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Kathmandu Thursday July 26, 2001 Shrawan 11, 2058.
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Trade deficit narrows Fiscal expenditure
rises
Post Report
KATHMANDU, July 25 - The macro indicators for the first
eleven months of last fiscal year have been marked with the deceleration in the monetary
aggregates followed by the increase in fiscal expenditures, states a press communiqué
issued by Nepal Rastra Bank (NRB) here today.
During the review period, resource mobilization grew by 16.8
per cent first as a result of higher growth in foreign cash grants and non-budgetary
receipts. The economy has felicitated by a satisfactory growth in the exports accompanied
by a slower growth in imports. This has lower down the trade deficits and subsequently the
current deficit during the review period.
The foreign exchange holding of the banking system have
increased substantially due to a surplus in the balance of payments emanating from the
growth of official capital inflows in the wake of a decline in the current account
deficit. The resulting foreign exchange reserve is sufficient to cover merchandise imports
of eleven months. In the share market share transaction has slowed down compared to the
previous month. In the money market , treasury bills rate has remained at 4.9 per cent
whereas the inter-bank rate has stood at 3.9 per cent, says the release.
The domestic credit of the banking system decelerated from
15.3 per cent (Rs 20607.7 million) growth last year to 14.3 per cent (Rs 22670.2 million)
this year. The fall on the domestic credit is a result of modest growth if credit flow to
the government enterprises and a slower growth of credit to the private sector.
Consequent to a sharp slow down in the credit flow to imports
accompanied by a sluggish demand for import credit, bank credit to the private sector
increased by 14.9 per cent (Rs 16314.3 million) only this year compared to a higher growth
of 17.3 per cent (Rs 15683.3 million) last year.
Public Finance
Government expenditure registered a higher growth of 18.3 per
cent to Rs 55661.1 million during the review period as against a growth of 13.1 per cent
during the same period last year. Of the total expenditure, regular and development
expenditure increased by 21.3 per cent and 13.6 per cent respectively whereas freeze
expenditure moved up by 3.4 per cent only, states the release.
Revenue collection stood at Rs 41173.0 million marking a
growth of 14.9 per cent this year compared to a similar growth of 15.1 per cent in the
previous year.
A significant increase in the receipts from foreign cash
grant and non-budgetary income jointly attributed in making the 16.8 per cent growth in
resource mobilization as compared to 11.6 per cent last year.
However the resource mobilization being lower than the
government expenditure, a larger budget deficit of Rs 11262.7 million was incurred during
the review period; during the same period last year the deficit stood at Rs 9030.3
million.
To meet the resource gap government issued national savings
bonds worth 2100 million, development bonds worth Rs 1700 million, treasury bills worth Rs
1126.3 million and mobilized foreign cash loan amounting to Rs 3527.6 million. The
remaining amount of Rs 2808.8 million was overdrawn from Nepal Rastra Bank, according to
the release.
Inflation
The National Urban Consumer Price Index on point to point
basis, recorded a rise of 3.8 per cent during the review period compared to a growth of
0.9 per cent last year. Of the overall price index, the index of foods and beverages group
moved up by 1.3 per cent during the review period, as against a decline of 4.8 per cent
during the same period last year. Price index of non-food and services group increased by
6.7 per cent during the review period compared to a higher growth of 8.1 per cent last
year, says the release.
Because of the depreciation of Nepalese currency and a rise
in the prices of petroleum products the price index of government controlled goods
increased to 10.4 per cent during the review year compared to 8.4 per cent increase last
year.
Trade
During the review period, imports grew up by 5.5 per cent
only amounting to Rs 103679.4 million as against a growth of 24.5 per cent during the same
period last year. The import of vehicle and parts, textiles, thread, agricultural tools
and parts from India and petroleum products, betel nut, plastic granules, copper wire and
sheet, computer parts, medicine, camera and palm oil from third countries increased
compared to that of last year. Meanwhile imports of chemical fertilizer, raw wool,
machinery and parts, and gold declined this year as compared to previous year, says the
release.
During the period of eleven months the growth rate of exports
was higher than that of imports, trade deficit declined by 3.2 per cent and remained at Rs
51371.2 million; such deficit had recorded a growth of 14.3 per cent in the previous year.
The export-import ratio, which was 46.0 per cent in the previous year improved to 50.5 per
cent during the review period.
Balance of Payment
The available statistics for Balance of Payments (BOP) for
first nine months of the last fiscal year shows that the BOP remained favorable by Rs
4993.4 million. During this period, inspite of a decline in net services income, current
account deficit declined to Rs 4013.5 million due mainly to a decrease in trade deficit
and an increase in current transfer receipt compared to that last year. However, a
substantial inflow of official capital net helped the balance of payments to remain
positive, states the release.
Based on the monetary statistics for the first eleven months
of the current fiscal year, the overall balance of payments recorded a surplus of Rs
4714.9 million. Subsequently, foreign exchange reserves of the banking system increased by
11.6 percent to Rs 103376.4 million at mid-June 2001. Of the total reserves, 76.9 percent
accounted for convertible currency and 23.1 percent for non-convertible currency.
Continued strong export performance in trade with India along with remittances growth have
resulted in such an accumulation of non-convertible currency reserves.
In the share market, market capitalization of the companies
listed in the Stock Exchange compressed to Rs 43.8 billion at mid-June 2001 from Rs 46.7
billion in the previous month. Likewise, NEPSE share price index further dipped down from
355.6 in the previous month to 333.2 at mid-June 2001, states the NRB release.
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