National 3 (Spotlight Weekly)

NRB REPORT

Mixed Picture

The central bank’s financial diagnosis of the first month of the current fiscal year gives reasons to rejoice

By A CORRESPONDENT

The financial report prepared by the Nepal Rastra Bank (NRB) showed that the export trade and revenue has registered handsome growth in the first month of the current fiscal year 2003/2004.

During the month (July/August), the export grew by 34.9 percent compared to the same period last year. The growth was due to increase in the exports of readymade apparels, woolen carpets and refined leather.

Dr. Lohani : Upbeat indiction

Likewise, the revenue collection also grew by 18.1 percent in the period. The revenue has grown due to increasing imports. The government expenditure in the period, too, decreased by 11 percent to reach Rs 2.87 billion.

However, the pressures on inflation and decline in the capital market are the negative aspects of the economy at present. The inflation is 5.0 percent at present compared to 4.2 percent in the same period last year. The declining trends of paddy production, increase in petroleum products and rise in the prices of foodstuffs have given way to high inflation, it states.

The export grew by 34.9 percent to reach Rs 3.67 billion in the review period compared to the same period of the last fiscal year. Exports to India grew by 57.9 percent to reach Rs 2.05 billion. In the same period of the last fiscal year, the exports to India had declined by 49.7 percent. The exports to the third countries also grew by 13.9 percent in the period to reach Rs 1.62 billion. This had also decreased by 22.1 percent in the same period last year.

In this period, the exports of pashmina decreased by 21.2 percent and jewelries by 7.4 percent. However, the exports of readymade apparels grew by 15.9 percent, woolen carpets by 3.7 percent and refined leather by 318 percent.

In the import front, the total imports grew by 19.6 percent to reach Rs 9.75 billion. The imports had decreased by 6 percent in the same period last fiscal year. The imports from India increased by 24.3 percent and those from the third countries increased by 13.5 percent.

During the mid-August 2003, the total foreign exchange reserves totaled Rs108.76 billion. Out of it, Rs 98.03 billion are of convertible foreign currencies. Compared to the same period last fiscal year, the reserve volume has grown by 22.9 percent.

As another evidence of creeping optimism in the economy, the Nepal Stock Exchange (NEPSE) is exhibiting signs of improvement since last two weeks after a long period of sustained decline. Last week the NEPSE index rose by 0.52 points to reach 207.80. It had risen by 0.18 points the previous week As usual the transactions of shares of banks and financial institutions continue to dominate the overall transactions at the stock exchange. The government is also preparing to equip the NEPSE with modern gadgets to computerize the transactions there.

Meanwhile, with the objective of making the transactions at the public offices and government institutions transparent, the government is soon introducing a separate bill on Fiscal Transparency. According to Dr. Prakash Chandra Lohani, finance minister, the government honors the public’s right to be well-informed and has, therefore, decided to introduce the Transparency bill to make the government activities transparent and prevent corruption.

Dr. Lohani has also recently said that the budget implementation of the first quarter of the current fiscal year is going on satisfactorily despite adverse security situation and other difficulties. He said that in the last few months, the government has already introduced Build-Own-Operate-Transfer act and is in the process of drafting laws for Special Economic Zones with the participation of the private sector. He hinted that the government has requested International Civil Aviation Organization (ICAO) to evaluate the assets and liabilities of the Royal Nepal Airlines Corporation (RNAC) in order to turn it into a company. He expressed satisfaction over the development expenditure and revenue mobilization.