NRB report card on Current Macroeconomic Situation
Kathmandu, June 21: During the ten months of the FY 2010/11, government budget remained at a surplus of Rs. 1.61 billion and a high resource mobilization relative to total government expenditure accounted for such a surplus during the review period, said the Nepal Rastra Bank based on the ten months’ data of the Fiscal Year 2010/2011. In the corresponding period of the previous year, budget surplus had stood at Rs. 7.08 billion.
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| Nepal Rastra Bank |
During the review period, total government spending increased by 13.4 percent to Rs. 181.04 billion compared to an increase of 25.1 percent in the corresponding period of the previous year. During the review period, the low growth rates on both recurrent and capital expenditures were attributed for such a low growth rate in the government expenditure.
Similarly, during the review period, recurrent expenditure increased by 12.6 percent to Rs. 115.15 billion. In the corresponding period of the previous year, such expenditure had increased by 24.9 percent. Delay in the announcement of the annual budget was responsible for such a low growth rate of recurrent expenditure.
In the revenue sector, NRB stated that during the review period, revenue mobilization of the Government of Nepal (GoN) grew by 14.7 percent to Rs. 158.98 billion compared to an increase of 25.4 percent to Rs. 138.56 billion in the corresponding period of the previous year. The impact of the delay in the announcement of the government budget, revenue mobilization based on previous year's Finance Act during the first four months and slow growth accounted for this situation.
Of the total revenue mobilization, VAT revenue grew by 17.8 percent to Rs. 50.48 billion in mid-May 2011. It had increased by 37.5 percent in the corresponding period of the previous year. Lack of expansion of industrial products, ineffective billing system, use of fake bills and low invoicing practice attributed for such a low growth rate in VAT.
During the review period, custom revenue rose by 4.2 percent to Rs. 29.11 billion compared to an increase of 33.8 percent in the corresponding period of the previous year. The growth rate of custom revenue declined mainly due to the low growth rate of import compared to that of the corresponding period of the previous year.
Income tax revenue increased by 28.6 percent to Rs.31.79 billion during the review period. Such revenue had risen by 22.1 percent in the corresponding period of the previous year.
Similarly, during the first ten months of the FY 2010/11, the Government of Nepal received foreign cash loans amounting to Rs. 3.82 billion and foreign cash grants amounting to Rs. 18.17 billion. Such receipts were respectively Rs. 3.58 billion and Rs. 20.84 billion in the corresponding period of the previous year.
The overall BOP recorded a deficit of Rs. 11.67 billion during the ten months of FY 2010/11 compared to a deficit of Rs. 14.03 billion in the same period last year. The current account also registered a deficit of Rs. 10.47 billion compared to a deficit of Rs. 25.44 billion in the same period last year. The deceleration in the growth of trade deficit along with improvement in the service account attributed to such a decline in the current account deficit. Still, the overall BOP position has not improved as expected.
NRB stated that the gross foreign exchange reserves declined by 3.7 percent to Rs. 259.01 billion in mid-May 2011 from a level of Rs. 268.91 billion as at mid-July 2010. Such reserves had gone down by 14.1 percent to Rs. 246.20 billion in the same period last year.
On a monthly basis, foreign exchange reserve of Rs 5.96 billion increased in the month of April/May from the level of the previous month of this year. Out of total reserve, NRB's reserves declined by 2.0 percent to Rs. 201.33 billion in the review period from a level of Rs. 205.37 billion as at mid-July 2010. The gross foreign exchange reserves in USD terms increased by 0.3 percent to USD 3.62 billion in mid-May 2011. Such reserves had decreased by 6.6 percent in the same period last year. Based on the trend of import during the ten months of the current fiscal year, the current level of reserves is sufficient for financing merchandise imports of 8.2 months and merchandise and service imports of 7.1 months.
In the liquidity management sector, NRB injected net liquidity of Rs. 54.21 billion through secondary market operation during the review period. Liquidity of Rs. 21.0 billion was mopped up through outright sale auction of Rs. 2.0 billion and reverse repo auction of Rs. 19.0 billion during the review period. On the other hand, liquidity of Rs. 75.21 billion was injected through repo auction during the review period. Liquidity of Rs. 8.44 billion was mopped up through outright sale auction and reverse repo auction while Rs. 110.50 billion was injected through outright purchase auction and repo auction in the corresponding period of the previous year.
The NRB injected net liquidity of Rs. 139.64 billion through the purchase of USD 1.93 billion from foreign exchange market (commercial banks) during the review period. A net liquidity of Rs. 84.45 billion was injected through the purchase of USD 1.14 billion million from foreign exchange market in the corresponding period of the previous year.
Similarly, NRB purchased Indian currency equivalent to Rs. 157.95 billion through the sale of USD 2.18 billion in the Indian money market during the review period. INR equivalent to Rs. 132 billion was purchased through the sale of USD 1.77 billion in the corresponding period of the previous year.
According to NRB, the short-term interest rates remained slightly higher in mid-May 2011 compared to mid-May 2010. For example, the weighted monthly average 91-day Treasury bill rate stood at 9.0 percent in mid-May 2011 compared to 7.41 percent in
mid-May 2010. The weighted average inter-bank rate remained at 10.43 percent in mid-May 2011 compared to 7.13 percent in mid-May 2010.
The year on year (y-o-y) NEPSE index declined by 24.3 percent to 346.44 points in mid-May 2011. This index had stood at 457.81 in the same period last year. The decline in share prices was on account of the significant increase in the supply of securities.
The NRB stated the y-o-y inflation as measured by the consumer price index increased to 9.5 percent in mid-May 2011 from 8.8 percent in the corresponding period of the previous year. During the review period, the index of food and beverage group increased by 16.0 percent and the index of non-food and services group increased by 4.2 percent respectively. The indices of these groups had increased by 11.3 percent and 6.9 percent respectively in the corresponding period of the previous year.
Prime Minister-Chinese Envoy Meet
Kathmandu, June 21: Prime Minister Jhala Nath Khanal was called on by Chinese Ambassador to Nepal Yang Houlan today.
In a meeting held at the Office of the Prime Minister and Council of Ministers in Singha Durbar, matters related to various bilateral and mutual benefits including the expansion of Nepal-China economic relations were discussed.
Ambassador Yang enquired about the ongoing peace process and constitution drafting in Nepal and Prime Minister, in response, pledged to promulgate the new constitution on time by all means, informed Prime Minister's advisor on foreign affairs, Milan Tuladhar.
The two also dwelt on how Nepal could reap benefits from the prosperity China has gained and the possible area of cooperation Beijing could extend for the development of Nepal, Tuladhar further informed.
Ambassador Yang appreciated the Nepal government's commitment to prevent anti-China activities and Nepal’s stance on One China Policy.
The Chinese envoy, who came here in Kathmandu on Saturday to assume his office, had presented letter of credence to the President on Monday. Earlier, Ambassador Yang was special envoy on the Korean Peninsula.
Govt mulling full budget: Finance Minister
Kathmandu, June 21: Deputy Prime Minister and Minister for Finance, Bharat Mohan Adhikari said the government was bringing a full-fledged budget.
At a discussion on 'private sectors suggestions on the budget of the fiscal year 2011/012' organized by Federation of Nepal Chamber of Commerce and Industry (FNCCI) in the Capital on Tuesday, Minister Adhikari said it would easy to the full budget once the major political parties forged consensus on this.
Expressing happiness over the atmosphere made conduce by the private sectors to bring budget, Minister Mr Adhikari said he would uphold the suggestion of the private sectors to fix the date of budget announcement in the constitution and to announce this in Baisakh. The upcoming budget would focus on promotion of investment and social justice.
On the occasion, Finance Secretary Krishna Hari Baskota said the private sectors should not talk negative to the people at a time the country has gross domestic products over the average rate among the Asian nations, export increased with import rate decreased and foreign exchange reserve in a satisfactory condition.
FNCCI Chairman Suraj Vaidya suggested the government that it prepared the budget focusing on production and development rather than revenue-generating one. Various industrialists including president of the revenue committee of the FNCCI, Jagdish Prasad Rathi furnished suggestions to the government on budget.
Parties urged to keep freed kamaiyas rehabilitation free from politics
Dhangadhi, June 21: Freed Kamaiya leaders have urged the political parties not to politicize the task related to the rehabilitation of freed Kamaiyas.
Taking part in a progress review and planning workshop organised by the Ministry of Land Reform here on Tuesday, the freed Kamaiya leaders complained that the task of rehabilitating the freed kamaiyas in Kailali including other districts was delayed due to political interference.
Freed Kamaiya Society Chairman Pashupati Chaudhary urged the parties to allow the administrative mechanism work freely regarding the rehabilitation of the freed Kamaiyas, so as to take forward the task effectively.
Inaugurating the workshop, Minister for Land Reform and Management, Ramcharan Chaudhary stressed on the need to introduce and implement a policy aimed at putting an end to the culture of Kamaiyas.
According to information provided at the workshop, some 22,893 freed Kamaiyas have been rehabilitated so far in Kailali and Bardiya districts and some 4,677 are yet to be rehabilitated.
wb agrees to provide 1.70 b for urban development
Bhadrapur, June 21: The World Bank (WB) has agreed to provide grant of Rs. 1.70 billion for implementing the urban development programme in six municipalities in the eastern and western development regions.
The municipalities getting the WB grant assistance are the Itahari Municipality of Sunsari district, the Dhankuta Municipality, Dhankuta district and the Mechinagar Municipality, Jhapa district in the eastern region and the Baglung Municipality, Baglumg district, the Tansen Municipality, Palpa district and the Lekhnath Municipality, Kaski district in the western region.
Senior trainer from JIZ, Ishwor Joshi gave information about this at the skill enhancement training organised by the Mechinagar Municipality with the support from the department of urban development and building construction and JIZ here on Tuesday.
As per the agreement, the World Bank will invest total Rs. 1.70 billion for implementing the programe in the selected municipalities, said Joshi. Of the amount, Rs. 286 million will be apportioned to the Mechinagar Municipality alone.
No Interim Order on writ against Minister Sapkota
Kathmandu, June. 21: The Supreme Court on Tuesday decided that it was not necessary to issue an interim order on the writ petition filed against Minister for Information and Communications Agni Prasad Sapkota.
The SC made such decision in response to a writ petition filed by human rights activists including Sushil Pyakurel against Minister Sapkota, accusing him of his hand in the murder of Arjun Lama from Kavrepalanchowk district. The rights activists had filed the petition demanding the SC to suspend Minister Sapkota from the post till the settlement of the murder charge against him.
A joint bench of Justices Ramkumar Prasad Saha and Prakash Wasti delivered the decision that it would be against the law to suspend anyone holding government post or declare him disqualified only on the basis of the case filed against him/her until the investigation into the charge was completed.
The international law also says that such a person cannot be announced disqualified merely on the basis of their names figuring in the charge but needs an investigative indictment with evidence. So, there was no need of interim order till the activities of accused person causes the irreparable loss to anyone or ruins the services.
However, the SC stated in the decision that it is the moral duty of Minister Sapkota to cooperate to the state in the works related to the legal provision and criminal investigation.
The SC decision further directed the writ petitioners to file the reports, if any, on any influence, pressure and non-cooperation from any, through the office of the attorney general while conducting investigation every two weeks till the final decision on the writ petition on the murder charge.
After Kavre Police Office rejected the application filed by Purni Maya Lama, wife of the murdered Lama on Asar 21, 2064 BS against six persons including Minister Sapkota, the case was filed again on Saun 27, 2065 BS as per the Supreme Court order.
TIA service resumed
Kathmandu, June 21: The problem that was seen in the Tribhuvan International Airport (TIA) since early this morning after the black top in the runway was damaged. It had been difficult for the landing and flights to different destinations were affected when the 900 meters runaway in the airport was damaged.
Five planes had to return and two others flights were delayed due to the problem, said Ratish Chandralal Suman, General Manager of the airport. The five planes that were returned were also landed after the maintenance of the runaway, he said.
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