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NRB's macro-economic report BY A STAFF REPORTER Kathmandu, Nov. 3: Nepal Rastra Bank (NRB) today reported that the first two months of the current fiscal year (2000/2001) witnessed a decline in both narrow and broad money. The government expenditure accelerated mainly due to the growth in regular and development expenditures, a NRB press release said. On spite of a deceleration in revenue collection, resource mibilisation remained high because of a significant growth in foreign cash grant receipts and non-budgetary income, thereby resulting in budgetary surplus. The rate of inflation on the point-to-point basis dropped to less than one per cent mainly due to the decline in the prices of food and beverages group, according to the press release. In the external front, because of a higher growth rate of exports than that of imports, trade deficit decreased compared to the last year. The foreign exchange holdings of the banking system rose substantially due to a surplus in the balance of payment emanating from the growth in miscellaneous capital inflows. The resulting foreign exchange reserve was sufficient to cover merchandise imports for eleven months. The release added that share transaction improved significantly during the reported period. Monetary Sector During the first two months of the fiscal
year 2000/01, broad money registered a decline 0.4 per cent (Rs. 769.2 million) amounting
to Rs. 183,711.1 million compared to a decline of 0.3 per cent (Rs. 500.0 million) during
the same period last year. A decline in the growth of net domestic assets and only a
marginal increment in net foreign assets attributed to such a decline in broad money. As a
consequence of downward revision of interest rate on deposit, growth of imports and
expansion in resource mobilisation activities of non-bank financial institutions, growth
of time deposits decelerated from 2.6 per cent As a result of a decline in the credit flow
of government and government enterprises, total domestic credit of the banking system fell
short by 0.4 per cent (Rs 572.9 million) during the review period compared to a decrease
of 0.2 per cent (Rs 336.2 million) in the preceding year. The flow of bank credit to the
private sector increased by 0.9 per cent Fiscal Sector On the fiscal front, government expenditure increased by 26.0 per cent amounting to Rs. 5,699.7 million during the review period in contrast to a decline of 15.6 per cent last year. Of the total expenditure, regular expenditure and development expenditure increased by 35.8 per cent and 32.8 per cent respectively, while freeze expenditure decreased by 4.3 per cent. A substantial increment in the salaries for government staff has mainly attributed for a rise in regular expenditure. Whereas an early preparation of the budget and its release in time has helped to speed up the growth of development expenditure. Resource mobilisations marked a growth of 26.9 per cent during the review period compared to a growth of 12.8 per cent in the previous year. Revenue collection, a major source of resource mobilisations, stood at Rs. 5,458.8 million at a 9.9 per cent growth compared to a growth of 10.8 per cent in the previous year. However, an increase in the receipts from foreign cash grants and non-budgetary income have resulted in the higher resources mobilisation with a budgetary surplus of Rs. 522.4 million. During the review period, the government received foreign cash loan amounting to Rs. 890.6 million, and as such, there was a surplus of Rs. 1,413.0 million in the treasury, the press release stated. National Urban Consumer Price Index (NUCPI), on point to point basis, recorded a rise of 0.3 per cent during the review period compared to a rise of 5.5 per cent in the previous year. A fall in the prices of food and beverages group helped to lower down the inflation rate to less than one per cent. Of the overall price index, price index of food and beverages group declined by 4.4 per cent compared to 6.2 per cent increase in the preceding year. There was an increase in the price of spices, sugar and sugar products, milk and milk product, restaurant meals, vegetables as well as fruits, meat, fish and eggs, and pulses. However, the declining prices of cereal products, oil and ghee as well as beverages contributed for such a decrease in the price index of food and beverages group. Price index of non-good and services group increased from 4.8 per cent in the previous year to 6.5 per cent during the review period. This was mainly due to the rise in prices of transport and communications, housing, medicine and personal care, tobacco, education and recreation, shoes, cloth, clothing and sewing services. Region wise, price indices of Kathmandu and Hills increased by 1.7 per cent and 1.3 per cent respectively and that of Terai decreased by 0.9 per cent, according to the press release. External Sector On the external front, exports and imports both registered respective growths of 35.3 per cent to Rs. 9022.1 million and 8.8 per cent to Rs. 17,566.1 million during the review period. Although there has been a significant increase of exports to India, exports to third countries have decelerated during the review period in spite of a decrease in the exports to readymade garment, woolen carpet, and jewelry to third countries have declined, exports of tanned skin, pulses and nigerseed have improved compared to that of last year. During the review period, Rs. 2 billion worth of Pashmina has been exported. The export-import ratio, which was 41.2 per cent in the previous year, imporved to 51.4 per cent during the review period. The increase in imports was attributed mainly to a higher imports of vehicles and parts, textile, thread, chemicals, agricultural tools and machineries from India and petroleum products, beetle nuts, crude oil, plastic granules, copper wire and sheet, thread, textile, transportation goods and spare parts, computer parts, aeroplanes parts, medical equipment and palm oil from third countries. The growth rate of exports was high while that of imports remained low compared to last year. As a result trade deficit during the review period declined by 10.2 per cent amounting to Rs. 8544.0 million compared to a growth of 45.5 per cent in the previous year. Based on the available statistics for the preceding fiscal year 1999/00, balance of payment (BOP) remained favourable by Rs. 14,285.1 million. During the review period, decline in net service income, marginal growth of net transfer and trade deficit resulted in the current account deficit of Rs. 5,627.4 million. However, a substantial inflow of miscellaneous capital items helped balance of payment to register a sizeable surplus. Based on the monetary statistics for the first two months of the fiscal year 2000/01, the overall balance of payment recorded a surplus of Rs. 665.6 million. Foreign exchange holdings of the banking system increased by 23.8 per cent to Rs. 94,986.7 million as at mid-Sept. 2000. Of the total reserves, 84.4 per cent accounted for convertible currency and 15.6 per cent for non-convertible currency, the released said. Other Stories |
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