Country foots 36 pc of development bill

-By a Post Reporter

KATHMANDU, Jan. 9 - In contrast to general belief that Nepal’s development expenditure is mostly borne by foreign assistance, a study has shown that from 1950 to 2000 Nepal has contributed 36 percent from its own revenue.

The result is unearthed by a team of researchers comprising senior economist Bishowmbhar Pyakurel and former Secretary Deependra Purush Dhakal. The duo conducted the research “Foreign Aid: Some Issues for Future Policy Consideration” commissioned by the Ministry of Finance. The report was conducted following the announcement of Finance Minister to review national policy on foreign aid, during his budgetary speech of 1999/2000.

According to Bishowmbhar Pyakurel the report has focused on various economic indicators of the country, and has come out with many recommendations, extensive form of which will be publicized only after discussions within the ministry and also with the donor community. It is learnt that almost an 80-page report was prepared in seven weeks from the beginning of November 1999.

“We still need to have an in-house discussion in the Minister’s presence, and then we will have extensive discussions with donors,” Pyakurel diverted the request of the reporter to elaborate the findings.

Pyakurel says, the report has stressed that if Nepal enhances its capabilities in aid productivity and utilization, and curbs the misuse of the funds it would not fall into debt trap so easily. “Our findings have shown that whatsoever, the country has not completely submerged into debt problems,” he added.

However, he said, as the surplus revenue at present is not sufficient to meet all the development requirements of the country, foreign assistance is still very much important to meet national needs.

The report has analysed saving-investment gap in the country, studied debt burden, commitment and disbursement ratio of the donor community etc. The issues of decentralization, governance, transparency, monitoring, evaluation, sustainability etc. related with operationalization of the projects have been studied in the report.

The report has also given due consideration to avoid duplication due to the works of NGOs in development field. It has suggested future steps to the government on foreign assistance after studying Nepal’s external assistance request trend in Nepal Development Forums meeting in Paris.

During the study the researcher duo met with various donors, political parties, members of the National Planning Commission, implementing ministries, Office of Comptroller General, Nepal Electricity Authority, Social Welfare Council and over 45 organizations and individuals.

According to Economic Survey of the year 1999/2000, Nepal’s total outstanding loan has reached to 173.86 billion till mid-April 1998/99. The loan amount that year increased by only 7.8 percent, which had increased by 22 percent late last year.

Nepal earmarks almost 15 percent of its total budget in foreign loan servicing. Total percentage of foreign debt to national GDP at the moment is almost 50 percent. However, as Nepal’s status is among least-indebted, it was deprived from the provision to relief debt to highly indebted countries by United States of America, recently.

Goods worth over Rs 70 b smuggled from India and Tibet: Businessmen

-By a Post Reporter

KATHMANDU, Jan 9 - Businessmen claim that goods worth over Rs 10 billion from India and Rs 60 billion from Tibet are smuggled into the country every year.

“The figures are rising every year. This not only has a negative impact on the local market setup but also adversely affects the revenue collection of the country,” say businessmen.

The businessmen expressed their concern at a workshop on ‘Border Trade’ organized by the Revenue Committee of the Federation of the National Chamber of Commerce and Industry (FNCCI) on Thursday.

Businessmen said that the illegal import of Indian and Tibetean goods has affected the level of domestic production thus adversely affecting the economy.

They suggested to stop the unheeded transportation of goods from the other side of the border and to include representatives of local chambers of commerce and industry while holding discussion on cross-border trade.

Highlighting the reasons for such illegal imports, businessmen said it was due to the indifferent attitude of the government towards the problem, inability to properly implement the existing laws and regulations, high customs duty,  complications in the Value Added Tax (VAT) system and inappropriate calculation of income taxes.

Moreover, encouraging the local agents in cross-border trade, administrative lapses, increase in curruption and political protection to businessmen conducting illegal trades are other reasons for increasing such trade, businessmen claimed.

The businessmen also blamed the 1950 Indo-Nepal trade treaty, traditional business of Nepal with Tibet, use of Indian notes in India and easy cross-border movement due to open border, as some more reasons facilitating such illegal imports.

Pradip Kumar Shrestha, president of FNCCI, speaking on the occasion, said that the open border has endangered the domestic trade and commerce due to the ever-increasing illegal cross-border transactions.

He stressed on the need to check the illegal trade that takes through the customs points of the country and said that the government need to take concrete steps to solve the problem.

Rohini Thapaliya, executive member of FNCCI said until and unless illegal trade is not curbed in the TIA, where a lot of political influence exists, the problem cannot be solved.

Including the Tribhuban International Airport (TIA), there are 75 entry-exit points to the north and south of the country, where border trade takes place, businessmen informed in the workshop.

Various papers covering the issues relating to cross-border trade were presented on the occasion.

Economy, finance and market

-By Supa Upadhyay

Domestic money market:
The yield on the 91-day Treasury Bills (TBs) rose on high demand last week. The AWDR of 91-day TBs improved by 25 basis points to 4.48 percent. The NRB had received 30 bids worth NPR 1330 million against the notified amount NPR 789.345 million. The rupee was traded higher at 98.94 and lower at 98.84 for 91-day. In the weekly auction, the NRB is going to issue 90-day TBs worth NPR 750 million on January 12, 2000.

Domestic capital market:
The stock market spurted on a distinctly firm note on the back of continued speculative purchases. On the NPESE banking scrips scaled new peaks. Nepal Grindlays, Nepal Indosuez, Himalayan Bank, Everest Bank and Bank of Kathmandu touched an all-time high also led to frenzied buying in bank shares.  The brokers had quoted the prices of 58 companies in the trading board but only 44 companies were traded. The NEPSE index-100 closed for the week at 267.88, netting a smart gain of 5.36 points over the previous week’s close.

This week, the index of Commercial bank, Productive sector and Hotel groups improved while Insurance and Finance sector and other groups dipped down. Business groups remained unchanged. Commercial bank groups alone shared 667.18 percent of the total trading amount.

This week, altogether, 36062 shares amounting NPR 122 million were traded in five working days compared to the 26038 shares amounting NPR 9.77 million of previous week. Twenty-four companies improved while ten companies lost. Other ten traded scrips remained unchanged at their previous prices. HISEF, Bank of Kathmandu and Nepal Bank Ltd registered first, second and third most traded company trading 10240, 5560 and 3072 shares respectively. Share of Nepal Bank Ltd, Nepal SBI, Nepal B’desh Bank, Everest Bank, Bank of Kathmandu and United Insurance were only able to trade in all five working days. Whereas, Nabil Bank, Indosuez Bank, Nepal Grindlays Bank, Taragaon Regency Hotel and Himalayan Bank were able to trade in three working days.

Forex round up:
In the beginning of the new year and millennium, the dollar showed a lackluster performance in the forex market.

This week the sterling and euro improved sharply against the USD over the week. While the yen weakened sharply against the green back. The traders suspect BOJ may be trying to drive dollar above 105 yen or above. The INR and the NPR remained unchanged over the week against the dollar.

NEPSE Trading (Closing prices in NPR)