Submit your Article

The Federation of Contractors' Associations of Nepal (FCAN) has demanded the government to pay Rs 60bn immediately to the contractors. Making public the 27-point Kathmandu Declaration after its 24th Annual General Meeting, FCAN has said that the government is yet to make the payment of the works that have already been completed. Speaking on the occasion, FCAN President Rabi Singh said the government has not yet cleared the bills presented in the last fiscal year for the completed works. " Contractors are facing financial difficulties as they have not received payments for the works they've already accomplished," he said. He said that the contracts that the state cannot pay immediately should be terminated as per the law and should be taken forward only when the resources are arranged. According to Singh, contractors have not been able to process many contracts since the government has failed to provide the money. "The budgetary operation is currently in deficit. In this situation, it would be better to terminate the contract if the government is not in a position to make payments to the contractors," he said. FCAN is of the view that the government should issue a white paper if it is unable to make payments to the contractors. It has also demanded that the recent price increment should be adjusted in the contract amount. An agreement was reached between the federation and the government on May 26, 2022, to address the excessive and unexpected increase in the price of construction materials. "Based on that agreement, guidelines should be issued for the price adjustment," said FCAN. Similarly, the federation has requested to extend the deadline of the contract projects which are sick. According to FCAN, the works of the projects that are under construction have been affected due to elections, crusher shutdown, excessive royalty collected by the local level at various places, non-availability of project sites due to delay in compensation, payment issue, and liquidity problems, among others. Such projects' deadlines should be extended, said FCAN. Similarly, the federation also demanded that 20 percent of the mobilization advance should be compulsorily provided as stated in the Public Procurement Act. In addition, it has also demanded that the demands of the contractors should be fully addressed while amending the Public Procurement Act.  

With revenue collection continuing to remain poor, the mismatch between government expenditure and income has widened further. Data show the government treasury is in deficit by Rs 156 billion by mid-March 2023. According to the latest statistics of the Financial Comptroller General Office (FCGO), the government's expenditure has reached Rs 779.23 billion by mid-March while the income totaled Rs 622.78 billion. The government has been able to meet only 42.7 percent of the revenue target during the eight months of the current fiscal year while the total expenditure has reached 43.44 percent of the annual target. The dramatic decline in revenue forced the government to trim the federal budget of Rs 1.793 trillion by 14 percent to Rs 1.549 trillion through the mid-term review of the budget. While the recurrent expenditure has increased, development expenditure has remained dismal as before. FCGO data shows that by mid-March, government recurrent expenditure stood at 51.4 percent, capital expenditure at 22.1 percent, and fiscal management at 37.4 percent. The non-improvement in revenue collection has been a worrying factor for the government which is struggling to meet the expenses. In the eight months of the current fiscal year, revenue collection totaled Rs 582.77 billion, of which Rs 526.47 billion is tax revenue and Rs 56.29 is non-tax revenue. The decline in imports has hit the revenue collection hard. According to the Department of Customs (DoC), revenue from imports has declined by 25 percent in the eight months of the current fiscal year compared to the same period of the last fiscal year. DoC collected revenue worth Rs 250.64 billion till mid-March, which was Rs 333 billion a year ago. The country's total imports have declined by 18 percent in the review period. Nepal has imported goods worth Rs 1,057 billion in the eight months of FY 2022/23 compared to Rs 1,308 billion during the same period of FY 2021/22.  

The Nepal Stock Exchange (NEPSE) plunged by 5. 32 points to close at 1,933.31 points on Thursday. Similarly, the sensitive index dropped by 5. 32 points to close at 1,933. 30 points. A total of 3,402,267 unit shares of 258 companies were traded for Rs 1. 14 billion. Meanwhile, Unique Nepal Laghubitta Bittiya Sanstha Limited and Shuvam Power Limited were the top gainers today with their price surging by 10. 00 percent. Likewise, Laxmi Laghubitta Bittiya Sanstha Limited was the top loser with its price dropped by 5. 76 percent. At the end of the day, the total market capitalization stood at Rs 2. 79 trillion.

At a time when microfinance institutions (MFIs) are grappling with multiple problems, the surge in non-performing loans (NPL) has emerged as a major issue for MFIs. A new report of Nepal Rastra Bank (NRB) shows NPLs of MFIs, both wholesale and retail lenders, have increased in the first half of the current fiscal year. According to the report, the NPLs of wholesale lenders have increased to 0.87 percent while those in retail lending have seen their NPLs increase to 4.68 percent in the first six months of the current fiscal year. The NPLs of retail MFIs have gone up by 82.62 percent during the review period while it is 112.19 percent for the wholesale MFIs. The NPLs of four MFIs operating as wholesale lenders have reached 0.87 percent in mid-January 2023 from 0.41 percent in mid-July 2022. Similarly, NPLs of retail MFIs have reached 4.68 percent in mid-January 2023 from 2.56 percent in mid-July 2022. Of the total 64 MFIs operating in Nepal, four are wholesale lending MFIs and the remaining are retail MFIs. The surge in NPL, according to MFIs' promoter is due to the non-recovery of loans. Loan recovery became complicated for MFIs as their primary lenders—micro and small enterprises— have been badly affected by the Covid-19 pandemic and the ongoing economic slowdown. "As MFIs provided loans arbitrarily, they have struggled to recover the loans which resulted in the rise in their NPLs," said Dr. Man BK, former secretary and a microfinance expert. Of late, MFIs have been embroiled in controversies with issues of multiple lending, and high-handedness adopted for loan recovery. There have been cases where borrowers either committed suicide or fled from their residences after failing to pay interest and principal amounts for the money they’ve borrowed from MFIs that have been charged with using coercive measures to recover the debts. Prakash Raj Sharma, president of the Nepal Microfinance Bankers Association said that bad loans have increased due to the recent economic recession. In addition, he said, the recent movement against microfinance and the loan non-payment campaign has also increased NPLs. "Many borrowers of MFIs have been in a protest demanding their loans should be waived and many of them have not paid their loans," said Sharma, "As a result, NPLs have increased." The number of borrowers of MFIs has decreased in the first half of the current fiscal year. The new report released by NRB on 'Off-site Supervision Microfinance Finance' says the number of borrowers has decreased by 43,000 in the first six months of FY 2022/23. There were 3.3 million borrowers till mid-July 2022 which has come down to 3.26 million by mid-January 2023. According to the NRB report, the MFIs' borrowers started to decline from the start of the current fiscal year. While the borrowers' number has decreased, the total number of members of the MFIs increased by 2.19 percent in the first half of FY 2022/23.