South Asia

Sum of Measures 1—5 (Total Package)

Total Package in USD Million: 1,754.69
% of GDP (2019): 5.77%
% of Regional Total Package: 0.45%
Package Per Capita in USD: 62.47
Note: Measures 9 and 10 are added to the sum of Measures 1-5.
Measure Amount (Local) Amount (USD) Details Update Source
01 - Liquidity Support info_outline
01A - Short-term lending info_outline

No amount/estimate: (i) March 29, Nepal Rastra Bank (NRB) instructed banks to provide short-term loan of up to a certain limit to tourism and transport businesses within 5 days of their loan application; (ii) April 28, Businesses in affected sectors, if they can show the need, can qualify for additional working capital loans of up to 10% of the approved amount of their existing working capital loans, to be repaid within a year at most.

01B - Support policies for short-term lending info_outline

No amount/estimate: March 29, NRB lowered its cash reserve ratio from 4% to 3%.

01C - Forex operations info_outline

No amount/estimate: April 1: (i) Import of gold limited to 10 kilograms per day to mitigate the pressure on foreign exchange reserves; (ii) Foreign exchange facility shall not be provided for the import of alcohol and vehicles worth over USD50 thousand; (iii) Foreign exchange facility via draft/TT for the import of COVID-related medical supplies and equipment increased from USD30 thousand to USD100 thousand.

02 - Credit creation info_outline NPR200,000,000,000 USD1,754,693,806
02A - Financial sector lending/funding info_outline NPR200,000,000,000 USD1,754,693,806

March 29: (i) NRB announced a refinancing fund of NPR60 billion to provide subsidized credit for banks willing to lend at a concessional rate to priority sectors including small and mid-size enterprises affected by the pandemic. Banks were instructed to approve loans within 5 days pertaining to import and distribution of medical supplies and equipment, food, and other essential items to combat COVID-19 pandemic; On July 17, NRB released the Monetary Policy for this fiscal year 2021 (ending 15 July 2021). The bank has increased the refinancing fund to NPR200 billion (USD1.7 billion); (ii) No amount/estimate: Banks were asked to provide subsidized credit to migrant workers to initiate their own enterprises, who could not depart for foreign employment due to this pandemic, within 7 days of their loan application; (iii) No amount/estimate: May 28, The budget speech for fiscal 2020/21 includes a provision for commercial banks to lend subsidized credit to at least 10 individuals per branch and development banks to at least 5 individuals per branch.

02B - Support policies for long-term lending info_outline

No amount/estimate: March 29: (i) The NRB is no longer requiring banks to build up the 2% countercyclical capital buffer as provisioned under Capital Adequacy Framework 2015 that was due in July 2020; (ii) The NRB temporarily relaxed reporting norms and announced that bank and financial institutions will not be charged or penalized for their non-compliance with regulatory and supervisory requirements in April; (iii) NRB reduced interest rate on the standing liquidity facility from 6% to 5%; (iv) April 29, The NRB directed banks to apply lower interest rates (up to 2 percentage points) when calculating the interest due for the period of mid-April to mid-July, applicable to borrowers from affected sectors; (v) The policy rate or repo rate was cut by 100 basis points to 3.5%; On July 17, it was further cut by 50 basis points to 3%; (vi) July 17, The limit on the loan-to-value ratio for personal residential home loans was raised to 60%and margin natured loans to 70% from 65%. The limit on banks’ total loans was raised to 85% of the sum of core credit and deposits from 80%. The NRB requires banks to increase their loans to priority sectors, such as agriculture, energy, tourism, and micro, small and mid-size enterprises, to 40% from 25% by 2024.

02C - Loan guarantees
03 - Direct long-term lending info_outline
03A - Long-term lending info_outline

No amount/estimate: May 28, The budget speech for fiscal year 2020/21 includes additional measures in the area of business support (a lending program for cottage, small and medium-sized enterprises and those in the tourism sector).

03B - Forbearance

No amount/estimate: (i) April 29, The NRB announced that banks will defer loan repayments due in April and May until mid-July. For working capital loans, banks will extend the repayment schedule of the amount due during the lockdown up to 60 days; (ii) Banks were instructed to provide a 10% discount on interest payments if paid timely, i.e. by mid-April.

04 - Equity support info_outline
05 - Government support to income/revenue
05A - Health

No amount/estimate: (i) March 30, Health spending will be increased, including by providing additional insurance coverage to all medical personnel fighting the coronavirus, importing additional medical supplies (with duty on said items eliminated), and setting up quarantine centers and temporary hospitals; (ii) May 28, In the budget speech for fiscal year 2020/21, Finance Minister Khatiwada announced additional measures in the area of healthcare (the establishment of additional hospital facilities). The specific measures announced include (a) Testing facilities to be expanded in high risk zones; and additional quarantines with testing facilities to be established to allay public concern; (b) Healthcare and lab technicians will be eligible for encouragement allowance; and will be provided with personnel protective equipment; (c) Provision of free health insurance plan of up to NPR500,000 for all healthcare professionals combatting contagious diseases including novel coronavirus; (d) A 50% discount on annual fee applicable on a group corona insurance policy worth NPR100,000; (e) A 300-bed tropical disease hospital to be established in Kathmandu Valley in FY2021; (f) 250 ICU beds to be added in all government hospitals across Kathmandu valley and provincial capitals; (g) A 50-bed tropical disease hospital to be operationalized in all provincial capitals; (h) Capacity of National Public Health Laboratory to be enhanced to comply with international standards; modern health laboratories to be established in all provincial capitals; health desks equipped with requisite medical equipment to be established in all major international entry points; (i) Basic hospitals with 5-15 beds to be established in all local levels; 272 such hospitals to be established by FY2021.

05B - Non-health

No amount/estimate: (i) March 30, Social assistance will be strengthened by providing those most vulnerable with daily food rations, subsidizing utility bills for low-usage customers, extending tax-filing deadlines, and taking measures to partially compensate those in the formal sector for lost wages in the event of job loss; (ii) April 26, Informal sector workers who have lost their jobs due to the ongoing crisis will be given the opportunity to participate in public-works projects for a subsistence wage or receive food worth 25% of local daily wage should they choose not to participate; (iii) May 28, The budget speech for fiscal year 2020/21 includes additional measures in the area of job creation (labor intensive in the construction sector, and training for work in manufacturing and service sectors). Some specfic measures include (a) Daily wagers in the informal sector who choose not to be included in either food-for-work or cash-for-work modalities will still be entitled to food worth one-fourth of minimum wage receivable; (b) Electricity bills will be completely waived for households consuming up to 10 units per month; a 25% discount on electricity bills for households consuming up to 150 units of electricity per month; and a 15% discount on electricity bills for households consuming up to 250 units per month; (c) Electricity demand charge during the nationwide lockdown to be waived for industries affected by COVID-19 pandemic; industries will be entitled to a 50% discount on electricity bills during low demand; (d) Government to deposit employer and employees’ social security contribution to SSF during the period of nationwide lockdown; (e) Prime Minister Employment Program will be further expanded across all three tiers of governments. Under this program, an additional 200,000 jobs will be generated; (f) Skill enhancement training programs to be launched at federal and provincial levels so that Nepali workers can fill in employment opportunities created with the departure of foreign migrant workers due to COVID-19 pandemic. It is expected that this initiative will generate an additional 50,000 jobs; (g) An additional 40,000 jobs will be generated through Small Farmers’ Credit Program operated via Small Farmers’ Development Micro Finance Institutions.

06 - Budget reallocation info_outline
07 - Central bank financing government
07A - Direct lending & reserve drawdown
07B - Secondary purchase: government securities
08 - International Assistance Received NPR122,355,502,125 USD1,073,482,209
08A - Swaps info_outline
08B - International loans/grants NPR122,355,502,125 USD1,073,482,209
08B1 - Asian Development Bank NPR29,340,731,600 USD257,420,000

(i) April, USD2.19 million - TA 9950-REG: Regional Support to Address the Outbreak of COVID-19 and Potential Outbreaks of Other Communicable Diseases; (ii) April 7, USD0.06 milllion TASF - Regional Project Development Support for the South Asia Subregional Economic Cooperation Operational Plan, 2016–2025; (iii) As of June 19, USD0.68 million [update] (Regular OCR) and USD0.08 million (Cofinanced) - Trade Finance Program (Guarantee); (iv) May 20, USD0.35 million TASF - Regional Support to Address Outbreak of Coronavirus Disease 2019 and Strengthen Health Systems Preparedness for Communicable Diseases in South Asia; (v) May 26, USD250 million (COL) COVID-19 Active Response and Expenditure Support Program; (vi) June 11, USD0.80 million TASF - Portfolio Management and Capacity Development for Enhanced Portfolio Performance (Additional Financing); (vii) June 29, USD3 million COVID-19 Emergency Response under the Asia Pacific Disaster Response Fund; (viii) July 24, USD0.21 million (TASF) Due Diligence and Capacity Development of Trade Finance Program Banks (Subproject 3); (ix) September 4, USD0.13 million TASF - Enhancing Gender Quality Results of South Asia COVID-19 Response [update].

08B2 - Other NPR93,014,770,525 USD816,062,209

(i) April 7, The World Bank has approved a fast-track USD29 million COVID-19 Emergency Response and Health Systems Preparedness Project to help Nepal prevent, detect, and respond to the COVID-19 pandemic and strengthen its public health preparedness; (ii) April 14-Oct 13: IMF Catastrophe Containment And Relief Trust-Grant Assistance For Debt Service Relief, SDR2.852 million (SDR0.729/USD); (iii) May 6, The IMF Executive Board approved the disbursement of USD214 million in emergency financing to help Nepal address urgent balance of payments needs created by COVID-19 under the Rapid Credit Facility; (iv) May 21, USD1 million UN COVID-19 Response & Recovery Fund from UNDP; (v) May, USD7.3 million in total assistance from USAID, which includes USD2.5 million in Economic Support Fund to help local governments and disaster-management committees respond to the economic and social impacts of COVID-19, and will provide small grants to the private sector and civisl society organizations to enable economic recovery, mitigate food insecurity, and address the needs of vulnerable populations. It also includes USD4.8 million for health assistance that is helping the Nepalese Government to conduct community-level risk-communications, prepare laboratory systems, activate case-finding and surveillance, support technical experts for response and preparedness, and more; (vi) June 2, The World Bank Board approved a US100 million Development Policy Credit (DPC) to continue support to the government in improving the financial viability and governance of the electricity sector and recovering from the COVID-19 crisis; On June 24, The USD100 million DPC was signed by the World Bank and the government; (vii) June 10, The World Bank approved a USD450 million project to help Nepal improve its roads and set the course for post-COVID-19 economic recovery through greater cross-border trade, more jobs, especially for women, and better road safety; On July 17, The government and the World Bank signed the USD450 million Financing Agreement; (viii) September 4, The Government of Nepal and the World Bank signed a financing agreement for an additional grant of USD10.85 million to the School Sector Development Program (SSDP) to maintain access to basic education and continued learning for children amid the COVID-19 crisis [update].

09 - International Assistance Provided
09A - Swaps info_outline
09B - International loans/grants
10 - No breakdown
11 - Other Economic Measures

April 1: (i) The security requirement of 10% of L/C value (Document value) for the import of COVID-related medical supplies and equipment has been waived; (ii) Parents/guardians can send USD500 per student to meet their living expenses abroad even without a NO OBJECTION LETTER.

12 - Non-Economic Measures

April: (i) Closure of cinema halls, stadiums, health clubs, museums, bars and other recreational places and public transportation until July 22; (ii) Closure of land-border crossings; June: (iii) Nationwide lockdown until July 22; (iv) Ban on domestic and international flights (except chartered flights) until July 22; (v) The government began easing the lockdown on June 12, allowing shops to open; (vi) Government, private offices, and banks have reopened from June 15, with government staff working in shifts; (vii) Private vehicles are allowed to operate on an alternating odd-even license-plate-number basis, corresponding to the calendar date; (viii) July 20, The government announced that the national lockdown will be lifted. Services, such as hotels and restaurants, will resume operations from July 30. All flights and transportation will be resumed from August 17. Tourism activities including travel, trekking, mountaineering will also resume operations from August 17. However, recreational activities including parties, seminars, and other public gatherings continue to be restricted. Educational institutions, recreational centers, religious centers, gyms, libraries, museums, and zoos will be closed until further notice; (ix) August 5, The Nepal government has enforced partial lockdown to full lockdown in various parts of the country as cases of coronavirus infection and fatalities continued to soar. The Home Ministry released a list of 14 districts: six districts will be facing a complete restriction in movement, while eight would remain under partial lockdown; (x) August 11, Other containment measures include restrictions on domestic and international passenger flights until August 31; long distance buses will now be allowed to ply from September 1; all educational institutions including schools, colleges, tuition centres and training centers will remain closed. No date for their opening has been announced; restaurants have been limited to takeaway services and all non-essential services like salons, shopping malls, theatres must remain closed; opening of hotels which was supposed to start on August 17, has been pushed back by 15 days; (xi) August 25, The government announced that it will resume flights to repatriate Nepali workers stranded abroad until 31 August. After that, airlines will be allowed to operate limited regular international flights. The government has also reversed its earlier requirement that all passengers, even those with PCR reports, have to spend at least one week in a hotel quarantine in Kathmandu at their own expense. Passengers with PCR negative reports will now be allowed to go home for 14 day self-isolation; (xii) August 31, The government has extended the suspension on long-route transportation and domestic flights until September 16. International flights will resume on September 1, but only for Nepalis and diplomats (no foreign tourists). The government also decided to continue the suspension on the operation of schools, colleges and academic institutions until September 16.