Nepal | July 05, 2020

Govt launches relief package targeting workers

Sujan Dhungana
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Kathmandu, April 30

With the country still locked down and businesses shut for more than a month, the government has introduced the second phase of stimulus relief package targeting the public and also businesses hit by the coronavirus pandemic.

The stimulus package which was approved by the Cabinet meeting on Sunday and was released today has basically focused on providing relief to workers in both the formal and informal sectors, relaxation on tax payment period and availability of loan facility for businesses.

The government has decided to deploy informal sector workers who have been unemployed due to the ongoing crisis in public works that are carried out by the local, provincial and federal governments. Such workers will either be paid in cash on a daily basis or provided with food. The local governments will fix the wage for such workers. Meanwhile, unemployed workers who refuse to work in the designated areas will be paid 25 per cent of the relief or wage that a worker who decides to work gets.

According to the government, necessary resources for providing jobs to unemployed workers in the informal sector will be mobilised through the Prime Minister Agriculture Modernisation Project, development projects under local governments and the COVID-19 Relief Fund of the government.

For workers in the formal sector, the government has directed firms to immediately issue 50 per cent of workers’ salary till Baisakh and gradually pay the remaining 50 per cent salary after their businesses resume. In case firms face liquidity problem in doing so, the government has asked Nepal Rastra Bank to ensure that such firms get loans from banks and financial institutions at subsidised rates. Moreover, the government has also asked the central bank to manage loans from its refinancing facility for firms facing liquidity issues.

The government has also asked businesses in the tourism sector that have been shut to pay 50 per cent of the workers’ salary till Baisakh. It has assured firms facing difficulty in paying workers the remaining 50 per cent salary subsidised loan facility through BFIs or through refinancing fund of NRB.

For bigger business houses facing difficulties in paying workers, the government has said subsidised loan facility will be provided to them on collateral basis. In a bid to ensure refinancing facility for businesses hit by the pandemic, the government has also directed NRB to raise the size of its refinancing fund to Rs 100 billion. The central bank had raised the size of the fund by Rs 10 billion to Rs 60 billion immediately after the lockdown was imposed.

The government has also directed NRB to further reduce the interest rate on refinancing loans and ensure working capital loans required for the operation of small and medium scale enterprises at subsidised rates.

The government has also asked the central bank to extend the period for repayment of loans from businesses.

While the government has continued its earlier decision to offer 25 per cent rebate on electricity tariff to customers who consume up to 150 units, it has also announced 15 per cent rebate on electricity tariff for those consuming up to 250 units a month throughout the lockdown period. The government has also asked Nepal Electricity Authority to provide necessary subsidy on demand charge and electricity tariff to industries that have remained shut during the lockdown.

In addition, the government has also deferred tax payment period of all taxes — income tax, excise duty and value added tax — for the public and businesses for the months of Falgun and Chaitra till June 7.

The government has also deferred the payment of electricity, water and telephone bills for the months of Falgun and Jestha till Ashad (mid-July). The government has also decided to give 25 per cent subsidy on transportation cost to farmers to transport their produce to nearby markets. The government has also decided to monitor through local levels the implementation of its previous decision that asked landlords to exempt rent for tenants for the month of Chaitra.

On the health front, the government has assured special treatment to all medical workers and other related staff working on the frontline to combat the spread of coronavirus in the country and treat patients infected with the virus. Biswo Poudel, an economist, said relief measures announced to support businesses and the public seemed positive and timely and urged the government to effectively implement them.

“However, businesses are not just facing problem regarding payment, but also disturbance in supply chain and unavailability of raw materials. The government has failed to address these issues,” he said, adding that the government should also come up with concrete plans on ways to allow businesses to gradually resume operations.

Highlights

  • Unemployed in the informal sector to be deployed in public works
  • Subsidised loan facilityfor businesses facing  liquidity problem
  • Size of refinancing fund to be expanded to Rs 100 billion
  • Clearance period for all taxes deferred to June 7
  • Deferred payment of electricity, water and telephone bill for the months of Falgun and Jestha till Ashad (mid-July)
  • 25 per cent subsidy on transportation cost to farmers

A version of this article appears in e-paper on May 1, 2020, of The Himalayan Times.

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