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The price of gold has increased by Rs 800 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 113, 300 per tola today. The gold was traded at Rs 112, 500 per tola on Tuesday. Meanwhile, tejabi gold is being traded at Rs 112, 750 per tola. It was traded at Rs 111, 950 per tola. Similarly, the silver is being traded at Rs 1,435 per tola today.

Nepal has achieved a major breakthrough in power cooperation with India. The southern neighbor has agreed to a long-term power trade agreement with Nepal as well as allowing Nepal to export power to Bangladesh via its land. During Prime Minister Pushpa Kamal Dahal’s India visit, the southern neighbor agreed to buy 10,000 MW of electricity from Nepal in the next 10 years. India has also agreed to permit the first trilateral transaction from Nepal to Bangladesh via India for up to 40 MW of power. Addressing a press conference at Hyderabad House after the delegation-level talks on Thursday, Indian Prime Minister Narendra Modi announced that India will purchase 10,000 MW of electricity from Nepal in the next 10 years. A preliminary agreement for the power trade agreement has been signed between Nepal and India during Dahal's India visit. Nepal’s Energy Secretary Dinesh Kumar Ghimire and his Indian counterpart Shri Alok Kumar have signed the preliminary agreement. Nepal has been requesting the southern neighbor for a long-term power trade deal arguing that an inter-government agreement would lock in the market and end the unpredictability of the Indian market’s availability for electricity from Nepal in the long run. The signing of the preliminary agreement, according to Nepali officials, has ensured a market for electricity produced in Nepal. “Power sector is one of the key signature successes between India and Nepal partnership in recent years,” said Indian Foreign Secretary Vinay Mohan Kwatra at a press meet on Thursday. Kwatra termed the understanding to increase the quantum of power to 10,000 MW as a major decision by both Prime Ministers. As Nepal faces the risk of spillage of electricity in the monsoon season, there was an urgent need for Indian approval to sell more power generated by power projects in Nepal. According to Nepali officials, an inter-government agreement will also cut the red tape in the approval process. As per the Indian Power Ministry’s ‘Guidelines for Import/Export (Cross Border) of the Electricity-2018’, the Indian entity willing to buy electricity from neighboring countries can do so by taking approval from the Central Electricity Authority of India. Currently, Nepal is only allowed to sell power in the day-ahead market of India’s energy exchange. The day-ahead market means that Nepal can sell electricity once quantity and price are determined a day ahead of the trading day. Since buyers may not buy Nepal’s electricity or may seek power at a very cheap price depending on the availability of power supply in the real-time market and day-ahead market, Nepal was pressing for a long-term power purchase agreement with a southern neighbor to ensure that electricity is not wasted in Nepal. India has also agreed to fund three major transmission corridors in Nepal under the line of credit support of $680m-Bheri Corridor, Nijgadh-Inaruwa Corridor, and Gandak-Nepalgunj Corridor. A project development agreement (PDA) for the construction of the 669 MW Lower Arun hydropower project was signed between Investment Board Nepal and SJVN India. This is the second mega project undertaken by the SJVN after the $1.04bn 900-MW Arun-III hydroelectric project in the Arun River. As per the PDA, the project developer has to provide 21 percent of the total energy produced from the Lower Arun HEP to Nepal for free. Similarly, an agreement for the development of the Phukhot-Karnali Hydropower Project was also signed between the Vidyut Utpadan Company Limited (VUCL) of Nepal and NHPC of India. NHPC will have a 51 percent stake in the joint venture that will develop the project.

Economists have said that the country's economy has fallen into a policy trap due to unstable and inconsistent government practices for a long time. According to them, the problem in the economy is multi-faceted as the government's current expenditure has exceeded revenue collection and more resources have to be allocated for the interest payment of sovereign loans than the capital expenditure. During a post-budget discussion organized on Wednesday, former finance minister Yubaraj Khatiwada and Professor Shiva Raj Adhikari, Head of Central Department of Economics at Tribhuvan University said that the country’s economy has become a victim of a policy trap that has been clearly reflected in the next fiscal year’s budget. “The budget deficit is expanding rapidly due to increasing recurrent expenditure and shrinking revenue. With the widening budget deficit, internal debt will increase which will again affect the monetary system,” mentioned Adhikari. According to him, the budget deficit in the current fiscal year has already reached Rs 271bn which has played a role in the rapid increase of internal debt. “The more the deficit, the greater the expansion of debt. The remaining months of the current fiscal year will see an increase in debt level with the government expediting public spending,” said Adhikari. He said there is a need for a big policy leap to escape from low fiscal space and structural problems and the new budget has principally indicated something towards this end. “However, the budget allocation under different headings has failed to signal the government’s readiness toward structural changes in the economy,” he said, adding, “While the new budget talks about policy reforms and reducing expenses, its relationship with budget allocation and other aspects is not well established. The downsizing of capital expenditure shows inefficiency in overall budget allocation.” Speaking on the occasion, former finance minister Khatiwada said the post-2006 practices of the government have led the economy to a policy trap and its effects are increasing now. According to him, the current situation is the result of competition among the political parties that have led the government over the years to introduce distribution-oriented programs. “We focused on distributive fiscal policy to resolve the problems of conflict, keeping the production-oriented approach in shadow. Some of the policies taken during the natural calamities also created problems. After the 2015 earthquake, the governments competed for providing grants by taking loans for post-earthquake construction,” said Khatiwada. Stating that a six percent economic growth target mentioned in the budget is appropriate for bringing the economy out of the recession, Khatiwada said that the investment required for this will be insufficient. He suggested the government avoid raising too much internal debt as Nepal's economy is falling into a debt trap. Finance Minister Prakash Saran Mahat admitted that the economy has fallen into a policy trap. “It is clear that we are in a very difficult situation,” he said. “There is no easy escape from the policy trap. But by accepting the problems, we can find ways to resolve the issues. With the budget, we have attempted to initiate economic reforms and expand the economy.” According to Mahat, while the capital expenditure has been reduced for the next fiscal year, the budget has announced measures for the effective utilization of the money allocated for development works. “If capital expenditure is utilized properly, foreign aid will also increase and this will ease the pressure on resources,” he said, adding that the government’s next focus will be on implementing the budget. Prakash Saran Mahat, Finance minister There is no easy escape from the policy trap. But by accepting the problems, we can find ways to resolve the issues Shiva Raj Adhikari, Head, Central Department of Economics, TU While the new budget talks about policy reforms and reducing expenses, its relationship with budget allocation and other aspects is not well established. The downsizing of capital expenditure shows inefficiency in overall budget allocation Yubaraj Khatiwada, Former finance minister We focused on distributive fiscal policy to resolve the problems of conflict, keeping the production-oriented approach in shadow

Satluj Jal Vidyut Nigam, a hydropower producing company of India, is to construct the Lower Arun Hydropower Project in Nepal. A bilateral agreement was made to this regard during the visit of Prime Minister Pushpa Kamal Dahal to India today. The company has also been constructing the Arun-III Hydropower Project. The project development agreement (PDA) was signed between Nepal and India in the presence of the Prime Minister Pushpa Kamal Dahal and his Indian counterpart Narendra Modi amidst a function in New Delhi. Chief Executive Officer from Investment Board Sushil Bhatta and Chairman of Satluj Company Nanda Lal Sharma signed the PDA from the respective sides. The 54th meeting of the Investment Board on May 28 chaired by Prime Minister Dahal had taken a decision on necessary homework on PDA. The meeting approved the draft document on PDA to be made with the developer company and forwarded to the Council of Ministers for approval. The Cabinet meeting later endorsed the PDA. The entire power produced from the project will be exported, which is believed to contribute to the economic development of the country. The Investment Board had approved the investment of Rs 92.68 billion for the 669-MW capacity project.