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The Rasuwagadhi-Kerung border point, one of the key trade routes between Nepal and China, has been closed till February 3. Rasuwa Customs Office Chief Narayan Prasad Bhandari said that China has closed the border point till February 3 citing Chinese New Year. According to Bhandari, a total of 39 containers loaded goods have been exported to China from Nepal in a month. “So far 39 containers laden with goods worth around Rs 60 million have been exported to China from Nepal,” he said, adding, “Everyday, 14 containers are coming to Nepal from China, that too has been closed from today.” Earlier, China had closed the Rasuwagadhi-Kerung border point for a long time, throwing local traders out of jobs. The border point, which was closed following the Covid-19 pandemic, was opened on December 28, but there is no significant progress in the business. The trade between Nepal and China is yet to come on track. The 2015 devastating Gorkha earthquake and the Covid-19 pandemic that spread from China three years ago have badly affected the trade between the two countries. Tatopani of Sindhupalchok and Rasuwagadhi of Rasuwa, two border points which were in operation for trade between the two countries, have not returned to normalcy. ALSO READ: Despite reopening of border, restrictions still hinder Nepal’s exports to China According to the statistics of the Customs Department, the annual foreign trade between the two countries is more than Rs 2.5 billion in the normal state. But, the two customs offices—Tatopani and Rasuwagadhi—which are connected to trade with China have been very poor in recent years. Tatopani Customs Office Chief Dayananda KC said that though Nepali consulate in Lhasa has been taking initiative to open the export, the date has not been fixed yet. At one time, 80 to 85 staffers used to be deployed to operate the Tatopani Customs Office. Now, there are only 14. China has also removed its customs office, saying that the place was unsafe for human settlement.

The government has not been able to increase capital expenditure. Despite repeated attempts, no government over the years has been able to increase expenditure in development works. Additionally, the government has not been able to adopt any measures to boost capital expenditure, which is crucial for economic prosperity. Former Vice Chairman of National Planning Commission (NPC) and Member of Bagmati Province Assembly, Dinesh Chandra Devkota, suggests that the inability to spend capital is due to a structural fault. "There needs to be a radical change in the structure. We need to break away from the trend of not being able to execute but only adding more work," said Devkota. The shift to federalism brought hope and expectations of increased capital expenditure and rapid development for the country. However, experts claim that the post-federal government has failed to take any action to increase capital expenditure, despite the promise of development under the new system. Devkota argues that even though the country has transitioned to federalism, the central government has not fully decentralized the power of development and construction to the local and state governments as outlined in the constitution. “Even small-scale projects are handled by the center. The central government continues to retain control and does not delegate budget or staff to the provincial and local levels,” he said, adding that it will be impossible to increase capital expenditure without increasing capacity by delegating staff and budget to lower levels. Budgets are allocated without any proper planning or preparing a detailed project report (DPR). This has resulted in a lack of capital expenditure. Additionally, issues with land acquisition further hinders the ability to increase spending. The government's capital expenditure has been only 14.05% of the target in the first six months of the current fiscal year 2022/23. Till the end of January, the government has managed to spend Rs 53.45 billion. The inability to improve capital expenditure has resulted in frequent halting of development and construction projects. It has been observed that the government tends to spend a majority of the capital budget at the end of the financial year. The expenditure incurred at this time leads to poor quality works. According to the Financial Comptroller General Office (FCGO), capital expenditure was only 13.44%, or Rs 50.80 billion, in the first half of the previous fiscal year. Since the adoption of the new constitution, no government has been able to prioritize increasing capital expenditure. There is very little spending in the first six months of the financial year, and often the entire allocated budget is not spent by the end of the year. Only 14.4% of the capital budget was spent in the first six months of 2020/22. Data shows capital expenditure over the last six years has been extremely disappointing. Economists are expressing concerns that the development budget is not being spent in a timely manner and that it is contributing to the current economic crisis. In the fiscal year 2021/22, the government could spend only Rs 227.73 billion out of the Rs 352.91 billion allocated for capital expenditure. In 2020/21, the government allocated a capital budget of Rs 408 billion, but only Rs 189 billion, or 46.34%, was spent. In 2019/20, out of the Rs 314 billion capital budget, Rs 241.56 billion, or 76.93%, was spent. In 2018/19, the government managed to spend Rs 270.71 billion of the allocated Rs 335.16 billion. This was nearly 81% of the targeted capital spending. The government has allocated a budget of Rs 380.38 billion for development spending for the current fiscal year. It is estimated that capital spending will suffer this year as well. Economists argue that capital spending is not picking up the failure to prepare a work calendar. Even though the Ministry of Finance has been giving authorization for spending on the first day of the fiscal year i.e. mid-July, the concerned ministries and departments have been found deploying the budget rather late. relevant Ministries and Departments sent it to the field late, but could not capitalize on it. Devkota points out that the budget is allocated even before completing the feasibility study. This also affects spending, he added. Economist Dr Dilliraj Khanal sees problems in project preparation. "There are problems with budgeting, allocation of resources, planning, and project sector policy formulation," said Khanal. "The expenditure will not increase until the problem of sectoral priorities and targets is solved," he added. The problem in project execution still persists even though there is a gap of 45 days between allocation and authorization. The government announces fiscal budget at May-end and gives spending authorization from mid-July. Earlier, the budget would be released rather late. These days, however, the budget can be released from the first day of the fiscal year. In order to improve expenditure, Dr Khanal underlined the need to prepare an action plan by setting targets, reviewing daily performance, and putting in place work performance indicators. The slow public spending is due to a lack of transparency in expenditure, said Khanal. "Construction entrepreneurs are showing negligence as wrongdoers are never punished. Unaccounted expenditure is rising, and so is the trend of abusing resources. There is a lack of check and balance,” he said, adding that if the budget is implemented with an emphasis on good governance, capital expenditure will increase.  

The price of gold has increased by Rs 700 per tola in the domestic market on Friday. According to the Federation of Nepal Gold and Silver Dealers’ Association, the precious yellow metal is being traded at Rs 105, 200 per tola today. The gold was traded at Rs 104, 500 per tola on Thursday. Meanwhile, tejabi gold is being traded at Rs 104, 700 per tola. Similarly, the price of silver has increased by Rs 20 and is being traded at Rs 1,375 per tola today.  

The prolonged liquidity crunch that banks and financial institutions (BFIs) grappled with in the last fiscal year has affected their credit flow to the industrial sector. The Nepal Rastra Bank (NRB) in a new report has said the total loans of BFIs to the industrial sector slumped by 8.5 percent in FY 2021/22. The credit flow was also affected as interest rates surged due to the shortage of loanable funds in the financial system making it difficult for the private sector to borrow from BFIs.  According to the new report released by NRB titled 'Economic Activities Report (Integrated) 2021/22', BFIs disbursed a total of Rs 1251.96 billion in loans to the industrial sector in the last fiscal year which was Rs 1367.75 billion in FY 2020/21. While BFIs’ credit to the industrial sector declined, the extension of loans to the services sector increased by 13.7 percent in the last fiscal year. According to NRB, BFIs disbursed Rs 1857.14 billion in loans to the service sector in FY 2021/22. Of the total loans disbursed by the BFIs in the last fiscal year, 39.6 percent went to the services sector and 26.7 percent to the industrial sector. Of the total industrial loans, 1.2 percent was disbursed to mining industry, 19.6 percent to agriculture, forestry, and beverage industry, 40 percent to non-food product manufacturing industry, 13.9 percent to construction industry, 19.7 percent to electricity, gas, and water industry and 5.6 percent to metal product, machinery, and electronics industry. According to the report, Bagmati Province had the highest loan disbursement of Rs 842.66 billion while Karnali Province had the lowest disbursement of Rs 3.67 billion. The Bagmati Province's share in industrial loans is a whopping 67.3 percent. According to the report, the share of Province 1 is 9.7 percent, Madhesh Province is 8.2 percent, Gandaki Province is 3 percent, Lumbini Province is 9.5 percent, Karnali Province is 0.3 percent and Sudur Paschim Province is 2.1 percent. The report shows, of the total loans disbursed to the services sector, 51.6 percent went to wholesale and retail, followed by 11.8 percent to finance, insurance, and real estate, 10.5 percent to tourism, and 5.5 percent to transport, storage, and communication and 4.2 percent to other services sub-sectors.