Tax Amnesty Scheme by Nepal Finance Act 2077/78 (2020/21)

Central Bank of Nepal unvealed it's Monetary Policy on July 17, 2020 for the Fiscal Year 2020/21. Governor Mr. Maha Prasad Adhikari through the annual monetary policy attempts to mitigate the economic effects of Covid-19, promising to help support businesses get back on their feet. Extension of the loan repayment deadline, refinance facility, grace period extension for infrastructure projects and targeted lending in productive sectors at cheaper rate are the key measures the Nepal Rastra Bank announced in its monetary policy for the fiscal year 2020-21 for relief and revival of various sectors affected by the virus.

OPERATING TARGET & INSTRUMENTS

1. The existing Standing Liquidity Facility (SLF) rate as the upper bound of the Interest Rate Corridor has been kept unchanged at 5% and the deposit collection rate as the lower bound has been reduced to 1%. Further, Repo Rate as the policy rate has been reduced to 3% from 3.5%.
2. The cash reserve ratio to be maintained by the BFIs has been kept unchanged at 3%. CCD Ratio has been increased from 80% to 85%.
3. Statutory Liquidity Ratio (SLR) has been kept unchanged at 10% for commercial banks, 8% for development banks and 7% for finance companies.
4. The bank rate, applied for the purpose of Lender of Last Resort (LOLR) facility, has been kept unchanged at 5%.
5. Long-term repo facility will be provided as per the need to provide additional liquidity required for economic recovery.

ECONOMIC GROWTH

1. According to the preliminary estimate of the Central Bureau of Statistics, the economic growth achieved in the FY 2076/77 was limited to 2.28%. The growth rate of agriculture sector is estimated at 2.6 %, industrial sector at 3.2% and service sector at 2%.
2. In FY 2076/77, it is estimated that the Gross Domestic Savings (% of GDP) was 18.1% and the Gross National Savings to be 46%. In the previous year, these ratios were 19% and 48.9 % respectively.
3. In FY 2076/77, the ratio of GDP to total fixed capital formation is estimated to be 28.1% and GDP to total capital formation to 50.2%. In the previous year, these ratios were 33.7% and 56.6% respectively.
4. Annual point-based consumer price inflation stood at 4.54% in Jestha, 2077. In the eleven months of FY 2076/77, the average consumer price inflation stood at 6.28%. Such inflation was 4.51% in the corresponding period of the previous year.
5. In the eleven months of FY 2076/77, exports increased by 0.2% to Rs. 88 Billion and imports declined by 15.3% to Rs. 1100.81 Billion. The trade deficit improved by 16.4% while the remittance inflow decreased by 3% to Rs. 774.87 Billion during the review period.