South Asia

Sum of Measures 1—5 (Total Package)

Total Package in USD Million: 1,772.24
% of GDP (2019): 5.83%
% of Regional Total Package: 0.41%
Package Per Capita in USD: 61.95
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) 29 March 2020, 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) 28 April 2020, 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

(i) No amount/estimate: 29 March 2020, NRB lowered its cash reserve ratio from 4% to 3%; (ii) No amount/estimate: 3 December 2020, The NRB announced the collateral auction process will be deferred for some time for borrowers impacted by the COVID-19 pandemic who have outstanding interest payment of less than six months.

01C - Forex operations info_outline

No amount/estimate: 1 April 2020: (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; (iv) No amount/estimate: 3 December 2020, The NRB announced that provisions will be made to allow repayment of foreign currency loans in local currency.

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

29 March 2020: (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. 17 July 2020, 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: 28 May 2020, 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
02B1 - Interest rate adjustments

(i) 29 March 2020, The NRB reduced interest rate on the standing liquidity facility from 6% to 5%; (ii) 29 April 2020, 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; (iii) The policy rate or repo rate was cut by 100 basis points to 3.5%. 17 July 2020, The repo rate was further cut by 50 basis points to 3%.

02B2 - Other policies to support long-term lending

No amount/estimate: 29 March 2020: (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) 17 July 2020, 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: 28 May 2020, 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) 29 April 2020, The NRB announced that banks will defer loan repayments due in April and May until mid-July. The loan deferral was further extended to January 2021 or later depending on how severely the borrower was affected. 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 - Health and income support NPR2,000,000,000 USD17,546,938
05A - Health support NPR2,000,000,000 USD17,546,938

No amount/estimate: (i) 30 March 2020, 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) 28 May 2020, 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; (iii) 17 February 2021, NPR1 billion for the purchase of additional 2 million doses of COVID-19 vaccines from the Serum Institute of India.

05B - Income support
05B1 - Tax and contribution deferrals and policy changes

No amount/estimate: 30 March 2020, Tax-filing deadlines are extended.

05B2 - Tax and contribution rates reduction
05B3 - Subsidies to individuals and households

No amount/estimate: (i) 30 March 2020, Social assistance will be strengthened by providing those most vulnerable with daily food rations and by subsidizing utility bills for low-usage customers and taking measures to partially compensate those in the formal sector for lost wages in the event of job loss; (ii) 26 April 2020, 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) 28 May 2020, 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 specific 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) Government to deposit employer and employees’ social security contribution to SSF during the period of nationwide lockdown; (d) 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; (e) An additional 40,000 jobs will be generated through Small Farmers’ Credit Program operated via Small Farmers’ Development Micro Finance Institutions.

05B4 - Subsidies to businesses

No amount/estimate: 28 May 2020, The budget speech for fiscal year 2020/21 includes 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.

05B5 - Indirect income support

No amount/estimate: 28 May 2020, The budget speech for fiscal year 2020/21 includes 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.

05B6 - No breakdown (income support)
05C - No breakdown (health and income support)
06 - Budget reallocation info_outline
07 - Central bank financing government
07A - Direct lending and reserve drawdown
07B - Secondary purchase: government securities
08 - International Assistance Received NPR207,392,925,925 USD1,819,555,413
08A - Swaps info_outline
08B - International loans/grants NPR207,392,925,925 USD1,819,555,413
08B1 - Asian Development Bank NPR29,415,958,400 USD258,080,000

(i) April 2020, USD2.19 million - TA 9950-REG: Regional Support to Address the Outbreak of COVID-19 and Potential Outbreaks of Other Communicable Diseases. As of 29 January 2021, the amount increased to USD2.37 million; (ii) 7 April 2020, USD0.06 milllion TASF - Regional Project Development Support for the South Asia Subregional Economic Cooperation Operational Plan, 2016–2025; (iii) As of 19 June 2020, USD1.97 million (Regular OCR) and USD0.02 million (Cofinanced) - Trade Finance Program (Guarantee). As of 12 February 2021, the amounts decreased to USD1.03 million (Regular OCR) and USD0.17 million (Cofinanced); (iv) 20 May 2020, 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) 26 May 2020, USD250 million (COL) COVID-19 Active Response and Expenditure Support Program; (vi) 11 June 2020, USD0.80 million TASF - Portfolio Management and Capacity Development for Enhanced Portfolio Performance (Additional Financing); (vii) 29 June 2020, USD3 million COVID-19 Emergency Response under the Asia Pacific Disaster Response Fund; (viii) 24 July 2020, USD0.21 million (TASF) Due Diligence and Capacity Development of Trade Finance Program Banks (Subproject 3); (ix) 4 September 2020, USD0.13 million TASF - Enhancing Gender Quality Results of South Asia COVID-19 Response; (x) 9 September 2020, USD0.13 million TASF - Strengthening the Enabling Environment for Disaster Risk Financing.

08B2 - Other NPR177,976,967,525 USD1,561,475,413

(i) 7 April 2020, 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. 18 March 2021, USD75 million additional funding to support access to safe and effective COVID-19 vaccines and equitable vaccine distribution by strengthening Nepal’s health and vaccination system [update]; (ii) 14 April - 13 Oct 2020: IMF Catastrophe Containment and Relief Trust (1st Tranche) - grant assistance for debt service relief, SDR2.852 million (SDR0.729/USD); (iii) 6 May 2020, 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) 21 May 2020, USD1 million UN COVID-19 Response & Recovery Fund from UNDP; (v) May 2020, 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 civil 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) 2 June 2020, The World Bank Board approved a USD100 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; 24 June 2020, The USD100 million DPC was signed by the World Bank and the government; (vii) 10 June 2020, 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 17 July 2020, The government and the World Bank signed the USD450 million Financing Agreement; (viii) 4 September 2020, 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; (ix) 17 September 2020, The World Bank approved a USD200 million “Finance for Growth” development policy credit to spur COVID-19 resilience and recovery efforts; (x) 28 September 2020, The World Bank approved a USD150 million project to help Nepal strengthen service delivery and institutional capacities in strategic secondary cities, and to support the post-COVID-19 economic recovery; (xi) 2 October 2020, IMF Catastrophe Containment and Relief Trust (2nd Tranche) - grant assistance for debt service relief, USD7.95 million; (xii) 28 October 2020, World Bank approves USD80 million Rural Enterprise and Economic Development Project to boost Nepal’s agriculture sector and support post-pandemic recovery; (xiii) 30 October 2020, The European Commission is providing EUR2 million (USD2.2 million) in humanitarian aid for Nepal and countries in the Southeast Asia to support those affected by the pandemic, natural disasters, and the consequences of man-made conflicts; (xiii) 21 December 2020, the Government of Nepal and the World Bank signed a USD80 million (around NPR 9.3 billion) million project to bolster Nepal’s agriculture sector by strengthening rural market linkages and promoting entrepreneurship while creating jobs to support post-COVID-19 recovery; (xiv) 21 January 2021, India handed over one million doses of COVID-19 vaccine to Nepal under grant assistance in sync with its ‘Neighborhood First’ policy [update]; (xv) 27 January 2021, The Government of Nepal and the World Bank jointly launched the USD150 million Nepal Urban Governance and Infrastructure Project to promote sustainable urban development and support post-COVID-19 economic recovery in strategic secondary cities; (xv) 3 March 2021, The Ministry of Health and Population (MoHP) received NRP30 million worth of Personal Protective Equipment (PPE), examination gloves, surgical mask and Inter-Agency Reproductive Health (IARH) kits from the United Nations Population Fund (UNFPA). The financial support is from the People's Republic of China (PRC) under the existing south-south partnership initiative between Nepal, PRC and UNFPA.

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

1 April 2020: (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; (iii) 22 March 2020, The government has banned the export of the medicines, mask and sanitizers amid potential shortage in the country.

12 - Non-Economic Measures
12A - Measures affecting travel and transport (local and international)

April 2020: (i) Closure of public transportation and ban on domestic and international flights (except chartered flights) until July 22; (ii) Private vehicles are allowed to operate on an alternating odd-even license-plate-number basis, corresponding to the calendar date; (iii) 20 July 2020, The government announced that all flights and transportation will be resumed from August 17; (iv) 11 August 2020, 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; (v) 25 August 2020, The government announced that it will resume flights to repatriate Nepali workers stranded abroad until August 31. After that, airlines will be allowed to operate limited regular international flights; (vi) 31 August 2020, 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); (vii) 23 December 2020 The government restricted entry of passengers originating from or transiting through the United Kingdom due to concerns about the new strain of the coronavirus.

12B - Measures affecting business and workplace

April 2020: (i) Closure of cinema halls, stadiums, health clubs, museums, bars and other recreational places until July 22; (ii) 12 June 2020, The government began easing the lockdown and allowed shops to open; (iii) 15 June 2020, Government, private offices, and banks have reopened, with government staff working in shifts; (iv) 20 July 2020, The government announced services, such as hotels and restaurants, will resume operations from July 30. Tourism activities including travel, trekking, mountaineering will also resume operations from August 17. Recreational centers, religious centers, gyms, libraries, museums, and zoos will be closed until further notice; (v) 11 August 2020, 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; (vi) 13 November 2020, The government further relaxed restrictions by opening tourist sites.

12C - Others

(i) April 2020, Closure of land-border crossings; (ii) June 2020, Nationwide lockdown until July 22. 20 July 2020, The government announced that the national lockdown will be lifted. However, recreational activities including parties, seminars, and other public gatherings continue to be restricted. Educational institutions will be closed until further notice; (iii) 5 August 2020, 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; (iv) 11 August 2020, All educational institutions including schools, colleges, tuition centres and training centers will remain closed. No date for their opening has been announced. 31 August 2020, The government decided to continue the suspension on the operation of schools, colleges and academic institutions until September 16; On November 12, The government announced the reopening of schools from November 20 in low infection areas; (v) 25 August 2020, The government has 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; (vi) 15 January 2021, Conditional permission has been granted for the emergency use authorization of COVISHIELD vaccine against COVID-19 [update]; (vii) 27 January 2021, The government launched the first phase of the COVID-19 vaccination drive starting with the health and other frontline workers in all seven provinces; (viii) 17 February 2021, The government approves the "Vero Cell" vaccine manufactured by Beijing Institute of Biological Products Co Ltd (BIBP), People's Republic of China, under Sinopharm, for emergency use against COVID-19 in Nepal.