Govt expenditure is up; foreign grants down: NRB
The Nepal Rastra Bank (NRB) has said that the government spending has recorded a growth of 22.5 percent in the last two months of the current fiscal year.
A current macroeconomic situation based on first two month's data of 2006/07 released by the NRB said that the government spending in the last two months of the current fiscal year was Rs. 9.8 billion.
"A significant rise in the recurrent expenditure largely accounted for a surge in overall government expenditure," the central bank said. The government expenditure went up by 17.1 percent in the same period of the last year.
The total foreign financial grant assistance and foreign loans declined by 39.8 percent and 15.2 percent respectively in the first two months of 2006/07, in contrast to an increase of 65.8 percent and 54.3 percent respectively in the same months last year.
Speaking at the programme organised to release the report, NRB Governor Bijay Nath Bhattrai said that the foreign grants and loan declined in last two months as the government was preparing its policies and expressed the hope that the foreign grant would increase in the coming days as donor agencies have started giving assurance for increasing their support.
The report, however, said the government revenue went up by 22.3 percent to 10.8 billion rupees in the first two months of 2006/07.
The report has also presented dim picture in the foreign trade sector.
The total foreign trade increased by mere 6.7 percent in two months of 2006/07 in comparision to a growth of 22.4 percent in the corresponding period of 2005/06. Exports grew by just 0.1 percent compared to an increase of 16.9 percent in 2005/06.
According to the report, total imports rose by 9.1 percent in the first two months of 2006/07 compared to growth of 24.7 percent in the same period of the previous year.
Saying that the foreign trade scenario is not satisfactory, Governor Bhattrai said the government should immediately adopt measures to improve foreign trade.
He urged the government to take necessary steps to exploit the potentials of hydropower and tourism sector.
"In the first two months of 2006/07, trade deficit rose by 14.5 percent compared to an increase of 29.9 percent in the corresponding period of 2005/06," the NRB report said.
On the foreign currency reserve, the NRB report said, "In comparison to mid-July 2006, gross foreign exchange reserves increased by 0.5 percent to Rs. 166 billion in mid-September 2006," adding, "The current level of reserves is adequate for financing merchandise imports of 11.5 months and merchandise and service imports of 9.3 months."
The central bank further said that the consumer price inflation moderated to 6.6 percent in mid-September 2006, as compared to 8.2 percent in mid-September 2005.
Region-wise the price level remained high in the hills at 7.2 percent and Terai at 6.7 percent and relatively low in the Kathmandu valley at 6.0 percent.
On liquidity, the Central Bank said the net liquidity injection through the intervention of foreign exchange market stood at Rs. 11.3 billion in the review period compared to Rs. 3.3 billion in the previous period.
"In the review period, net liquidity of Rs. 6.4 billion was mopped up through market operations in treasury bills compared to Rs 1.4 billion in the previous year," the NRB report adds.
Governor Bhattrai said that the economy of the country is facing pressure as the government has to spend large amount for the management of cantonment sites of the Maoists and for holding the elections of the constituent assembly.
He, however, said that the positive response of the donor community have shown positive sign in the national economy.
Governor denies charges of assisting royal regime
Commenting on the recommendation of the high level probe commission to take action against him for assisting the royal regime, NRB Governor Bhattrai said that he did not know anything about the recommendation for action to him.
He said that the central bank has the responsibility of making payments to the cheques issued by the government and to open letter of credit for the government.
Bhattrai also said that he was ready to give clarification if concerned authorities asked about his wrongdoings.
The Rayamajhi commission has recommended action against governor Bhattrai accusing him of assisting the royal regime.
There were reports that the then royal government spent 500,000 per day to suppress pro-democracy movement. nepalnews.com pb Nov 27 06
