NDF meet begins today

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KATHMANDU, Feb 3: The Nepal Development Forum (NDF) meet, a convention between the government and the donor community assisting Nepal’s development efforts, will kick off in Kathmandu on Monday.

The NDF meet, earlier known as the Paris Aid Group (PAG) meet, is slated through February 4 to 7 and Nepal is hosting it for the first time. The inauguration will take place in the capital while the closed session will commence from Tuesday in Pokhara.

Representatives from over two dozen bilateral and multilateral donor countries and agencies are taking part in the meet. A series of pre-NDF consultations have already been held in the capital for making the meet more transparent and participatory.

During the meet, Nepal will present the Poverty Reduction and Strategy Paper (PRSP), the Tenth Five-Year Plan and the Medium Term Expenditure Framework (MTEF) as its main policy documents.

The government will also present a number of sectoral papers pledging the much-needed reforms, including the financial sector reform, civil service reform, decentralization, privatisation and other necessary institutional reforms.

The donor community, on the other hand, among others, will present a paper focusing their accountability while financing development projects. In addition, they are expected to reiterate their concerns over the weak implementation of the government policies and programmes.

The four-day meeting will also review the implementation of the programmes and policies adopted during the last meeting of NDF held on April 17, 2000 in Paris, France. The meeting, which typically takes place every two years, is being held after an interval of 18 months, at the joint convenorship of the government and the World Bank.

The meeting is taken as an important event especially in the light of the present crisis faced by the nation. The resource-starved government is expected to ask for financial aid from the donor community to meet its soaring security expenses.

Furthermore, the government is likely to ask the donor community to fulfill their aid commitments. Hardly a third of the aid committed by the donors flow into Nepal.

Handicraft exports plummet

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KATHMANDU, Feb 3: Plagued by the global economic downturn, the export of Handicraft goods has plunged by a massive 69.85 per cent during the first half of the current fiscal year.

According to a half-yearly exports figure compiled by the Handicrafts Association of Nepal (HAN), the export of handicraft items during the period slumped to Rs 1.59 billion from Rs 5.29 billion during the same period last year.

The sharp decline in the exports of the handicrafts goods has been attributed to a nose-dive in the export of Pashmina, which is the largest exportable handicrafts goods and also the third largest exportable commodity of the country.

The export of Pashmina during the period recorded a massive decline by over 80 per cent amounting at Rs 916.03 million. The export figure of Pashmina during the same period last year was well over 4.65 billion.

Pashmina entrepreneurs attribute inferior quality of yarn imported from China, export of Pashmina from China and Pashmina manufacturers failing to maintain the quality of the product, in addition to the economic downturn globally, as the causes of its decline.

Bikash Ratna Dhakhwa, General Secretary of the HAN, said that like all other exportable commodities, handicrafts goods, especially pashmina, has failed to generate demand in the international market in the wake of September 11 terrorists attack in the US.

"While there have emerged better producers in neighbouring countries, the quality of domestic produce has gone down," he stated. This has hit the exports, he said.

Pashmina exports during the first half of the current fiscal year constitute just 57.41 per cent of the total handicrafts exports. However, it comprised over 88 percent of the total handicrafts exports during the same period last year.

Considering the fact that the Pashmina exports during the first half of the last fiscal year comprised 82.46 percent of the total Pashmina exports carried out throughout the year, the third largest exportable commodity is likely to face survival threat, according to Dhakhwa.

As usual, the Indian market is the largest consumer of Pashmina and exports to India valued at Rs 237.71 million during the period. Japan and the United States is the second and the third largest market for Nepali Pashmina. Pashmina exports to these countries stood at Rs 136.78 million and Rs 118.35 million respectively during the period.

Similarly, export of the woolen goods, which is the second largest exportable handicrafts goods tumbled by over 24 percent during the period. Export of woolen goods during the period slid to Rs 135.79 million from Rs 179.11 million during the same period last year.

However, export of Silver jewelry, the third largest exportable commodities among the handicraft goods went up by 20.74 percent. Its exports during the period was Rs 133.12 million, while it was Rs 110.25 million during the same period last year.

Metal craft, handmade paper, hemp/allo goods, silk products and cotton garments too have recorded increased exports by over 20 percent, 27 percent, 21 percent, 13 percent and 2 percent during the period respectively. Export of these commodities was valued at Rs 127.81 million, Rs 127.69 million, Rs 9.62 million, Rs 17.92 million and Rs 32.84 million respectively.

As usual, the United States remained the largest export market for handicrafts goods. the export of handicrafts items to the US during the period amounted to Rs 286.21 million. India and Japan following next with exports amounting to Rs 262.71 million and Rs 211.78 million respectively.

The HAN has added plastic and stone in its list of exportable commodities in the current fiscal year and the export of these commodities was valued at over Rs 541 thousand and Rs 728 thousand respectively.

Govt vows to raise productivity

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KATHMANDU, Feb 3: Minister for Industry Commerce and Supplies Purna Bahadur Khadka has said that the government is formulating a long-term industrial policy and amending the labour act with a view to increase productivity of the industrial sector.

He said this while speaking at a meeting with the representatives of the Binational Chamber of Commerce and Industry organised by the ministry on Friday. "The government will soon formulate an effective law to curb corruption in the country," he added.

Minister Khadka further noted that the ministry would look after the concern raised by the private sector seriously to address problems seen in the industrial sector immediately, according to a press release issued here.

"The government wishes to tie-up with the private sector when it comes to promoting the industries and commerce in the country. Establishment of the board of investment, adoption of measures to address the issue of industrial security, efforts to promote foreign trade is a part of that government-private sector intimacy," said Khadka, the release further adds.

Ronald P Nash, Ambassador of United Kingdom; Michael Malinowski, Ambassador of the United States; Nagama Mallik, First Secretary of the Indian Embassy, and Rabi Bhakta Shrestha, President of Federation of Nepalese Chamber of Commerce and Industry (FNCCI), among others too shared their views on the occasion.

Bhanu Prasad Acharya, Secretary at the ministry, Rajendra Kumar Khetan of Nepal-Britain Chamber of Commerce, Claude Ambrosini, the French Ambassador, and Klaus Tesch, First Secretary of the German Embassy, too were present on the occasion, according to the release.

Earlier in the day, I P Singh, Indian Ambassador to Nepal had met minister Khadka. They had discussed on the current scenario of bilateral trade and commerce and also talked over issues of mutual concern.

Changes sought in NRB directives

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KATHMANDU, Feb 3: Participants in a discussion programme have stressed on making massive changes in the directives issued by the Nepal Rastra Bank (NRB) to financial institutions arguing that the directives is impractical.

They expressed the views that the new directives has made it difficult for the financial institutions to compete in savings and in the collection of new deposits, at the same time making it more complex for depositors to withdraw money.

In the programme organized by the Federation of Nepalese Chambers of Commerce and Industry (FNCI), Rajendra Kumar Khetan, second vice president of the FNCCI, said that the federation would discuss the issue with the central bank in detail.

Binod Bahadur Shrestha, first vice president of FNCCI, pointed out the need to change the provisions stressing that they are having an adverse impact on the financial institutions.

Gambhir Man Bajracharya, president of Nepal Financial Companies Association, said that the government has imposed the directives without any prior consultation with the financial institutions. Chief executives of various financial institutions participated in the discussion.

Economy, Finance and Market

By Supa Upadhyay

Domestic money market:

The Average Weighted Discount Rate (AWDR) of 91-day Treasury Bills (TBs) dipped sharply by 22 basis points to 5.03 percent compared to previous week. The rupee was traded higher at NPR 98.90 and lower at NPR 98.71 for 90-day TBs. The NRB had received 23 bids worth NPR 1883.650 million against the notified amount NPR 751 million for 90-day TBs. The Repo rates for member banks and institutions have been quoted at 6.0277 for the trading days 05 to 11 February 2002 for 91-day TBs. The outright purchase facility for bank, institutions and other on TBs is also available, In the regular weekly auction, the NRB is going to issue 91-day TBs worth NPR 670 million on February 05, 2002.

Domestic capital market:

The stock market witnessed further weaker week amid thin trading. Almost all companies lost against their previous prices. The NEPSE Index-100 opened weaker at 254.27 dipped further in all consecutive trading days and eventually closed lower to 251.41, netting a loss of 5.43 points over the week. This week, trading was estimated at 39184 shares valued NPR 10.1 million compared to 48727 shares valued NPR 15.8 million of previous week. Commercial Bank and Finance companies shared 62.21 percent and 12.81 percent of total traded amount respectively. This week, Hotel sector and Finance sector improved while Insurance sector, Commercial banks and Development bank sector lost. Business sector, other sector and Production sector remained unchanged. Out of thirty-three traded companies, only five companies improved, seventeen companies lost and ten traded companies remain unchanged at their previous prices. Nepal Development Bank, Oriental Hotel and Bank of Kathmandu, registered the first, the second and the third most traded companies trading 11400, 7130 and 5283 shares respectively. Shares of Nepal Bank Ltd, Standard Chartered Bank, Everest Bank, NIC Bank, Nepal B’desh Bank, Bank of Kathmandu, Oriental Hotel, Neco Insurance, Lumbini Finance, Nepal Marchant Bank & Finance, Siddhartha Finance, Alpic Finance, Nepal B’desh Finance and Nepal Development Bank were able to trade in all four working days. Likewise, Himalayan Bank, Nebil Bank, Nepal SBI Bank, Taragaon Regency Hotel, Nepal Indosuez Bank, Shamjhana Finance and Sagarmatha Insurance were able to trade in three working days.

Forex round-up:

The USD strengthened against all the major trading partners over the week on improving trend of US economy. In the last 4th quarter, the US GDP increased by 0.2 percent. In the meantime, the Federal Reserve decided on Wednesday to keep unchanged the rates.

The Euro has slumped to a fresh six-month low of 0.8561. As long as equities take to the data kindly, positive dollar sentiment should continue, an analyst said. Dollar sentiment has been boosted by the latest US Treasury securities flow data, which shows a net inflow of $60 billion in November. Bilateral flows with the Euro zone are at $6.2 billion in favour of the dollar.

The yen strengthened modestly against the dollar over the week, but the yen was still under siege, dealer said. The yen’s latest trouble began on Thursday when ratings agency Standard and Poor’s issued a report pointing to a worrisome deflationary recession in Japan and warning that its sovereign credit rating could be cut again if reform were delayed.

The INR lost sharply against the dollar over the week. Although, the demand of dollar was increased due to commmercial factors but later the RBI support 48.53 level on the ground that the INR is still over valued by 2.5 percent against its trade weighted terms. The NPR also buoyed with INR depreciated by 25 paisa against the dollar over the week.