Kathmandu, June 23: During the first ten months of the current fiscal year 1999/2000, the growth rates of both narrow as well as broad money have slowed down compared to the same period last year, a press release issued by the Nepal Rastra Bank said.

In spite of an acceleration in the growth of development expenditure, total government expenditure has decelerated mainly due to control in regular expenditure.

Higher budgetary deficit has been recorded as a consequence of sluggishness in resource mobilization in comparison to government expenditure.

The rate of inflation on point to point basis has decelerated to a lower single digit level mainly because of 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 the relatively large volume of imports.

The foreign exchange holdings of the banking system as per the monetary records have substantially gone up due to surplus in the balance of payment emanating from the growth in net service and transfer income as well as miscellaneous capital inflows.

The existing foreign exchange reserve is sufficient to cover merchandise imports of ten months and a half as per the current trend.

In the share market, although the number of transactions has declined, translocation value and NEPSE index have increased compared to previous month, the press release said.

During the first ten months of the current fiscal year, broad money has registered a decelerating growth of 14.5 per cent (Rs 22,169.9 million) amounting to Rs 175,065.6 million compared to the growth of 18.7 per cent (Rs 23,651.6 million) last year.

This is mainly due to the deceleration in the growth of net domestic assets of the banking system.

As a consequence of downward revision of interest rate on deposit, improvement in share market, growth of imports and expansion in activities of non-bank financial institutions, growth of time deposits has decelerated from 21.2 per cent (Rs 17,201.8 million) last year to 15.7 per cent (Rs 15,974.9 million) this year.

Likewise narrow money has also decelerated by 12.1 per cent (Rs 6,195.0 million) this year compared to the growth of 14.3 per cent (Rs 6,449.8 million) last year.

As a result of growing claims on the government and private sector, total domestic credit of the banking system has increased by 14.6 per cent ( 19,674.2 million) during the review period compared to an increase of 12.8 per cent (Rs 14,797.8 million) during the same period last year.

In spite of a slow growth in industrial credit , the growth rate of bank credit to the private sector has increased to 15.8 per cent ( Rs 14,321.1 million) from 13.9 per cent (Rs 10,707.5 million) last year, mainly due to the increase in credit flow to import and service sector.

On the fiscal front, government expenditure has increased by 10.2 per cent amounting to Rs 40,850.5 million during the review period compared to 14.6 per cent last year. Of the total expenditure, regular expenditure has increased by 9.5 per cent, development expenditure by 10.0 per cent and feezee expenditure by 41.4 per cent.

During the review period, regular expenditure has decelerated while development expenditure has slightly moved up compared to that of the previous year.

Resource mobilisaiton has marked a sluggish growth of 8.3 per cent during the review period compared to 15.5 per cent last year.

Revenue collection, a major source or resource mobilisation, stood at Rs 30,801.8 million marking a 11.5 per cent growth compared to 11.2 per cent growth last year.

In addition to it, decline in the receipts from foreign cash grants and non-budgetary income are also accountable for such a sluggish growth in resource mobilisation. As a consequence of lower resource mobilisation compared to expenditure, budget deficit of Rs 7,853.6 million has been recorded and this is 19.2 per cent higher than that of the previous year.

During the review period, the government has received foreign cash loan amounting to Rs 2,805.0 million and issued treasury bills as well as national saving bonds worth Rs 2,510.0 million and Rs 700.0 million respectively, the press release said.

The remaining amount of Rs 1,838.6 million has been overdrawn from the Nepal Rastra Bank.

National Urban Consumer Price Index, on point to point basis recorded a rise of 1.8 per cent during the review period compared to a rise of 10.3 per cent last year. A rapid fall in the prices of food and beverages group has helped lower down the price index to a single digit.

Price index of food and beverages group has declined by 3.0 per cent compared to 14.5 per cent increase last year.

Despite an increase in price index of restaurant meal, meat, fish and eggs beverages, milk and milk products as well as spices, the declining prices of oil and ghee, vegetables and fruits, cereal products, sugar and sugar products and pulses have contributed to such a decrease in the price index of food and beverages group.

However price index of non-food and services group has increased from 5.4 per cent last year to 7.8 per cent during the review period mainly due to the rise in prices of transport and communications, education and recreation, housing, medicine and personal care, tobacco, cloth, clothing and sewing services as well as shoes.

Regionwise, prices in Kathmandu has recorded a higher growth of 3.2 per cent followed by 1.2 per cent in Terai and 0.9 per cent in Hills.

On the external front, both exports and imports have respectively registered a growth of 42.4 per cent to Rs 41,742.0 million and 25.0 per cent to Rs 87,859.7 million during the first ten months of fiscal year 1999/2000.

In the export side, export of readymade garment and Pashmina to third countries have increased significantly whereas that of woolen carpet and jewellery have shown only a marginal increment.

During the review period, Rs 4.8 billion worth of Pashmina has been exported. However, exports of pulses, tanned skin and nigerseed have declined during the review period. Export-import ratio, which was 41.7 per cent last year, has increased to 47.5 per cent during the review period.

A surge in import is attributed to higher imports of foodgrains, medicine, cement, textile, thread, glass and glassware, chemicals, agricultural tools, machineries etc. from India and sugar, copper wire and sheet, thread, transportation goods and spare parts, aeroplanes and its parts, chemicals, gold and other machineries as well as spare parts from third countries.

Although exports have increased at a higher rate than imports, trade deficit which had declined last year increased by 12.6 per cent amounting to Rs 46,117.7 million mainly due to a relatively larger volume of imports compared to exports.

Based on the available statistics for the first eight months of the current fiscal year, the balance of payment has remained favourable by Rs 11,915.0 million. During 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 3333.1 million. However, a substantial inflow of miscellancous capital item net has helped balance of payment to register a slzeable surplus. Based on the monetary statistics for the first ten months of the current fiscal year, the overall balance of payment has recorded a surplus of Rs 13,469.0 million. As a result, foreign exchange holdings of the banking system has increased by 21.4 per cent to Rs 9175.6 million as at mid-May 2000. Of the total reserve 84.9 per cent accounted for convertible currency and 15.1 per cent for non-convertible currency