Economic policy should be reviewed: UML
‘Coming budget has to be realistic’

Post Report

KATHMANDU, June 24 - The main opposition party, Communist Party of Nepal- Unified Marxist Leninist (CPN-UML) has said that due to the liberal economic policy adopted by the Nepali Congress (NC) the national economy is in the doldrums and has suggested to review the policy in time.

Speaking at press meet organized to make the party’s view about the forth coming budget public here Sunday, Chief of Central Planning and Monitoring Department Bharat Mohan Adhikari blamed the Nepali Congress for adopting an economic policy that is against the interest of the agriculture sector.

"Now the national economy is in the brink of collapse and the economic policy pursued by the Nepali congress without weighing its pros and cons is responsible for it", said the former finance minister.

Though he did not mention explicitly about the alternative of the open economic policy, he however, hinted at adopting middle path.

Liberal economic policy should be adopted in keeping with the practicality and national interests, agriculture sector should be expanded, rural economy should be boosted and land reform needs to be initiated, he said.

"We are not dead against the open market economy nor harbour the feeling that of anti-privatization. What we are repeatedly saying is that our economic policy and programs we introduced in the past are not appropriate and they should be reformed", he added.

He also demanded to protect ailing industries and provide subsidy to the agriculture sector.

Speaking on the occasion, CPN-UML parliamentarian and economist Dr Dilli Raj Khanal expressed the views that the government should take protective measures in order to grapple with the negative impacts of liberal economic policy. He also said that the open market policy was introduced in an ad hoc manner.

A press release distributed on the occasion states that the downward trend in the economy has further accelerated in the current fiscal year, the dross domestic products is far behind the budgetary target and there are serious problems in the industry, tourism, foreign trade, development expenditure and banking sector.

Adhikari said that owing to rising regular expenditure and low revenue collection is pushing the economy into bankruptcy. This year the budgetary target is very poor. Internal revenue mobilization is also very worrisome this year. Going by the statistics of the past 10 months of the current fiscal year, revenue mobilization will be short of Rs 5 billion of the budgetary target, he said.

The forth coming budget has to correct the past mistakes and make massive reform in policy and implementation, says the release. The budget should embrace new concepts and should be realistic. Subsidy in irrigation, fertilizers, and loans should be provided and the financial and banking programs should be made accessible to the rural poor in the forth coming budget, he added.

There should be provisions for easy access to agriculture loans in the budget. The most important aspect of the budget is that the concerned ministry should be accountable to the policies and programs mentioned in the annual fiscal budget. In order to revitalize the economy, the coming budget should adopt peoples’ participatory approach and the CPN-UML is ever ready to hold dialogue with the government, Adhikari further said.

Economy, finance and market

By Supa Upadhyay

Domestic money market: The Average Weighted Discount Rate (AWDR) of 91-day Treasury Bills (TBs) remain unchanged at 4.96 while the AWDR of 364-day TBs rose marginally by 6 basis points to 5.60 percent compared to the previous week. The rupee was traded higher at 98.80 and lower at 98.77 for 91-day TBs and higher at 94.97 and lower at 94.58 for 364-day TBs. The NRB had received 19 bids worth NPR 880 million against the notified amount NPR 750 million for 91 day-TBs and 23 bids worth NPR 540 million against the notified amount NPR 350 million for 364 day-TBs . The Repo rate for Member Banks and Institutions have been quoted at 5.4622 for the trading days June20 to June 26, 2001. The outright purchase facility for banks, institutions and other on TBs is also available. In the regular weekly auction, the NRB is going to issue 91-day TBs worth NPR 600 million and 364-day TBs worth NPR 350 million on June 26, 2001.

Domestic capital market: The stock market staged a moderate recovery largely on speculative purchases of selected bank stock that have yet to close their books for bonus shares and right issues. The NEPSE Index-100 opened firmer at 332.81 compared to the previous week’s close of 331.30 zoomed further in all consecutive days and eventually closed higher at 336.87 for the week, netting a gain of 5.57 points. This week, trading was estimated at 1,878,161 shares valued NPR 24.06 million compared to 13,802 shares valued NPR 9.0 million of previous week. Commercial banks, Finance companies and Production sector shared 50.21, 25.08 and 23.21 percent respectively of total traded amount. This week, the Index of Commercial Banks improved while Production Sector, Other group and Finance/Insurance sector lost. Business Sector and Hotel sector remain unchanged at their previous prices. This week, brokers had quoted the prices of 56 companies on the trading board but only 36 companies were traded. Out of Thirty-six traded companies, twelve companies improved, twelve companies lost and twelve traded companies remain unchanged at their previous prices. Harishiddhi Bricks &Tiles, Lumbini finance and Gorkha finance registered the first, the second and the third most traded companies trading 1837840, 8740and 7720 shares respectively. Share of Nabil Bank, Nepal B’desh Bank, NIC Bank, Sagarmatha Insurance, Nepal Grindlays Bank, Himalayan Bank, Everest Bank and Bank of Kathmandu were able to trade in all four working days. Like wise, Nepal SBI Bank, NIDC Cap, People Finance, Lumbini finance, Nepal Bank Ltd and Premier Insurance were able to trade in three working days.

Forex round-up:The Sterling recovered significantly against the dollar over the week. While the Euro closed firmer against the dollar helped by the yen’s weakness and ahead of the ECB’s monetary policy decision. Rates were widely expected to be left on hold.

On the other hand, the dollar hit seven-week highs against the yen on Thursday following reports that the US government would not object if structural reform in Japan led to a weaker yen. The White House economic adviser Lawrence Lindsey comments that a weaker yen would be acceptable if it resulted from structural reforms.

The INR fell marginally against the dollar on demand for the dollar. While the NPR remains unchanged against the dollar over the week.