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Deputy Chief of Mission (DCM) of the Chinese embassy in Nepal Wang Shin held a meeting with Rastriya Prajatantra Party Chairman Rajendra Lingden on Saturday. During the meeting, DCM Wang Shin discussed power sharing with Chairman Lingden. According to a source, Wang Shin expressed his concern about the role of Rastriya Prajatantra Party in the to be formed new government. The source claimed that China wants to expand relations with RPP in the coming days. The RPP, which has long been advocating for monarchy, won 14 seats in the House of Representatives election.  

CPN-UML Chairman KP Sharma Oli and Rastriya Swatantra Party Chairman Rabi Lamichhane held a meeting at the latter’s residence in Balkot, Bhaktapur on Friday. During the meeting, the duo discussed power sharing mechanisms among other issues. “The two leaders discussed the process of forming a new government among other issues on Friday night,” a Balkot source said. The UML, which emerged as the second largest party from the recently held elections, has been holding consultations with various parties to discuss the process of government formation. Oli and Lamichhane held the meeting as part of the same, the source said. “The ruling coalition has also taken ahead the process to form a new government. As the second largest party, we also deserve to lead the government. That is why, we are intensifying meetings with leaders of various other political parties,” a party leader said. The UML won 78 seats and the Rastriya Swatantra Party secured 20 seats in the November 20 elections.  

Luka Modric high-fived and embraced his Croatia teammates after what was likely the midfield great’s last appearance at the World Cup.

Some of the Morocco players sank to their knees in dismay, while others went in search of the referee to complain.

So much for this being a meaningless game.

Croatia ended up taking third place at the World Cup after a 2-1 win over Morocco at Khalifa International Stadium on Saturday, Associated Press reported.

“It is as if we have won the gold,” said Croatia coach Zlatko Dalić, whose team lost in the final four years ago.

To some, the third-place match is considered to be little more than an exhibition between two losing semifinalists. The day before the match, Morocco coach Walid Regragui described it as a “booby prize.”

However, as the final whistle blew on Morocco’s historic run at the World Cup, the disappointment was clear to see.

So, too, was the delight on Croatian faces.

The Nepal Oil Corporation (NOC) has slashed the prices of petrol, diesel and kerosene by Rs 3 per litre. With this adjustment, petrol will cost Rs 178 per litre while diesel and Kerosene will cost Rs 175 per litre each respectively. According to the state-owned enterprise, it has made an adjustment based on the revised rates forwarded by the Indian Oil Corporation today. However, the prices of cooking gas, aviation fuel remained unchanged.

Serious discussions on government leadership have started with the Election Commission submitting the final results of the Parliamentary election to President Bidya Devi Bhandari. With the process of government formation begins, leaders have started staking claims for the post of prime minister. None of the parties mustered a majority in the recently held elections. How, the leaders of major political parties will hold the leadership of power. The largest party of the Parliament Nepali Congress President Sher Bahadur Deuba has staked claim for the leadership of government. He presented the claim saying that he will lead the government for the last time. Along with Deuba, Ram Chandra Paudel, Gagan Thapa and Shekhar Koirala are also eying the coveted post. Thapa has already said that he will vie for the post of Parliamentary Party leader while Pauel has urged Deuba to help him become the prime minister.  Koirala is also aspiring to become the prime minister. However, it seems very difficult for Thapa, who is also the general secretary of the party, to be elected as the Parliamentary Party leader as Paudel and Koirala are also staking their claims for the top executive post. Similarly, CPN (Maoist Center) Chairman Pushpa Kamal Dahal also waiting for the opportunity to lead the next government. He has intensified meetings with leaders of various political parties to help him in the prime ministerial race. The Maoist supremo has already said that he would work as per the wishes of the people. Chairman KP Sharma Oli is the unanimous candidate for prime minister from the CPN-UML. The party had presented Oli as the prime minister in the election agenda also. Among the claimants, Deuba, Oli and Dahal have already served as the prime minister over and over again. Nepali Congress has become the largest party with 89 seats in the November 20 elections followed by UML with 78 seats. Similarly, CPN (Maoist Center) has secured 32 seats, Rasriya Swatantra Party, Rastriya Prajatantra Party and CPN (Unified Socialist) garnered 20 and 14 and 10 seats respectively. Likewise, Janamat Party, Democratic Socialist Party, Nagarik Unmukti Party won 6, 4, 3 seats respectively. Nepal Workers and Peasants Party and Rastriya Janamorcha Party obtained one seat each and five independent candidates were elected to the lower house of the federal parliament.

With the central bank giving a mid-March deadline for commercial banks to reduce their spread rate, the expectation of the private sector of banks' reducing their interest rates has been belied. The private sector has been putting immense pressure on the government and Nepal Rastra Bank (NRB) to reduce bank interest rates, the central bank and the commercial banks have remained indifferent to the demand of the business community indicating they will not revise interest rates any time soon. The NRB on Wednesday said that banks and financial institutions (BFIs) have to reduce their spread rate from mid-March 2023. Issuing a directive to implement the first quarterly review of monetary policy on Wednesday, the central bank has stated that commercial banks have to maintain a spread rate (the difference between the interest rate on deposits and loans) at 4.2 percent from mid-March and at 4 percent from mid-June. Currently, the spread rate of commercial banks stands at 4.4 percent. The NRB, while unveiling the first quarterly review of monetary policy on November 27, had reduced commercial banks' spread rate to 4 percent. As per NRB's latest directive, development banks and finance companies will have to reduce their spread rates to 4.8 percent from mid-March and 4.6 percent from mid-June. Speaking at a program on Wednesday, NRB Governor Maha Prasad Adhikari reiterated that the higher interest rates are the outcome of the current national and international economic scenarios hinting that the interest rates are unlikely to drop until next month. “The interest rate will automatically be revised if the situation improves,” Adhikari said. Recently, the Nepal Bankers’ Association (NBA) also expressed that the banks will not revise interest rates for the next month despite the easing of liquidity in the banking system. NBA statistics show that the average credit-deposit ratio (CD Ratio) of banks has come down to 86.41 percent, against the mandatory threshold of 90 percent enforced by the NRB allowing banks with additional capacity to provide Rs 198 billion in loans. According to NBA, commercial banks have collected deposits of Rs 95 billion in the past four and a half months while their extension of loans is Rs 58 billion. As a result, the interbank rate has also fallen to 6.86 percent from 8.5 percent. The private sector has been demanding to reduce interest rates soon after the banks hiked lending rates in mid-October. The average interest rate on fixed deposits stood over 12 percent, whereas the lending rate stands as high as 18 percent. Business community leaders say that the exorbitant interest rate amid soaring market prices has taken a heavy toll on the economic activities in the country. Shekhar Golchha, President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said the apathy shown by the government and the NRB to resolve the current economic problems will lead the economy deeper into recession. A survey report recently conducted by the FNCCI also shows that the consumption of everyday essentials has fallen by 18 percent, the transaction of electrical appliances has been down by 55 percent, that of automobiles by 75 percent, restaurant business by 20 percent and real estate business by 48 percent. After their plea remains unheard, the business community has launched protests against NRB’s policy to tighten the money supply. The umbrella organizations including the NADA Automobiles Association of Nepal and Morang Merchant Association have scheduled protest programs. A high-ranking official at the NMB Bank said the banks are in wait-and-watch mode to revise interest rates. “At present, banks have some cushion of liquidity due to the decline in demand for loans. We are waiting for the next month to fully ascertain our liquidity position before we revise the interest rate,” said the banker on condition of anonymity. Bankers say they are closely watching factors that can again cause a big stress in liquidity in the banking system. According to them, the business refinancing facility provided by the NRB will mature by mid-January 2023, after which around Rs 65 billion is likely to be wiped out of the country’s banking system. Similarly, the extension of the arrangement to allow banks to consider up to 80 percent of the reserve funds of local governments in their deposits will expire by mid-January. Likewise, the taxpayers will have to settle their tax dues by the end of the second quarter. “These factors are likely to put a big pressure on the liquidity of banks,” the source said.

The price of gold has dropped by Rs 400 per tola in the domestic market on Friday. According to the Federation of Nepal Gold and Silver Dealers’ Association, the yellow bullion is being traded at Rs 99, 900 per tola today. It was traded at Rs 100, 300 per tola on Thursday. Meanwhile, tejabi gold is being traded at Rs 99, 400 per tola today. Similarly, the price of silver has decreased by Rs 10 and is being traded at Rs 1, 370 per tola.

Sujeev Shakya is the founder CEO of beed, an international management consulting and financial advisory firm that works in Bhutan, Cambodia, Nepal, Rwanda, and the United States.  He also heads the Nepal Economic Forum, one of Nepal’s leading economic and policy research institutions. Shakya has over 25 years of experience working in diverse sectors, and he has also authored four books and worked as business and policy advisor. ApEx caught up with him to talk about the priorities of the new government, current economic issues, and Nepali private sector. Excerpts: Political parties are currently busy trying to form a new government. What is your expectation from the new government? As more new and young faces have come into the parliament from both existing and new political parties, it would increase the accountability of the government. I expect the new government to be more accountable. For common people, the government is the face that provides citizenship, birth, and death certificates. As a facilitator, the government should improve service delivery. It is one of the challenging parts, as the government is often criticized for not providing effective and efficient services. Digitization of government services, which was expected to ease the process, has in fact created more complications. The new parliamentarians, whether in the government or in the opposition, should regularly question bureaucrats and government institutions. If we look at the victory of Balen Shah and Harka Sampang in the local elections, it was not due to the big agendas. They won the people's confidence by advocating for small things. Consider the migrant workers. All they need is the right documentation, timely passport services and hassles-free services in labor and immigration departments. These aren’t big expectations. They are small things that can make Nepalis happy. There are often discourses about neighboring countries' policies such as Belt and Road Initiative (BRI), and Millennium Challenge Corporation (MCC), but I don't know how these things connect with a layperson. For me, citizen service is the only thing that matters. Among the newly elected parliamentarians, there are businesspersons too. Don't you think it raises the issue of conflict of interest? Individuals from business backgrounds going into politics is not a new thing. It is normal and a global trend. For example, the United States had a big business tycoon becoming the president of the country. What we have to look at is that in a democracy we have to rely on three key pillars: legislature, executive, and judiciary. And within these pillars, a system of accountability is built. As long as we ensure the accountability part is not compromised, it would take its own corrective action. In our previous parliaments and constituent assemblies, we have seen businesspersons not only as MPs but ministers too. Some even headed the parliamentary committees. What we need is think tanks and policy institutions that could help parliamentarians make, amend and implement better laws and policies. So, if we keep the cycle of accountability and fundamentals of democracy intact, I think, we don't have to worry much. Because, when a businessperson becomes a minister, he or she is automatically under public scrutiny, especially in the age of social media. Let's not also forget, whether business people are in the parliament or outside, they have over the past 30 years been able to influence policy making, influence legislation, and budget. You don't have to be in the parliament to influence the government and its decision-making. As we wait for the new government, the country's private sector has upped its ante against the government and the central bank. They say the current environment is not conducive for business because of government policies. Do you agree with them? I don't think so. The private sector in Nepal is used to super profits. And, they are not happy now, as those profits that they are used to are not happening. They want society to continuously consume. But there have been impacts on consumption post-covid and post-Russia-Ukraine war. If a customer is not in a situation to buy a car, a car dealer can't force him to buy one. As far as the interest rate is concerned, everyone in Nepal has invested in bank shares and they expect high dividends from banks. But banks can only distribute high dividends if they can charge high interests. All the businesspeople are bank promoters, who want high profits, and the banks have no option but to up the interest spread rates. Be it multinational banks or low CAMEL-rating banks, all of them charge the same interest rate, what's the difference then? There is no incentive for efficiency in banks. It is basically a syndicated cartelized environment. But who is running the banks? The same businessmen who are in the street protest are also the shareholders and promoters of the banks. Given the mandate of the election, it seems we will have a coalition government in place. Where should the new government focus? The focus has to be on the economy. Everyone is talking about geopolitics, foreign policy and all, but the foremost thing is you need to create jobs. Around half a million Nepali youths come to market seeking jobs every year, but we are only creating jobs for 50,000-70,000 annually. Everybody else is unemployed and leaving Nepal. Even if they are leaving, we can at least equip them with skills. But that's not happening. For the business environment, there has to be a reform. The parliament has not functioned effectively since July 2019. Fifty-seven legislations are still pending. We need legislation so that Nepalis can invest outside. Today, there are 800 IT companies in the export of IT services. If we allow them to open business development offices in Dubai or in Singapore, they are going to do wonders. So, we need to think from a globalized perspective, attract more foreign investments, and not fall into cartelizing behavior. We also need to ensure that we get some big projects that utilize a lot of electricity. There has to be some large-scale transformational stuff. This is a country where an MoU of $25m is signed, and it becomes the headline news. Nepal is a $40bn economy. So, we need to scale up the size of deals and investments. Our political structure is designed in such a way that foreign investors do not pay anything to the political parties.  So, how do political parties sustain themselves? That is one question. The local and parliamentary elections have given a very interesting indication that you really don't need money to win the election now. Why would people pay political parties? They would rather fund an independent and get him/her into the parliament. How do you see the future of Nepal? I am always optimistic about the future of Nepal in the long run. I had thought that the political transformation that happened in 2022 would only happen in 2027. So, I am happy that it happened five years earlier. If you look at what rides the Nepali economy, the first thing is remittance. Remittance will not decrease because people are leaving. But it’s not like the remittance only comes from Gulf countries. Half a million people in the US, 200,000 in Australia and as many in the UK also contribute to remittance. Countries like Japan, and Israel are also opening up for seasonal workers. Our economy is also based on social spending such as weddings, religious works, festivals, birthdays, anniversaries, and all. I guess our per capita social spending is higher than that of Western countries. Look at the money being spent on weddings, bachelor parties, and wedding photography. They have become a big business. Until these social spendings declines, I don't see our economy going down. Like in other countries, our consumption was not impacted by the Covid-19 pandemic either. Land transactions are also keeping our economy afloat. Nepalis have never stopped buying land. There is a limited supply of land, so the price of property is very high. If someone bought a piece of land 20 years ago, he/she will make more money than from investing in stocks. So, these three drivers have kept the Nepali economy going. And I don't see it changing anytime soon. You have been very vocal against the Nepali private sector, terming them 'rent seekers'. Have they changed their character over the years?  If you look at traditional sectors, then I don't see them changing their character. They are still cartelized. But there are no cartels in the new sectors like ICT. We are seeing some amazing innovations in these sectors. The likes of Burger House have disrupted the eateries sector. They are not a part of cartels and associations. And, we will see more disruption in the future. In the financial services sector, more private equity funds are coming. And these private equity companies would demand a certain set of behavior from their investees. A company like F1 Soft has been able to do so much without being part of any association or cartel. That's where I see the private sector moving. And also, it is a generational transformation, as the newer generation thinks differently than their predecessors. The nexus between business and politics have been more rampant in the last few years. It was more visible in the last one year as the federal budget drafting process was tampered to suit certain business groups and licenses were issued to those close to the power. How dangerous are these trends?  I think it’s a global phenomenon. Large oil companies in the US can make or break the government. If we look at the most efficient democracies, the nexus between power and business is always there. But what is important is that when there is a conflict of interest, the media should bring out the issue. In Nepal, we have seen people very close to power, be it in the royal regime or in the democratic regime, taking advantage. But if they do not reform and become professional, they will not sustain. People and the groups that have misused the power have grown very fast, but also fallen at the same rate. Also, if you are an influential businessperson, politicians will come to you. That's a natural process and it is not a one-way relationship. There should be enough mechanisms in place to curb these issues. There must be community standards on what is the acceptable relationship between politicians and businesspeople.