Budget deficit widens, inflation dips, trade deficit narrows

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KATHMANDU, Feb 28 - The first half of the current fiscal year 2000/01 has been marked with a deceleration in both narrow and broad money. Total government expenditure has declearated due mainly to the deceleration in development as well as freeze expenditures despite a significant growth in regular expenditure. During the review period, resources mobilisation grew by 18.2 percent as a result of higher growth in both revenue receipts and foreign cash grants. However, because of higher government spendings, budgetary deficit widened during the review period. The rate of inflation, on point to point basis, was recorded at two percent, mainly because of the decline in the prices of food and beverages group. In the external front, a robust growth of exports accompanied by a comparatively slower growth of imports helped narrow down the trade deficit during the review period. The foreign exchange holdings of the banking system increasesd substantially due to a surplus in the balance of payment emanting from the growth in official and miscellanesous capital inflows and decline in the trade deficit. The resulting foreign exchange reserves was sufficient to cover merchandise imports of more than eleven months. In the share market, share transaction decelerated compared to the previous month. In the money market, treasury bills rate remained at 5.33 percent whereas the inter banks rate stood at 5.1 percent.

Money Supply

According to a press communique issued by the Nepal Rastra Bank, during the first six months of the fiscal year 2000/01, broad money registered a decelerating growth of 4.6 percent (Rs 8615.4 million) to Rs 194736.3 million compared to a growth of 10.8 percent (Rs 16554.8 million) during the same period last year. A deceleration in the growth of both net domestic assets and net foreign assets compared to last year is attributed for such a deceleration in broad money. The downward revision in interest rates on domestic deposits, upsurge in the stock market activities and rapid growth in foreign currency deposits with banks has led to the deceleration in the growth of time deposits from 10.5 percent (Rs 10704.7 million) last year to 3.8 percent (Rs 4805.8 million) this year. Narrow money also decelerated to 6.2 percent (Rs 3809.6 million) during the review period compared to a growth of 11.5 percent (Rs 5850.1 million) during the same period last year.

As a result of a decline in the credit flow to government as well as to the private sector, total domestic credit of the banking system decelerated from 9.0 percent (Rs 12155.9 million) last year to 6.4 percent (Rs 10134.9 million) this year. The flow of bank credit to the private sector decelerated to 8.6 percent (Rs 9363.4 million) during the review period compared to a growth of 11.7 percent (Rs 10600.0 million) in the preceding year as a result of deceleration in imports followed by the sluggish demand for import credit, states the communique.

Fiscal

On the fiscal front, total government expenditure during the review period registered a comparatively lower growth of 18.8 percent amounting to Rs 27620.8 million as against 22.6 percent during the same period last year. Of the total government expenditure, regular expenditure, development expenditure and freeze expenditure increased by 21.6 percent, 13.7 percent and 5.4 percent respectively. During the review period revenue collection increased by 16.9 percent to Rs 21175.3 million compared to a lower growth of 13.7 percent last year. A significant growth in revenue collection coupled with a growth in foreign cash grant has contributed to the growth of resources mobilisation to 18.2 percent compared to 15.7 percent last year. However, such a growth rate of resources mobilisation remaining lower than government expenditure, a budget deficit of Rs 4379.4 million was incurred during the review period. To meet the resources gap, the government issued national saving bonds of Rs 1000.0 million, treasury bills of 494.5 million and mobilised foreign cash loan of Rs. 2447.1 million. The remaining amount of Rs 437.8 million was overdrawn from Nepal Rastra Bank.

Consumer Price Index

The National Urban Consumer Price Index, on point to point basis, recorded a rise of 2.0 percent during the reveiw period compared to a rise of 4.2 percent last year. A fall in the prices of food and beverages group helped the rate of inflation to be contained at such a low level. Of the overall price index, price index of food and beverages group declined by 2.1 percent during the review period compared to a rise of 0.9 percent during the same period last year. Price index of non-food and services group slowed down to 6.9 percent during the review period from 8.1 percent last year. Regionwise, price indexes of Kathmandu and Hills have respectively increased by 4.5 percent and 3.9 percent and that of Terai has decreased by 0.1 percent. A significant decline (5.5 percent) in the price index of food and beverages group in the terai helped the overall price index to remain at such a low level. Because of the depreciation of Nepalese currency and a rise in the prices of petroleum products, the price index of imported goods increased by 13.1 percent during the review period as against an increase of 2.9 percent last year. Similarly, as a consequence of the upward revision in the price of petroleum products, the price index of government controlled goods increased to 12.7 percent during the review year compared to 8.0 percent last year.

Exports

The release states that on the external front, exports registered a decelerated growth of 22.8 percent to Rs 28757.8 million during the review period compared to a growth of 41.0 percent during the same period last year. Exports to India went up by 28.2 percent whereas that to third countries grew by 18.7 percent. The export of readymade governments, woolen carpets and jewelery to third countries have declined whereas that of pashmina, tanned skin and pulses have increased significantly. During the review period Rs 5.47 billion worth of pashmina was exported.

Imports

During the review period the growth rate of imports decelerated to 8.4 percent amounting to Rs 56123.5 million from that of 35.5 percent during the same period last year. The increase in imports was attributed mainly to a higher imports of vehicles and parts, textile, thread, cement, chemicals, chemical fertiliser, agricultural tools and parts as well as other machinery from India and raw wool, petroleum products, beatle nut, plastic granules, copper wire and sheet, thread, textile, transportation goods and spare parts, computer parts, aeroplane parts, medical equipments and palm oil from third countries.

During the review period, the growth rate of exports was high while that of imports remained low compared to that of last year. As a result trade deficit during the review period declined by 3.5 percent amounting to Rs 27365.7 million compared to the growth of 31.2 percent in the previous year. The export-import ratio, which was 45.2 percent in the previous year, improved to 51.2 percent during the reveiw period.

Balance of Payments

Based on the available balance of payments statistics for the first four months of the current fiscal year, the balance of payment remained favourable by Rs 1445.6 million. During this period, decline in net services income has resulted in the current account deficit of Rs 1630.2 million in spite of a decrease in trade balance compared to the same period last year. However, a substantial inflow of official and miscellaneous capital items helped the balance of payment to remain positive. Based on the monetary statistics for the first six months of the current fiscal year, the overall balance of payment recorded a surplus of Rs 3190.0 million. Foreign exchance holdings in the banking system increased by 24.4 percent to Rs 102998.6 million as at mid-January 2001. Of the total reserves 80.9 percent accounted for convertible currency and 19.1 percent for non-convertible currency.

Stock Market

In the share market, market capitalisation of the companies listed in the Stock Exchange decreased to Rs 56.9 billion at mid-January 2001 from Rs 59.5 billion in the previous month. Likewise NEPSE index decreased from 486.05 in the previous month to 484.76 at mid-January 2001, concludes the press communique.

Employment generators honoured

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KATHMANDU, Feb 28- The Shramdut Publications, Wednesday honored the employees, employers, manpower companies and artists for contributing towards generating employment.

The interaction program organized here at the Reporters’ Club stressed the need to recognize the manpower companies by the government as an industry.

The program was organized to mark the sixth anniversary of the Shramdut Publications, a labour journal.

Trekking porters’ safety stressed

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LALITPUR, Feb 28 - Experts and the concerned people have pointed out the need of amending the existing laws relating to the tourism industry in order to ensure safety and better working condition of trekking porters.

Ganga Jung Thapa of King Mahendra Trust for Nature Conservation (KMTNC) said that porters have a significant role in enhancing the tourism industry especially the trekking tourism as it is well-nigh impossible in their absence and in many cases their behaviour directly impacts the tourism industry.

He said the training was organized to educate them on their role in keeping the environment clean, enhancing the experience of tourists and making them aware of health hazards like, altitude sickness, frost bite, snow blindness and hypothermia, environmental and socio-cultural impact and their ethics.

While the organizers laid emphasis on raising the awareness among the trekking porters, participants said in most of the cases, the porters are exploited by their employers and their heads as they are paid low and are forced to carry heavy loads.

However, they cannot complain of it for the fear of losing their jobs. Most of the porters are illiterate rural folk, who hail from remote areas of mountain districts like Dhading, Gorkha, Kaski, Syangja etc., and are unaware of even the minimum safety measures.

This apart, they have to work in a very harsh climate and very remote areas where physical risk is very high and even first aid treatment is hardly available.

Besides, female porters who are often sexually exploited by their heads, are worse affected.

Participants of a two-day interaction program on ‘Sustainable Tourism Trekking Workshop for Trekking Porters’ stressed to standardize the wage of the porters and the weight they carry.

They also urged the concerned bodies to provide porters with warm clothes and treatment if they fall sick or get injured. In some cases, some porters have been found dead while others have been found unconscious and deserted by their companions and heads. Therefore, the concerned party should be serious about it, they suggested.

Trekking tourism began in Nepal in the 1950s and it is estimated that over 100,000 tourists come to Nepal for trekking. It is said that two porters are required to serve a trekker. With the increasing number of trekkers, the number of porters involved in trekking is also growing twofold, gaining momentum.

The two-day training jointly organized by King Mahendra Trust for Nature Conservation (KMTNC), International Porters’ Protection Group (IPPG) and Annapurna Conservation Area Project (ACAP) is participated in by 35 trekking porters from different trekking and travel agencies.