Relief packages introduced by the Nepal Government amidst extension of the lockdown

The Nepal government on Sunday 29 March 2020 announced various decisions ranging from extending the lockdown period to providing several packages for different sectors. Initially, the government expressed their gratitude to all the citizens of the country for supporting their decision of a lockdown. Secondly, they extended the lockdown by another week until April 7 midnight. Along with this, all flights including international and domestic flights will remain shut until 15 April. However, the supply of essential goods through the border points will be allowed as usual.

The government has also formed a high-level task force or an action team called “Corona-19 Crisis Management Center (CCMC)” with the aim of implementing decisions regarding Covid-19. Similarly, the government has also decided to transfer budgets allocated in the annual expenditure program and to tap into various funds by mobilizing development partners to aid the relief measures. Funds collected at the local, provincial and federal level along with other funds such as the National Disaster Fund and Prime Minister Natural Disaster Fund will be mobilized. The government has also decided to start negotiations to finalize a NPR 3.48 billion concessional loan from the World Bank and a NPR 13.9 billion interest-free loan from the International Monetary Fund.

Some of the important decisions taken after the cabinet meeting on Sunday are as follows:

Extended Deadlines and Relaxations

  1. The government has extended deadlines for the tax filing by one and a half months. The value-added tax (VAT) and the income tax deadline has been extended till May 7.
  2. The deadline to submit reports and other details to the office of Company Registrar (OCR) has been extended until May 13 for companies.
  3. In case the expiration of driving license, route permits and others, the deadline has been extended to May 13, without any penalty or fines.
  4. Those companies who have donated to the government’s “Corona Virus Control and Treatment Fund” can deduct such donations as expenses for the purpose of tax calculations.
  5. The deadline to pay for electricity, drinking water, telephone and internet will be extended (with no fines) up until May 13.
  6. There will be no custom duty for any government, private and community sector importing medical equipment.
  7. Sugar mill owners must make complete payment to sugarcane farmers by May 13.
  8. Extension of one month for procurement agreements done prior to the Covid-19 pandemic.

Assistance to workers in the informal sector

  1. The local level government are to collect the data of the people in the informal sector who need assistance. Those who need the assistance must go to their respective ward and submit their profile. With this, the local level government will provide the relief package (which includes daily essentials like food) to them during the period of the lockdown.
  2. Each local level government and provincial level government should establish their own funds as per their requirement. In a case where the budget is not enough, the central government will provide the remaining budget.

For employees in the formal sector

  1. The wages of the employees in the formal sector are to be made available by the employer themselves.
  2. Tourism related businesses, which were completely closed should also provide wages for their daily and monthly waged employees for the month of Chaitra (March 14 – April 12).
  3. For the duration that the business has not been in operation, employers can utilize the organizational-level welfare funds to pay wages to their employees.
  4. For companies enrolled in the social security fund, the Nepal government will pay their contributions to the fund for the month of Chaitra (March 14 – April 12).

Discounts on food items

  1. Salt Trading Corporation and The Food Management and Trading Company Limited will be giving 10% off on the current prices for basic food items such as rice, flour, pulse, lentils, sugar, salt, oil, etc.

Discounts on internet

  1. Nepal Telecom will give 25% off for their internet and data packages during the lockdown.
  2. Private telecommunication companies are to give similar packages as well.

Discounts on electricity

  1. Nepal Electricity Authority (NEA) will give 25% off for households on electricity up to 150 units.
  2. Companies, in the productive sector, will get 30-50% off on electricity consumption for the surplus electricity produced for the time as directed by the NEA.

Regarding Health Sector

  1. Additional budget is to be provided to the Health and Population Ministry to upgrade the capacity of the hospitals and for the supply of medicines, health equipment, sanitizers, gloves, personal protection equipment (PPE), etc. which are needed for the treatment of Covid-19.
  2. The health equipment required during the treatment will be provided free of charge.
  3. Private hospitals will be guaranteed the necessary equipment. However, they should exempt 20% from their fees up until April 12.
  4. Doctors, nurses, health technicians, health volunteers, cleaners, ambulance drivers, directly-involved security personnel, and others; who are associated or a part of the task force for the treatment of Covid-19, will get insurance free-of-charge along with compensations till July 15. A total of NPR 2.5 million will be spent for the insurance.
  5. The cost associated with keeping people in the quarantine will be borne by the local level government and the central government.

Exemption of education fees

  1. Private schools (till secondary level) should exempt all fees, besides accommodation or boarding fees.

Exemption of housing rentals

  1. The respective landlords should exempt housing rents for the workers in the informal sector. For the exempted rents, landlords will not have to pay the housing rental taxes.

Regarding foreign employment

  1. Those who could not go for foreign employment and those who have returned from foreign employment will be linked with the Employment Service Center and will be given employment through the Prime Minister Employment Program.

Regarding banks and financial institutions

  1. In a similar line, the government has also worked with the Nepal Rastra Bank (NRB) to provide some relief to banks and financial institutions (BFIs).
  2. NRB has instructed BFIs to extend the deadline for the repayment of monthly or quarterly installment of any loans by mid-July, which earlier was set for mid-April.
  3. The central bank has also barred BFIs from collecting any penal charges or interest from such borrowers.
  4. NRB has mentioned that it will not require BFIs to classify such deferred repayment as non-performing loans.
  5. Those borrowers who will pay the installments of their loans by mid-April will get a 10% waiver in their interest payment.
  6. To boost liquidity, there will be a cut in the cash reserve ratio (CRR) requirement for BFIs by 1-3%.
  7. There will be an increase in the refinance fund size from NPR 50 billion to NPR 60 billion.

Ban or limitations on the imports

  1. The imports of gold will be limited to 10 kg.
  2. Imports of vehicles priced above NPR 5 million will be banned.
  3. The imports of betel nut, black pepper, peas, alcohol, etc. will be banned.

This write-up is based on the announcements made by the Nepal Government and Nepal Rastra Bank’s circular of March 29, 2020.