Nepal’s economy has been battered by the novel coronavirus. Hotel occupancy is under 15 percent in this major tourist season, supply chains have been affected, all major construction contracts with Chinese contractors have been delayed. The government has also cancelled on-arrival visas for eight corona-hit countries and people are scared to go to restaurants, department stores and multiplexes.
The global progression of coronavirus is still uncertain even as the fear that it could tip the global economy into recession rises. Against this backdrop, Nepal has done little to sustain its industries, businesses and to retain jobs.
Currently, over Rs 200 billion remains unspent in government treasury. But just a few days ago, the government got $29 million in grant from the World Bank Group to cope with coronavirus. This support will be spent to strengthen health services and primary health care, bolster disease monitoring and reporting, train frontline health workers, encourage community engagement to maintain public trust, and improve access to treatment for poorest patients. The International Finance Corporation (IFC), the World Bank Group’s private sector arm, says it is ready to support the private sector’s continued operation and job-retention. Another multilateral development partner, Asian Development Bank, also pledged sufficient financing for the recovery of private sector.
But the government has neither asked for subsidized credit with development partners nor has it announced any stimulus package for the private sector.
Finance Minister Yubaraj Khatiwada says the first priority is to smoothen supply chains, and control black-marketing and other ill-practices in the market. “In the next step, the government will address the severely hit sectors after studying the magnitude of their loss,” the finance minister says. “The government will definitely rescue any vital sector from a total collapse.” But he did not elaborate how the government was going to support the private sector.
The hospitality and airlines sectors have asked the government for loan-restructuring with add-on interest method (combining the principal amount borrowed and interest for the certain period), rescheduling loan repayment for at least for a year.
Domestic airlines operators are already witnessing sharp decline in the number of foreign and domestic passengers. Yograj Sharma Kadel, spokesperson of the Airlines Operators Association of Nepal (AOAN), says booking cancellations and decline in numbers of passengers have resulted in almost Rs 4 billion in losses to the domestic airlines business in past two months.
Nepal Rastra Bank (NRB) says it is flexible on one-time loan rescheduling and restructuring for corona-hit businesses. This provision is also mentioned in the bank’s half-yearly review of the monetary policy. Gunakar Bhatta, NRB Executive Director, says the central bank will also provide concessional finance worth Rs 22 billion to severely affected sectors from the bank’s refinancing window, albeit it will take another month for these provisios to come into effect.