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Kathmandu Thursday May 24, 2001 Jestha 11, 2058.
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Govt
expenditure increases, budget deficit widens
Post Report
KATHMANDU, May 23- The first nine months of the
current fiscal year 2000/01 have been marked with a deceleration in monetary aggregates
and an acceleration in fiscal expenditure and revenue. Total government expenditure has
accelerated due mainly to a pick up in both regular as well as development expenditure,
says a press release issued by Nepal Rastra Bank (NRB) today.
Budget deficit
During the review period, resources mobilisation
grew by 20.8 percent as a result of higher growth in revenue receipts, foreign cash grants
and non-budgetary receipts net. However, because of higher growth of government spendings,
budgetary deficit widened by 35.3 percent during the review period.
Inflation
The rate of inflation, on point to point basis,
was recorded at 2.2 percent, mainly because of the decline in the prices of food and
beverages group. In the external front, an impressive growth of exports accompanied by a
comparatively slower growth of imports helped narrow down the trade deficit during the
review period.
Forex holdings
The foreign exchange holdings of the banking
system increased substantially due to a surplus in the balance of payment emanating from
the growth in official and miscellaneous capital inflows and decline in the trade deficit.
The resulting foreign exchange reserve was sufficient to cover merchandise imports of
eleven months. In the share market, share transaction has come down compared to the
previous month. In the money market, treasury bills rate remained at 3.9 percent whereas
the inter bank rate stood at 3.4 percent, says the communique.
Monetary front
During the first nine months of the fiscal year
2000/01, broad money registered a decelerating growth of 8.4 percent (Rs 15674.6 million)
to Rs 201795.5 million compared to a growth of 16.6 percent (Rs 25362.8 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 was attributed for such a slowdown in broad money
growth. The downward revision in interest rates on deposits, availability of afternative
opportunities for saving and a rapid growth in foreign currency deposits with banks led to
the deceleration in the growth of time deposits from 17.3 percent (Rs 17647.2 million)
last year to 7.1 percent (Rs 8847.4 million) this year. Narrow money also decelerated to
11.2 percent (Rs 6827.2 million) during the review period compared to a growth of 15.1
percent (Rs 7715.6 million) during the same period last year, the communique says.
As a result of a slow growth in credit flow to
the government and government enterprises, total domestic credit of the banking system
decelerated from 13.2 percent (Rs 17764.4 million) last year to 10.5 percent (Rs 16567.3
million) this year. The flow of bank credit to the private sector increased by 12.8
percent (Rs 14063.6 million) during the review period compared to 14.2 percrnt (Rs 12870.6
million) in the preceding year.
Fiscal front
On the fiscal front, total government
expenditure during the review period registered a comparatively higher growth of 23.3
percent amounting to Rs 43865.6 million as against a growth of 11.6 percent during the
same reriod last year. Of the total government expenditure, regular expenditure,
development expenditure and freeze expenditure increased by 28.8 percent, 13.7 percent and
5.3 percent respectively. During the review period, revenue collection also inceassed by
17.7 percent to Rs 32594.7 million compared to a lower growth of 11.4 percent during the
same period last year. A significant growth in revenue collection coupled with an
impressive growth in foreign cash grant and non-budgetary receipts net, have contributed
to the growth of resources mobilisation to 20.8 percent compared to 6.7 percent growth
last year.
However, such a growth rate of resources
mobilisation remaining lower than government expenditure, a budget deficit of Rs 8419.0
million was incurred during the review period. To meet the resources gap, the government
issued national saving bonds worth Rs 2000.0 million, development bonds worth Rs 1000.0
million treasury bills worth Rs. 1276.2 million and mobilised foreign cash loan amounting
to Rs 3372.0 million. The remaining amount of Rs 770.8 million was overdrawn from Nepal
Rastra Bank, states the communique.
Consumer Price Index
The National urban consumer Price Index, on
point to point basis, recorded a rise of 2.2 percent during the review period compared to
a rise of 3.4 percent last year. A fall in the prices of food and beverages groups 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 1.7 percent during the review period
as aganist a decline of 0.2 percent during same period last year. Price index of non-food
and services group slowed down to 6.7 percent during the review period from 7.9 percent
last year. Regionwise, price indexes of Hills, Kathmandu valley and Terai have
respectively increased by 6.4 percent, 2.3 percent and 0.7 percent.
A decline in the price index of food and
beverages group in Terai helped the overall price index to remain at such a low level.
Becasue of the depreciation of Nepalese currency and a rise in the prices of petroleum
products, the price index of imroted goods increased by 7.7 percent during review period
as against an increse of 3.7 percent last year. As a consequence of the upward revision in
the price of pertroleum products, the price index of government controlled goods increased
to 10.3 percent during the veview year compared to 8.3 percent last year, says the
communique.
Export/Import
On the extenral front, exports registered a
decelerated growth of 21.5 percent to Rs 43441.0 million during the review period compared
to a growth of 37.6 percent during the same period last year. Exports to India and third
countries have decelerated by 35.1 percent and 11.9 percent respectively. The export of
readymade garments, woolen carpets and jewellery to third countries has declined whereas
that of pashmina, tanned skin and pulses increased significantly. During the review
period, Rs 6.28 billion worth of pashmina was exported. Lately, there has been a slowdown
in pashmina exports as well, says the communique.
During the review period, the growth rate of
imports has declined to 6.9 percent amounting to Rs 85117.2 million as against a growth of
28.6 percent during the same period last year. During the review period import of vehicles
and parts, textile, thread, chemicals, agricultural tools and parts from India and raw
wool, petroleum products, beatle nut, plastic granules, copper wire and sheets, thread,
textile, computer parts, aeroplane parts, medicine, camera and plam oil from third
countries have increased compared to a year earlier level.
During the review period, the growth rate of
exports was higher than that of imports. Consequently, trade deficit, during the review
period, declined by 5.0 percent and amounted to 41676.2 million compared to the growth of
22.2 percent in the previous year. The export-import ratio, which was 44.9 percent in the
previous year, improved to 51.0 percent during the review period, the communique says.
Balance of Payments
Based on the available balance of payments
statistics for the first seven months of the current fiscal year, the balance of payments
remained favourable by Rs 6181.7 million. During this period, decline in net services
income has resulted in the current account deficit of Rs 4092.2 million in spite of a
decrease in trade balance compared to the same period last year. However, a substantial
inflow of miscellaneous capital items helped the balance of payments to remain postive.
Based on the monetary statistics for the first nine months of the current fiscal year, the
overall balance of payments recorded a surplus of Rs 4993.4 million. Foreign exchange
holdings in the banking system increased by 14.1 percent to Rs 102871.0 million as at
mid-April 2001. Of the total reserve, convertible currency accounted for 79.4 percent.
In the share market, market capitalisation of
those companies listed in the Stock Exchange decreased to Rs 48.4 billion at mid-April
2001 from Rs 50.2 billion in the previous months. Likewise, NEPSE index decreased from
395.9 in the previous month to 369.1 at mid-April 2001, the communique concludes.
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