NRB reports inflation at 2%, fall in trade deficit

BY A STAFF REPORTER

Kathmandu, Mar. 31: The total expenditure of the government increased up to 19.2 per cent amounting to Rs. 32,676.9 million during the first seven months of the current fiscal year (2000/01) as against 18.4 per cent rise during the corresponding period last year.

Nepal Rastra Bank (NRB)’s press release on recent macroeconomic situation of the country said that of the total government expenditure, regular expenditure went up by 24.4 per cent whereas development expenditure increased only by 9.3 per cent. The increase in the freeze expenditure is recorded at 5.3 per cent.

During the review period, reources mobilisation grew by 19.7 per cent as a result of higher growth in revenue, foreign cash grants and net non budgetary receipts. However, because of higher government spending, budgetary deficit widened during the review period. The rate of inflation, on a point-to-point basis, has been recorded at two per cent as a result of decline in the prices of food and beberages group. On the external front, growth in exports accompanied by a relatively slower growth in imports, has helped to narrow down the trade deficit and subsequently the current account deficit during the review period. The foreign exchange holdings of the banking system continued to rise due to a surplus in the balance of payments emanating from the growth in official and miscellaneous capital inflows and a deeline in trade deficit. Foreign exchange reserves as at mid-February 2001, was sufficient to cover imports of eleven months. In the share markets, share transaction decclerated, compared to the previous month. In the money market, treasury bills rate remained at 5.2 per cent whereasinterbank rate remained at 4.1 per cent.

During the first seven months of the fiscal year 2000/01, broad money rose by 5.8 per cent (Rs 1,845.5 million) to Rs 196,966.4 million compared to a growth of 14.1 per cent domestic assets and net foreign assets can be attributed for such decelaration. The downward revision in interest rates on domestic deposits had led to the deceleration in the growth of time deposits from 13.3 per cent (Rs 13,483.9 million) last year to 6.0 per cent (Rs 7,521.7 million) this year. Growth in the narrow money supply also decelerated to 5.5.8 per cent (Rs 3,323.8 million) during the review period compared to the growth of 15.8 per cent (Rs 8,066.9 milllion) during the same period last year, the press release said.

As a result of a slow down in credit to the government and governments enterprises, the growth in total domestic credit of the banking system decelerated from 9.9 per cent (Rs 13,356.1 million) last year to 9.0 per cent (Rs 14,251.8 million) this year. The flow of bank credit tothe private sector decelerated to 11.2 per cent (Rs 12,235.4 million) during the review period compared to a growth of 11.9 per cent (Rs 10,763.5 million) in the preceding year. During the review period, revenue collection increased by 18.4 per cent to Rs 24,633.2 million compared to a lower growth of 12.1 per cent last year.

A significant growth in revenue collection coupled with growth in foreign cash grants andnet non-budgetary receipts constributed tothe19.7 per cent growth in resources mobilisation this year compared to 8.5 per cent last year.

In the context of lower resource mobilisation as compared to the government issued national savings bond of Rs. 1,000.0 million, treasury bills of Rs. 431.8 million and mobilised foreign cash loan of Rs. 2,609.9 million. The remaining amount of Rs. 1,876.7 million has been overdrawn from Nepal Rastra Bank.

The National Urab Consumer Price Index, on a point to point basis, recorded a rise of 2.0 per cent during the review period compared to a rise of 4.6 per cent last year. A fall inthe prices of food and beverages group helped to contain the rate of inflation at such a low level. Of the overall price index, price index of food and beverages group declined by 2.6 per cent during the review period compared to a rise of 1.2 per cent last year. Growth in the price index of non-food and services slowed down to 7.3 per cent from 8.5 per cent last year. Regionwise, price indices of Kathmandu and Hills have increased respectively by 3.4 per cent and 6.4 per cent and the price index of Terai has declined by 0.4 per cent. A significant decline of 6.1 per cent in the price index of food and beverages group in terai, helped the overall price index of the region to remain at such a low level. Due to the depreciation of the Nepalese rupees and a rise in the prices of petroleum products, the price index of imported goods increased by .9 per cent durng the review period as against an increase of 2.9 per cent last year, according to the press release.

On the external front, exports registered a decelearted growth of 21.8 per cent to Rs. 33,751.8 million during the review period compared to a growth of 41.1 per cent of during the same period last year. Exports to India went up by 29.3 per cent whereas export to third countries griew by 16.2 per cent. A decline in the export of readymade garments, woolen carpets and jewellery to third countries has been noted, whereas export of pashima, tanned skin and pulses has increased significantly. During the review period Rs. 5.82 billion worth of pashima has been exported.

During the review period, the growth rate of imports decelerted to 8.3 per cent amounting to Rs. 66,086.2 million from 31.4 per cent growth during the same period last year. The increase in imports can be attributed maily to a higher volume of imports of vehicles and parts, textiles, thread, cement, chemicals, agricultural tools and parts as well as other machineries from India and raw wool, petroleum products, bettle nuts, plastic granules, copper wire and sheet, thread, textiles, transportation goods and spare parts, computer parts, aeroplane parts, medicine, camera and palm oil from third countries.

During the review period, as the growth rate of exports has remained relatively higher than that of imports, trade deficit during the review period declined by 2.9 per cent compared to a growth of 24.2 per cent in the previous year. The export-import ratio which was 45.4 per cent last year improved to 51.1 per cent during the review period, NRB said.

Based on the available balance of payments statistics for the first five months of the current fiscal year, the balance of payments has remained favourable by Rs. 4,571.1 million. During this period, decline in net services income has resulted in the current account deficit of Rs. 3.029.7 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 payments to remain positive. Based on the monetary stastics for the first seven months of the current fiscal year, the overall balance of payments recorded a surplus of Rs 6,202.2 million. Accordingly, foreign exchange holdings with the banking system increased by 19.2 per cent to Rs. 106,029.5 million at mid-February 2001.

In the share market, market capitalisation of the companies listed in the stock exchange decreased to Rs. 55.9 billion at mid-February 2001 from Rs. 56.9 billion in the previous month. Likewise, NEPSE index decreased from 464.76 in the previous month to 455.34 at mid-February 2001.

Share market sees slight upsurge

BY A STAFF REPORTER

Kathmandu, Mar. 31: The share market of the country witnessed a slight upsurge during the past week following an 11 points fall during the preceding week.

The volume of transaction increased from Rs. 22.4 million to 34.7 million during the week covering March 26 to March 30.

Nepal Stock Exchange Ltd. (NEPSE) that saw 11.42 points fall during the previous week recorded over four points rise during the reported week. Seen sector-wise, the index of the banking sector recorded nine points rise while the indices of the other sectors either remained constant or slipped down.

The NEPSE index, according to Nepal Stock Exchange Ltd., rose by 4.29 points on the last day in comparison to the index of the first day. The NEPSE that figured 382.58 on the first day of the week rose to 386.87 on the last day (Friday).

The NEPSE index of the commercial banks rose to 439.28 by the end of the week from 430.94 in the beginning. The indices of the hotel and trading sectors remained constant at 303.66 and 116.68 respectively while the index of the manufacturing sector slipped from 344.21 to 341.51. Similarly, the index of the insurance and finance sector fell from 339.55 to 336.22.

During the reported week ending March 30, altogether 41,304 units of shares belonging to 35 enlisted companies (out of 52) were traded for Rs. 34.7 million, according to the report received from Nepal Stock Exchange Ltd.

During the week preceding it, 37,718 units of shares worth Rs. 22.4 million were traded on the NEPSE floor. The number of share transactions increased this week from 669 to 710.

So far as the group-wise trading of shares was concerned, the commercial banks group had a lead in the market with 90.34 per cent (up from 58.50 per cent previous week) of the total market transaction value. The finance companies sector followed with 4.93 per cent (down from 38.20 per cent). The transaction values of manufacturing and insurance sectors constituted 1.93 per cent and 1.76 per cent respectively of the total transaction. The transaction shares of the other sectors were negligent.

The NEPSE floor remained open Monday through Friday. The shares of Nepal Arab Bank, Nepal Bangladesh Bank, Everest Bank, Bank of Kathmandu, Nepal Industrial and Commercial Bank, Necon Air HISEF Finance ACE Finance, Sagarmatha Insurance, Lumbini Finance and Leasing Company were traded on all the open days.

The shares of Nepal Bank, Nepal Grindlays Bank, Universal Finance were bought and sold on four of the five days.

Nepal Indosuez Bank, Bishal Bajar Company, Himalayan General Insurance, Nepal Finance and Saving Company and Kathmandu Finance had only one transaction each during the week.