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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 metal is being traded at Rs 112, 100 per tola today. It was traded at Rs 112, 500 per tola on Thursday.

Meanwhile, tejabi gold is being traded at Rs 111, 550 per tola. It was traded at Rs 111, 950 per tola.

Similarly, the silver is being traded at Rs 1, 425 per tola.

The Nepal Stock Exchange (NEPSE) gained 44.34 points to close at 2,029.78 points on Thursday.

Similarly, the sensitive index surged by 7.55 points to close at 388. 72 points.

A total of 11,264,309-unit shares of 278 companies were traded for Rs 3. 29 billion.

Meanwhile, National Hydro Power Company Limited, Dibyashwori Hydropower Ltd, Swabhimaan Laghubitta Bittiya Sanstha Limited and Himal Dolakha Hydropower Company Limited were the top gainers today, with its price surging by 10. 00 percent. Likewise, NIBL Growth Fund was the top loser as its price fell by 4.07 percent.

At the end of the day, total market capitalization stood at Rs 3. 07 trillion.

The Asian Development Bank (ADB) has projected that Nepal’s economy is poised to achieve a growth rate of 4.3 percent in the fiscal year 2024. This marks a notable improvement compared to the previous fiscal year, FY 2023, when the country's economic expansion was constrained, registering only a 1.9 percent growth rate.

However, the Manila-based agency has revised its growth forecast for Nepal for 2024. According to the Asian Development Outlook-September 2023, it now anticipates Nepal’s economy to expand by 4.3 percent in 2024, which is a downward revision from its previous forecast. Initially, the Manila-based agency had anticipated a five percent growth rate for Nepal’s economy in 2024. 

In FY 2024, ADB predicts that growth will be subdued due to ongoing restrictive macroeconomic policies, reduced external demand, and delayed monsoon rains. However, ADB acknowledges that the Nepal Rastra Bank's decision to decrease the policy rate is expected to result in reduced commercial interest rates and a boost in economic activities.

“Along with moderation in inflation and comfortable foreign exchange reserves, the Nepal Rastra Bank has adjusted its monetary policy stance by lowering the policy rate by 50 basis points to 6.5 percent, which is expected to help lower commercial interest rates and stimulate economic activities,” reads the Asian Development Outlook-September 2023 report. 

The ADB has acknowledged a notable progress in restoring external balance has been made but warned that fiscal challenges still persist. “Despite some progress in restoring price and external sector stability, fiscal challenges persist. While the estimated fiscal deficit for 2024 is moderate at 2.4 percent of GDP, much lower than the deficit of 6.1 percent in 2023, the actual deficit could be substantially higher if the government does not meet its ambitious revenue target for FY 2024,” said Jan Hansen, ADB Principal Economist for Nepal.

According to ADB, economic activities in 2024 will be curtailed by low domestic and external demand, continued weakness in investor confidence, high-interest rates, and deficient rainfall in June that will likely suppress agricultural output. 

The service sector is expected to perform well with expansions coming from real estate, wholesale and retail trade, and accommodation and food services. Agriculture growth may however decelerate owing to deficient rainfall in June and erratic weather patterns, further aggravated by lumpy skin outbreaks. 

The central bank’s decision to lower the policy rate by 50 basis points to 6.5 percent and relax provisions on working capital loans to revive investor confidence will help stimulate economic activities. 

While the government has prioritized capital budget execution with the issuance of guidelines for its effective implementation, fixed investment will provide the main impetus to growth in 2024, reversing the drag it exerted in 2023. According to ADB, there is little risk to external balance given the comfortable foreign exchange reserves the country now has.

“External risks remain relatively well contained. Considering the recent trends and the central bank’s prudent monetary policy stance, the target of maintaining foreign exchange reserves sufficient to sustain at least seven months of imports seems achievable,” reads the report. “Amid stable remittances and higher imports, the current account deficit is expected to widen to 1.8 percent of GDP as growth revives in FY 2024.”

The ADB report projects annual average inflation to fall to 6.2 percent in 2024 from 7.7 percent in 2023 on subdued oil price increases and a decline in inflation in India, Nepal’s main source of import.

Downside risks to the economic outlook in 2024 may arise from more contractionary economic policy by the authorities to stem price rises given the uncertainties centered around geopolitical tensions. This may dampen consumption and domestic production and adversely affect growth.

The government’s ongoing struggle with revenue collection, which persisted throughout the previous fiscal year, appears to persist into the current fiscal year as well. The initial two months of FY 2023/24 have not shown any significant enhancement in the government’s revenue collection. According to recent data from the Financial Comptroller General Office (FCGO), the government has managed to achieve just 9.92 percent of its total revenue goal during this period.

In fact, the current fiscal year has witnessed a weaker performance in revenue collection compared to the previous fiscal year. In the first two months of FY 2023/24, government revenue collection amounted to Rs 141.07bn, slightly lower than the Rs 143.81bn achieved during the same period in FY 2022/23.

The Department of Customs (DoC) and the Inland Revenue Department (IRD) are the two major revenue collectors of the federal government. The statistics show, both agencies continuously collect revenue below the targets in this fiscal also.

The IRD has collected only 78.75 percent of the target in the first two months of this fiscal. The department has been able to collect only Rs 66.19bn against the target of Rs 84.05bn. In fact, the IRD’s revenue collection in the first two months of FY 2023/24 is 2.54 percent less than that of FY 2022/23’s first two months. 

While the Custom Department has seen some improvement, its revenue collection is also below the target. The department has managed to collect 75.5 percent of the target in the first two months of this fiscal. The DoC has collected Rs 67.95bn in revenue in the first two months against the target of Rs 90.28bn. 

Finance Ministry officials attribute the subdued economic activities to the slowdown in revenue collection. Despite the Dashain festival nearing, traders say there is not much movement in the market. The ministry had called a meeting of the heads of departments and discussed the decline in revenue.

The ministry has also formed a task force to study the problem of revenue leakage. The meeting of the Central Revenue Leakage Control Committee last Friday formed a working group under the coordination of the Revenue Secretary to analyze the trend of revenue leakage and submit an action plan with concrete measures to control it within a week.

Marginal growth in capital expenditure

There has been some improvement in the capital expenditure in the current fiscal year. The government has spent Rs 8.163bn under the capital expenditure heading in the first two months compared to Rs 5.86bn during the same period in the last fiscal. 

According to the officials of the Finance Ministry, the surge in the capital expenditure in this fiscal was due to the government releasing dues of the last fiscal year that were accrued to the contractors. The government has allocated Rs 302.07bn under the capital expenditure for FY 2023/24. 

The government spent Rs 87.66bn under recurrent expenditure in the first two months of the current fiscal year, which was less than Rs 21.06bn compared to the review period of the last fiscal year.