DURING the first eight months of the current fiscal year 1999/00, the growth of narrow money has accelerated while that of broad money slowed down. Total government expenditure has accelerated due to the growth in all expenditure heads.

Higher budgetary deficit has been recorded as a consequence of sluggishness in resources mobilisation in comparison to government expenditure. The rate of inflation on point to point basis has declared because of the improvement in the prices of both the food and beverage as well as non-food and services groups.

In the external sector, in spite of a higher growth rate of exports than that of import, trade deficit has widened substantially mainly due to a relatively larger volume of imports. Foreign exchange holdings of the banking system continues to rise due to a surplus in the balance of payment emanating from the flowed of net services and transfer income as well as miscellaneous capital net.

The existing foreign exchange reserve is sufficient to cover merchandise imports of 10 months. In the share market, both share transaction and NEPSE. Index have increased significantly as compared to previous month, according to Nepal Rastra Bank (NRB) press release.

During the first eight months of the current fiscal year, broad money has registered a declaring growth of 11.1 per cent (Rs16,934.5 million) amounting to Rs.169,830.1 million compared to the growth of 14.1 per cent (Rs. 17,783.2 million) last year. This is mainly due to the decline in the growth of not domestic assets of the banking system during the review period. Narrow money has, however, accelerated by 12.5 per cent (Rs.6,406.2 million) compared to the growth of 6.4 per cent (Rs.2,896.3 million) last year time deposit during the review period has decelerated from 18.3 per cent (Rs 14,886.9 million) to 10.3 per cent (Rs.10,528.3 million) as a consequence of downward revision of interest rate, improvement in share prices, growth of imports and expansion of activities of non-banking financial institutions, the press release says.

As a result of growth claim on the government, total domestic credit has increased by 8.6 per cent (Rs.11.5618.8 million) during the review period while such an increase was 7.2 per cent (Rs.8.326.8 million) last year.

Because of slow pick up of credit to industrial sector, in spite of a growth in import credit, the growth rate of banking credit to the private sector has declared from 9.5 per cent (Rs. 7,298.3 million) last year to 9.1 per cent (Rs.,8,268.5 million) during the review period.

FISCAL SIDE

In The Fiscal Side government expenditure has accelerated from 10 .7 per cent last year to 17.0 per cent amounting to Rs.31,082.0 million during the review period.

This is mainly due to the significant rise in development expenditure by 18.5 per cent, regular expenditure by 15.4 per cent and freeze expenditure by 41.4 per cent.

Expansion of development activities in the public sector has contributed to the growth of development expenditure during the review period.

Resource mobilisation had marked a sluggish growth of 7.8 per cent during the review period compared to 23.2 per cent last year. Revenue collection, a major source of resource mobilisation, stood at Rs.23, 9027 million marking a 12.1 per cent growth compared to 13.8 per cent growth last year.

In addition to lit, decline in the receipts from foreign cash grant and non-budgetary income are also accountable for such a sluggish growth of resource mobilisation.

As a consequence of lower resource mobilisation compared to expenditure, budget deficit of Rs.5.568.6 million has been recorded and this is 91.2 per cent higher than that of the previous year. During the review period, the government has received foreign cash loan of Rs.2,553.9 million, issued treasury bills worth of Rs.2,300.0 million and overdrawn Rs.714.7 million from Nepal Rastra Bank for deficit financing, it is said.

PRICE INDEX

National Urban Consumer Price Index, on point to point basis, recorded a price rise 2.8 per cent during the review period compared to 10.3 per cent in the previous year. The decelerating trend in the prices of food and beverages group as well as non-food and services group has helped to lower down the price to a single digit. Price index of food and beverage group has increased minaly by 0.1 per cent compared to 13.9 per cent last year. Despite a nominal pressure in the prices of restaurant meal, meat, fish and eggs. Beverages, milk and milk products as well as foodgrain, the declining price of a oil and ghee, sugar and sugar products, spices, pulses, vegetables and fruits has contributed for such a low growth in the price of food and beverages group. The price of non-food and services group has also declined from 6.2 per cent last year to 6.1 per cent during the review period.

Although there has been a slight increase in the price index of transportation and communication as well as housing subgroup mainly due to an upward revision of prices of petroleum products, electricity, and drinking water, the slow down in the prices of other subgroup items has attributed to the declaration in the price. Index of non-food and services group. Regionwise, prices in Kathmandu has recorded a higher growth of 4.3 per cent followed by 2.5 per cent in Terai and 1.2 per cent in Hills, it is said.

Export Trade Situation

ON THE EXTERNAL front exports have increased by 41.6 per cent to Rs.3,2501.4 million and import have gone up by 29.1 per cent to Rs.6,9307.9 million. In the export side, export of readymade garments, handicrafts and jewellery followed by Pashmina has shown a growtgh tendency. During the review period, Rs.3550.0 million worth of Pashmina has been exported. However exports of carpet, pulses, tanned skin and nigerseed have declined during the review period. Export-import radio, which was 42.8 per cent last year, has increased slightly to 46.9 per cent during the review period. A surge in imports is attributed to higher imports of foodgrains, medicine, cement textile, thread, glass and glassware, plastic were, chemical, agricultural,. tools etc. from India and gold, raw wool, copper, wire and sheet, transportation goods and spare parts, communication equipments, construction materials, crude oil and steel sheet from third countries. Although exports have increased at a higher rate than imports, trade deficit which had declined last year increased by 19.8 per cent amounting to Rs.3,6806.5 million mainly due to a large volume of imports compared to exports, according to press release.

Based on the available statistics for the first six months of the current fiscal year, the balance of payment has remained favourable by Rs.5792.6 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.4407.9 million. However, a substantial inflow of miscellaneous capital item net has helped balance of payments to register a sizable surplus.

Based on the monetary static’s for the first eight months of the current fiscal year, overall balance of payments has recorded a surplus of Rs.11915.1 million. As a result, foreign exchange holdings of the banking system has been increasing continuously, the press release says.