Kathmandu, May 25: During the first nine months of the suret fiscal year 1999/00, the growth of narrow money has accelerated slightly while that of broad money has decelerated compared to the same period last year according to Nepal Rastra Bank’s press release. Total government expenditure has accelerated due to growth in development and freeze expenditure. Higher budgetary deficit has been recorded as a consequence of sluggishness in resource mobilisation in comparison to government expenditure.
The rate of inflation on point to point basis has decelerated to a lower single digit mainly because of the decline in the prices of food and beverages group.
In the external sector, although the growth rate of exports has outpaced that of imports, trade deficit has widened substantially mainly due to a relatively larger volume of imports. The foreign exchange holding of the banking system as envisaged by the monetary survey has recorded a rise due to a surplus in the balance of payments emanating from the growth in net foreign loan and transfer income. The existing foreign exchange reserve is sufficient to cover merchandise imports of 10 months as per the current trend. In the share market, share transaction as well as NEPSE index have increased as compared to previous month, according NRB press release.
During the first nine months of the current fiscal year, broad money has registered a decelerating growth of 12.8 per cent (Rs 19,518.7 million) amounting to Rs 172,414.4 million compared to the growth of 16.4 per cent (Rs. 20,730.2 million) last year. This is mainly due to the decline in the growth of net domestic assets of the banking system. Narrow money has, however, accelerated by 12.4 per cent (Rs 6,356.4 million) compared to the growth of 9.2 per cent (Rs 4,171.9 million) last year. As a consequence of downward revision of interest rate, improvement in share prices, growth of imports and expansion in the activities of non-bank financial institutions, time deposit has decelerated from 20.4 per cent (Rs 16,558.3 million) last year to 12.9 per cent (Rs 13,162.3 million) during the review period, NRB press release says.
As a result of growing claims on the government, total domestic credit of the banking system has increased by 11.4 per cent (Rs 15,393.7 million) during the review period as against in increase of 11.2 per cent (Rs 13,007.3 million) during the same period last year. In spite of a growth in imports credit, the growth rate of bank credit to the private sector has decelerated from 13.0 per cent (Rs 10,016,6 million) last year to 12.1 per cent (Rs 10,994. 4 million) during the review period mainly because of slow pick up of credit to industrial sector, it is stated in the press release.
On the fiscal front, government expenditure has accelerated from 10.9 per cent last year to 11.6 per cent amounting to Rs 35,565.6 million during the review period. This is mainly due to a rise in regular expenditure by 11.1 per cent, development expenditure by 10.5 per cent and freeze expenditure by 41.4 per cent.
Resource mobilization has marked a sluggish growth of 6.7 per cent during the review period compared to 23.4 per cent last year. Revenue collection, a major source of resources mobilisation, stood at Rs 27,702.8 million marking a 11.4 per cent growth compared to 17.5 per cent growth last year. In addition to it, decline in the receipts form foreign cash grant and non-budgetary income are also accountable for such a sluggish growth in the mobilisation of resources. As a consequence of lower resource mobilisation compared to expenditure, budget deficit of Rs 6,220.9 million has been recorded and this is 42.3 per cent higher than that of the previous year. During the review period, the government has received foreign cash loan amounting to 2,706.4 million and issued treasury bills worth of Rs 2.510.0 million while the remaining amount of Rs. 1,004.5 million has been overdrawn from Nepal Rastra Bank to meet the resources gap.
National Urban Consumer Price Index, on point to point basis, recorded a price rise of 2.5 per cent durign the review period compared to a rise of 10.1 per cent last year. A rapid fall in the prices of food and beverages group has helped to lower down the price index to a single digit. Price index of food and beverages group has declined by 0.2 per cent compared to 13.7 per cent increase last year. Despite a nominal pressure in the prices of restaurant meal, meat, fish and eggs, beverages, spices as well as milk and milk products, the declining price of oil and ghee, sugar and sugar products, vegetables, and fruits, pulses, grains and cereal products has contributed for such a decrease in the price index of food and benerages group. However, the price index of non-food and services group has maintained a growth rate of 6.0 per cent, same as that of last year. An upward revision in the prices of petroleum products, electricity and drinking water a few months back is attributed to a higher price index of the transportation and communication as well as housing sub-group. Regionwise, prices in Kathmandu has recorded a higher growth of 3.3 per cent followed by 2.7 per cent in Terai and 0.9 per cent in Hills, the press release says.
On the external front, both exports and imports have respectively registered a growth of 41.9 per cent to Rs. 36,886.0 million and 27.3 per cent to Rs. 78,808.8 million. In the export side, export of readymade garments, woolen carpet and pashimna followed by jewelleries has shown a growing tendency. During the review period,. Rs 4.1 billion worth of pashimina has been exported. However, exports of pulses, lanned skin and nigerseed have declined during the review period. Export-import ratio, which was 42.0 per cent last year, has increased to 46.8 per cent during the review period.
A surge in imports is attributed to higher imports of foodgrains, medicine, cement, textile, thread, glass and glassware, chemicals, agricultural tools, machineries etc. from third countries. Although exports have increased at a higher rate than imports, trade deficit which has declined last year increased by 16.8 per cent amounting to Rs 41,922.8 million mainly due to the large volume of imports compared to exports, the NRB press statement states.
Based on the available statistics for the first seven months of the current fiscal year, the balance of payment has remained favourable by Rs 10,155.0 million. In the review period, the growth in trade deficit outpacing the increase in net service and transfer income has resulted in the current account deficit of Rs 3,457.1 however, a substantial inflow of miscellaneous capital item net has helped balance of payments to register a sizable surplus. Based on the monetary statistics for the first nine months of the current fiscla year, overall balance of payment has recorded a surplus of Rs 10,412.5 million. As a result, foreign exchange holdings of the banking system has increased by 17.7 per cent to Rs 8,9060.0 million as at mid-April 2000. Of the total reserve 87.7 per cent accounted for convertible currency and 12.3 per cent for non-convertible currency, the press release says.