Trade deficit contracts, inflation low

Post Report

KATHMANDU, Nov 3 - The first two months of the current fiscal year 2000/01 marked a decline  in both narrow and broad money. Total government expenditure has accelerated mainly due to the growth in regular and development expenditures. In spite of a deceleration in revenue collection, resourse mobilization remained high because of a significant growth in foreign cash grant receipts and non-budgetary income, thereby resulting in budgetary surplus, states a press communique issued by NRB here today.

Monetary front

The rate of inflation on point to point basis dropped to less than one percent mainly due to the decline in the prices of food and beverages group. In the external front, because of a higher growth rate of exports than that of imports, trade deficit has decreased compared to that of last year. The foreign exchange holdings of the banking system rose substantially due to a surplus in the balance of payment emanating from the growth in miscellaneous capital inflows. The resulting foreign exchange reserve was sufficient to cover merchandise imports for eleven months. In the share market, share transaction improved significantly compared to the previous month, states the release.

During the first two months of the current fiscal year, broad money registered a decline of 0.4 percent (Rs 769.2 million) amounting to Rs 183711.1 million compared to a decline of 0.3 percent (Rs 500 million) during the same period last year. A decline in the growth of net domestic assets and only a marginal increment in net foreign assists attributed to such a decline in broad money. As a consequence of downward revision of interest rate on deposit, growth of imports and expansion in resource mobilization activities of non-bank financial institutions, growth of time deposits decelerated from 2.6 percent (Rs 2597.8 million) in the previous year to 0.6 percent (Rs 721.3 million) during the review period. Narrow money declined by 2.5 percent (RS 1490.5 million) during the review period compared to a similar decline of 6.1 percent (Rs 3097.8 million) in the previous year, the communiqe states.

As a result in the decline in the credit flow to the government and government enterprises, total domestic credit of the banking system fell short by 0.4 percent (Rs 572.9 million) during the review period compared to a decrease of 0.2 percent (Rs 336.2 million) in the preceding year. The flow of bank credit to the private sector increased by 0.9 percent (Rs 1035.6 million) during the review period compared to a growth of 1.6 percent (Rs 1477.5 million) in the preceding year, says the communique.

Fiscal front

On the fiscal front, government expenditure increased by 26 percent amounting to Rs 5699.7 million during the review period in contrast to a decline of 15.6 percent last year. Of the total expenditure, regular expenditure and development expenditure increased by 35.8 percent and 32.8 percent respectively, while freeze expenditure decreased by 4.3 percent. A substantial increment in the salaries of civil servants has mainly attributed for a rise in regular expenditure. Whereas an early preparation of the budget and its release in time has helped to speed up the growth of development expenditure. Resource mobilizations marked a growth of 26.9 percent during the review period compared to a growth of 12.8 percent in the previous year. Revenue collection, a major source of resource mobilizations, stood at Rs 5458.8 million at a 9.9 percent growth compared to a growth of 10.8 percent in the previous year. However, an increase in the receipts from foreign cash grants and non-budgetary income have resulted in higher resources mobilization with a budgetary surplus of Rs 522.4 million. During the review period, the government received foreign cash loan amounting to Rs 890.6 million, and as such there was a surplus of Rs 1413 million in the treasury, according to the communique.

Consumer Price Index

National Urban Consumer Price Index, on point to point basis, recorded a rise of 0.3 percent during the review period compared to a rise of 5.5 percent in the previous year. A fall in the prices of food and beverages group helped to lower down the inflation rate to less than one percent. Of the overall price index, price index of food and beverages group declined by 4.4 percent compared to 6.2 percent increase in the preceding year. There was an increase in the price of spices, sugar and sugar products, milk and milk products, restaurant meals, vegetables as well as fruits, meat, fish and eggs, and pulses. However, the declining prices of cereal products, oil and ghee as well as beverages conteributed for such a decrease in the price index of food and beverages group. Price index of non-food and services group increased from 4.8 percent in the previous year to 6.5 percent during the review period. This was mainly due to the rise in prices of transport and communications, housing, medicine and personal care, tobacco, education and recreation, shoes, cloth, clothing and sewing services. Regionwise, price indices of Kathmandu and Hills increased by 1.7 percent and 1.3 percent respectively and that of Terai decreased by 0.9 percent.

Export/Import

On the external front, exports and imports both registered respective growths of 35.3 percent to Rs 9022.1 million and 8.6 percent to Rs 17566.1 million during the review period. Although there has been a significant increase of exports to India, exports to third countries have decelerated during the review period. In spite of a decrease in the exports of ready-made garments, woolen carpet and jewelry to third countries have declined, exports of tanned skin, pulses and nigerseed have improved compared to that of last year. During the review period, Rs. 2 billion worth of Pashmina has been exported.

The export-import ratio, which was 41.2 percent in the previous year, improved to 51.4 percent during the review period. The increase in imports was attributed mainly to a higher imports of vehicles and parts, textile, thread, chemicals, agricultural tools and machineries from India and petroleum products, beetle nuts, crude oil, plastic granules, copper wire and sheet, thread, textile, transportation goods and spare parts, computer parts, earphones parts, medical equipment and palm oil from third countries. The growth rate of exports was high while that of imports remained low compared to last year. As a result, trade deficit during the review period declined by 10.2 percent amounting to Rs. 8544.0 million compared to a growth of 45.5 percent in the previous year.

Based on the available statistics for the preceding fiscal year 1999/00, balance of payment remained favourable by Rs. 14285.1 million. During the review period, decline in net service income, marginal growth of net transfer and trade deficit resulted in the current account deficit of Rs. 5627.4 million. However, a substantial inflow of miscellaneous capital items helped balance of payment to register a sizable surplus. Based on the monetary statistics for the first two months of the fiscal year 2000/01, the overall balance of payment recorded a surplus of Rs. 665.6 million. Foreign exchange holdings of the banking system increased by 23.8 percent to Rs. 94986.7 million as at mid-Sept 2000. Of the total reserves, 84.4 percent accounted for convertible currency and 15.6 percent for non-convertible currency, the communique concludes.

NSLMB to issue public shares

Post Report

KATHMANDU, Nov 3 - Nepal Sri Lanka Merchant Bank (NSLMB) Ltd. is going to issue public shares worth Rs 40 million within six months.

The bank, which came into operation in 1996 under Nepal Finance Company Act, recently decided to upgrade its paid up capital to Rs 100 million from the present amount of Rs 45 million.

Talking to The Kathmandu Post, V M Malla, General Manager of the bank informed that out of Rs 100 million, 60 million rupees will be raised from the promoter and rest 40 million rupees would be collected from the public by issuing shares.

Talking about the present liquidity of the bank, he informed that the current holding of cash reserve ratio is around 12 percent of the total deposit, which is well above the requirement of 8 percent set by the Nepal Rastra Bank. 

Explaining about of the financial condition of the bank, Malla said that it is continuously improving after taking over the management of the bank from Sri Lankan managers.

"The new Nepalese management changed worsening financial scenario by accumulating a profit of more than half a million rupees within six months of handling of entire management," he said.

The accumulated profit of the bank before tax has, during the fiscal year 1999/2000 crossed Rs 18.87 million and during the first three months of the current fiscal year, the profit has scaled to Rs 2.3 million. "The total deposit has touched Rs 360 million mark and total lending is over Rs 320 million," he said.

The bank also has been actively involved in the merchant banking activities. It has invested Rs 40 million in shares issued by various companies. "As per the current market price, the value of shares has been increased to Rs 650 million," Malla said. And in the near future, the bank will be a share issuing manager for Nepal Bangladesh Finance and Leasing Company and as co-manager for Nepal bank of Ceylon.

Women entrepreneurs from Nepal, India to work closely

Post Report

KATHMANDU, Nov 3 - Leading Nepali and Indian women entrepreneurs have agreed to make concerted effort to share information and promote market.

The reached on the agreement at an interactional program, organized by FNCCI, between the representatives of Women Entrepreneurs Development Committee at the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and the representatives of Women Entrepreneurs of Federation of Indian Chambers of Commerce and Industry (FICCI) here Thursday.

An eighteen member delegation of Indian women entrepreneurs led by Renuka Shah held discussion with about two dozen of Nepali women entrepreneurs lead by Shanti Chadda.

The main agenda of the talks was to explore market for the products of Nepali women entrepreneurs in India and vice versa.

Third Vice President of FNCCI, Binod Bahadur Shrestha urged Indian women entrepreneurs to work in Nepal.

Shanti Chadda, President of Women Entrepreneurs development Committee at FNCCI, said that women entrepreneurs could utilize the Nepalese resources remaining idle. She also said that though they could produce many things, there is no market for their products. Therefore, India's cooperation is vital in this respect.

On the occasion, Renuka Shah said that the interaction was an important opportunity to expand relations with Nepali women entrepreneurs, and added that all women should be united for the bright future.

Women of both parties said that their respective government had not encouraged them in enterprise and they are facing the problem of getting loan.

The interactional program was organized by FNCCI.

Uniform rules contract for int'l carriage of goods by rail

(Contd. from Know ICD-49)

Art. 14. - Route and Tariffs Applicable

The consignor may stipulated in the consignment note the route to be followed, indicating it by reference to frontier points or frontier stations and where appropriate, to transit stations between railways. He may only stipulate frontier points and frontier stations which are open to traffic between the forwarding and destination places concerned.

The following shall be regarded as routeing instructions:

(a). designation of stations where formalities required by Customs or other administrative authorities are to be carried out, and of stations where special care is to be given to the goods (attention to animals, re-icing, etc.):

(b). designation of the tariffs to be applied, if this is sufficient to determine the stations between which the tariffs requested are to be applied;

(c). instructions as to the payment of the whole or a part of the charges up to X (X indicating by name the point at which the tariffs of adjacent countries are applied).

Except in the cases specified in Article 3,   4 and 5 and Article33, 1 the railway may not carry the goods by a route other than that stipulated by the consignor unless both:

(a). the formalities required by Customs or other administrative authorities, as well as the special care to be given to the goods, will in any event be carried out at the stations indicated by the consignor; and

(b)the charges and the transit periods will not be greater than the charges and transit periods calculated according to the route stipulated by the consignor.

Subparagraph (a) shall not apply to consignments in less than wagon loads if one of the participating railways is unable to adhere to the route chosen by the consignor by virtue of the routeing instructions arising form its arrangements for the international carriage of consignments in less than wagon loads.

Subject to the provision of  3, the charges and transit periods shall be calculated according to the route stipulated by the consignor or, in the absence of any such indication, according to the route chosen bij the railway.

The consignor may stipulate in the consignment note which tariffs are to be applied. The railway must apply such tariffs if the conditions laid down for their application have been fulfilled.

If the instructions given by the consignor are not sufficient to indicate the route or tariffs to be applied, or if any of those instructions are inconsistent with one another, the railways shall choose the route or tariffs which appear to it to be the most advantageous to the consignor.

The railway shall not be liable for any loss or damage suffered any loss or damage suffered as a result of the choice made in accordance with  6. except in the case of wilful misconduct or gross negligence.

If an international tariff exists form the forwarding to the destination to the destination station and if, in the absence of adequate instructions from the consignor, the railway has applied that tariff, the railway shall, at the request of the person entitled, refund him the difference between the carriage charges thus applied and those which the application of other tariffs would have produced over the same route, when such difference exceeds four units of account per consignment note.

The same shall apply if, in the absence of adequate instructions from the consignor, the railway has applied consecutive tariffs even though there is and international tariff offering a more advantageous charge, all other conditions being the same.

Art. 15. - Payment of Charges

The charges (carriage charges, supplementary charges, Customs duties and other charges incurred from the time of acceptance for carriage to the time of delivery) shall be paid by the consignor or the consignee in accordance with the following provisions. In applying these provisions, charges which, according to the applicable tariff, must be added to the standard rates or special rates when calculating the carriage charges, shall be deemed to be carriage charges.

A consignor who undertakes to pay a part or all of the charges shall indicate this on the consignment note b using on of the following phrase.

(a). (i)  carriage charges paid, if he undertakes to pay carriage charges only:

carriage charges paid including ..., if he undertakes to pay charges additional to those for carriage; he shall give an exact description of those charges; additional indications, which may relate only to the supplementary charges or other charges incurred from the time of acceptance for carriage until the time of delivery as well as to sums collected either by Customs or other administrative authorities shall not result in any division of the total amount of any one category of charges ( for example, the total amount of Customs duties and of other amounts payable to Customs, value added tax being regarded as a separate category);

'carriage charges paid to X' (X indicating by name the point at which the tariffs of adjacent countries are applied), if he undertakes to pay carriage charges to X;

'carriage charges paid to X including...'(X indicating by name the point at which the tariffs of adjacent countries are applied), if he undertakes to pay charges additional to those for carriage to X, but excluding all charges relating to the subsequent country of railway; the provisions off (ii) shall apply analogously;

(b) 'all charges paid', if he undertakes to pay all charges ( carriage charges, supplementary charges, Customs duties and other charges);

'charges paid not exceeding ...', if he undertakes to pay a fixed sum; save where the tariffs otherwise provide, this sum shall be expressed in the currency of the country of departure,

Supplementary and other charges which according to the provisions in force at the forwarding station, are to be calculated for the whole of the route concerned and the charge for interest in delivery laid down in Article 16,  2, shall always be paid in full by the consignor in the case of payment of the charges in accordance with (a) (iv).

The international tariffs may, as regards payment of charges, prescribe the exclusive use of certain phrases set out in  2 of this Article or the use of other phrases.

The charges which the consignor has not undertaken to pay shall be deemed to be payable by the consignee. Nevertheless, such charges shall be payable by the consignor if the consignee has not taken possession of the consignment note nor asserted his rights under Article 28,  4, nor modified the contract of carriage in accordance with Article 31.

Supplementary charges, such as charges for demurrage and standage, warehousing and weighing, which arise from an act attributable to the consignee or from a request which he has made, shall always be paid by him.

The forwarding railway may require the consignor to the prepay the charges in the case of goods which in its opinion are liable to undergo rapid deterioration or which, by reason of their low value or their nature, do not provide sufficient cover for such charges.

If the amount to the charges which the consignor undertakes to pay cannot be ascertained exactly at the time the goods are handed over for carriage, such charges shall be entered in a charges note and settlement of accounts shall be made with the consignor not later than thirty days after the expiry of the transit period. The railway may require as security a deposit approximating to the amount of such charges for which a receipt shall be given. A detailed account of charges drawn up from the particulars in the charges not shall be delivered to the consignor in return for the receipt.

The forwarding station shall specify, in the consignment note and in the duplicate, the charges which have been prepaid, unless the provisions in force at the forwarding station provide that those charges are only to be specified in the duplicate. In the case provided for in  7 of this Article these charges are not to be specified either in the consignment note or in the duplicate.

(To be continued in KNOW ICD - 51)