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Inflation continues to grow as food crisis deepens

The inflation rate continues to increase in local markets as the world plunges into a food crisis driven by low production due to drought.

According to a new report by Nepal Rastra Bank, inflation rate reached 7.2 percent in the first eight months of the current fiscal year compared to 6.2 percent the same period last year.

The report states that budget deficit for this year has reached Rs 6.99 billion as government expenditure grew faster and the government mobilised domestic borrowing of Rs 9.20 billion for deficit financing. Government expenditure this year increased by 32.5 percent while revenue mobilisation increased by 26.2 percent.

In this period, net domestic borrowing remained negative at Rs 433.14 million as the government repaid domestic borrowing worth Rs 5.29 billion.

Commercial banks had Rs 129.95 billion liquid assets as of mid-March, including Rs 60.34 billion holding of government securities of which net liquidity of Rs 54.99 billion was injected through foreign exchange intervention during this period. Rs 9.27 billion of the liquidity in banking system is being absorbed by open market operations.

Total exports during this review period decreased by 2.6 percent. The figure was at 6.6 percent in the corresponding period last year. Export to India plunged by 6.9 percent.

Overall Balance of Payment (BoP) posted a surplus of Rs 13.29 billion during this period compared to Rs 12.28 billion in the corresponding period last year. nepalnews.com ia May 08 08