statistics provided by the Department of National Parks and Wildlife Conservation, around 3,000 musk deer are found in Nepal.
In Asia, it is also found in Afghanistan, Bhutan, China, India, Myanmar and Pakistan.
The musk deer are hunted for musk, a powdery substance which the male musk deer secretes from a gland in the abdomen. This is a highly valued item for perfumes and medicines. Chinese use the musk as a folk medicine and believe it has aphrodisiac properties.
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NRB SCRAPS REFINANCING FACILITIES
Kathmandu, 20 Nov.: With the country’s banking system enjoying surplus liquidity for the last few months, the Nepal Rastra Bank (NRB) has scrapped all refinancing facilities, except ‘the lender of last resort’ policy, The Kathmandu Post reports.
Commercial banks are currently witnessing Rs 40 billion worth of surplus liquidity, thanks to increased deposit collection and sluggish lending.
The central bank had opened multiple refinancing windows, including normal and special refinancing and the lender of last resort facility, to ease the acute liquidity crunch that banks faced a few months ago. “With the improved liquidity situation, we felt there is no necessity of multiple refinancing instruments,” said Bhaskarmani Gnawali, spokesperson for NRB. “Now, if any BFI faces acute liquidity crunch, it will be given funds through the lender of last resort option.”
Under the lender of last resort policy, the central bank provides refinancing with certain strict conditions. Only those facing acute liquidity crunch get liquidity under this window.
Under the special refinancing, banks and financial institutions (BFIs) can get refinancing of up to 60 percent of their core capital for 120 days. They can get refinancing of up to 80 percent of the good loans put up as collateral. As per the usual refinancing measure, they can get refinancing of up to 40 percent of the core capital for six months.
Several BFIs availed these central bank facilities. More than a dozen of financial institutions (FIs) had applied to the Nepal Rastra Bank (NRB) for cash under the special refinancing measure amid protracted liquidity crunch last financial year. They had rushed to NRB to prevent any possible liquidity shortage due to large withdrawals. A total of 14 development banks and finance companies had applied to the central bank for refinancing by the second week of June in the last fiscal year and six commercial banks had applied for the usual refinancing facility, according to NRB.
Last year, the central bank rescued Vibor Bikas Bank by providing liquidity under the lender of last resort policy. The NRB, in the second week of June, 2011, had decided to provide up to Rs 500 million to Vibor. After it ran out of money following withdrawals by institutional depositors, Vibor had knocked on the central bank door, seeking rescue measures—either by taking over the management or by injecting liquidity.
Now, with the surge in liquidity, bankers have demanded that the central bank issue reverse repo to absorb the excess liquidity with them. Banks have also started to slash interest rates.
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IMF ASKS NEPAL TO END VAT EXEMPTIONS
Kathmandu, 20 Nov.: The International Monetary Fund (IMF) has urged Nepal to stop providing value added tax (VAT) exemptions, saying that they erode the tax base and are not always effective in lowering tax burden of intended beneficiaries, The Kathmandu Post writes..
The global monetary advisory body has categorically told the government that Nepal should end VAT exemptions on electricity and cooperatives and agriculture companies having turnover above the presumptive tax threshold.
“This could yield revenue gains by 0.7 percent of GDP,” the IMF said in its latest report on Nepal. It has also urged reforms in income tax incentives by increasing revenue productivity. The lender said the measures could be conditioning tax holidays and rebates on investment, expiring tax rebates earlier and increased use of investment tax allowance. “These measures could yield revenue gains up to 1.5 percent of GDP,” says the IMF.
According to the report, tax holidays and tax rebates in Nepal tend to favour short-run projects and are likely to lead to tax avoidance. Given the government providing VAT exemptions in areas of social benefits, the IMF suggested that such exemptions should not be applied for the purpose of social benefits, because they are not guaranteed to be reflected in the final product price. “When the benefits take place, they go proportionally more to those who spend more.”
The main objective of tax policy in Nepal has been to promote investment, industrialisation and export. Economic advisor to the Prime Minister, Rameshwor Khanal, also said unnecessary and unconditional tax incentives are not good for the country as they cause revenue losses. “Incentives should be given to the targeted people and region such as Karnali,” said the former finance secretary.
The IMF said Nepal’s tax incentives could be used widely and they are not conditional on outcomes. It also outlined some weaknesses in incentives offered to a few areas. First, tax holiday time horizons seem slightly longer, and second, tax rebates which appear indefinite in Nepal compared to other countries, which is worrisome, it said. Third, Nepal is poor in targeted investment allowance, and fourth, exemption on VAT and customs here seems more generous than in neighbouring countries, The IMF said, adding that excessive exemption and tax incentives lead to a low total tax rate.
The IMF termed Nepal’s the import-based revenue collection system ‘unsustainable’. “If import growth moderates in line with a more sustainable balance of payments position, and tariff rates decline with trade agreements, this revenue structure will be unlikely to generate sustainable revenue growth,” it said.
Import related indirect tax revenues make up close to 50 percent of Nepal’s tax revenue.
The government failed to realise the targeted revenue last fiscal year due to slow import growth, with the collection standing at Rs 200 billion against the target of Rs 216 billion.
Nepal has also made commitment to continue to reduce its tariff regime to the World Trade Organization, and other regional trade agreements, including South Asian Free Trade Agreement (SAFTA), are also oriented to reduce the tariff.
According to IMF, Nepal’s tax revenue against GDP is low among most of the low income countries (LICs) despite its good progress in revenue administration. As of 2010, Nepal’s tax revenue against GDP stands at 13.2 percent, against LICs’ average of 15.2 percent.
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SEPT. QUAKE DAMAGE BILL RS. 5 BILLION
Kathmandu, 20 Nov.: Property worth Rs 5 billion was damaged by the September 18 quake, the Ministry of Physical Planning and Works said today [Saturday], Thhe Himalayan Times reports .
The ministry, which has finished assessing the extent of the damage caused by the temblor, said it will need Rs 1.8 billion to carry out reconstruction work.
Property, including public and private buildings, was damaged mainly in the Eastern Development Region of the country by the 6.9 magnitude temblor, which claimed seven lives.
The government has already distributed immediate relief packages. “We have begun reconstructing public and private buildings,” said Tulasi Prasad Sitaula, secretary at the ministry. “Reconstruction will be completed within two years,” he added. “A panel working on reconstruction met for the first time on Thursday.”
The ministry has decided to demand Rs 1.8 billion from the Ministry of Finance for reconstruction work. “Around Rs 800 million will be necessary to reconstruct government buildings, mainly schools. An additional Rs 1 billion will be disbursed as soft loan or as grant to reconstruct private property,” he said. “Modalities for grants and soft loans are yet to be finalised.”
The government is considering a proposal to spend Rs 150 million to run an awareness campaign for construction workers, the Ministry of Physical Planning and Works said.
“They will be taught how to build quake-resistant buildings and what to do during quakes,” said Sitaula. “As soon as the Ministry of Finance allocates budget, reconstruction work will begin.”
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