How is the current macro-economic and financial situation of the country doing? See both the facts and implications.
Nepal Rastra Bank (NRB)’s publication of monetary and financial situation on Sunday further escalates instability in the economy. The series of negative indicators in the report has questioned the economy’s ability to create a positive impact in the near future. The current account and Balance of Payment (BOP) further recorded deficit. However, seeing good among the bad, the country’s remittance income has finally made a recovery based on the seven months data which had been going down for three consecutive months i.e. from mid-November till mid-January of the current fiscal year. Yet, the remittance is still low compared to the previous year.
What is the position of inflation?
The inflation has risen to 5% in the Magh, 2074. Previously, the customer price inflation was recorded at 3.3% in Magh, 2073. The 5% inflation is also higher than the 4% inflation recorded in Poush, 2074. This hike has been attributed to the rise in prices of food items.
Implication: The constant increase in inflation implies the decreasing purchasing power of the general public.
See the Inflation scenario of Nepal in Sharesansar's New Economy section
What is the position of government revenue, expenditure and budget deficit, surplus?
The government expenditure has increased from Rs 313.3 billion (as per corresponding period of previous year) to Rs 428.88 billion. In terms of revenue collection, it has increased by 19.5% percent which amounts to Rs 381.34 billion. However, in the previous year, the government revenue had increased by a whopping 65% which stood at Rs 319.15 billion. The accelerating government expenditure and weakening government revenue concluded to a deficit budgetary position of Rs 26.47 billion.
Implication: Although budget deficit is usually considered good for the economy like ours, in the current scenario, the decline in government revenue has raised concern towards the economy.
See the full picture of Nepal's government revenue and expenditure in Sharesansar's New Economy section
See the full picture of Nepal's budget in Sharesansar's New Economy section
What is the position of remittance?
The worker’s remittance increased 1.7% which stands at Rs 401.35 billion. The number of foreign employment, on the other hand, decreased by 4.9% for the month of Magh, 2074. The net transfer receipts decreased 3.0% which amounts to Rs 460.85 billion. As per the data of the same period in previous year, the worker’s remittance had increased 5.2% while the number of Nepalese workers going for foreign employment had decreased 6.7%.
Implication: The decrease in remittance inflow is anticipated to be a problem for short run until and unless the country prepares itself to be self-reliant.
See the history of Nepal's remittance in Sharesansar's New Economy section
What is the position of capital expenditure?
The government initially targeted to spend Rs 335.17 billion as capital expenditure. At the end of Magh, 2074 only 17.92% of the budgeted capital expenditure was utilized. It amounts to Rs 60.08 billion.
Implication: This resembles the slow pace of development activities taking place in the country. It further implies country’s inefficiency in mobilizing the resources to meet the targeted budget.
See Nepal's capital expenditure
in Sharesansar's New Economy section
What is the position of current account and BOP?
The current account reveals an unpleasant scenario with a deficit of Rs 141.06 billion. In the same period of previous year, the current account deficit stood at Rs 10.66 billion.
Implication: This significant rise in current account deficit has resulted to tighter financial conditions. The cause for the increase in current account deficit has been attributed to the accelerating imports and dividend payment of foreign investment. One such real world example can be labeled as NCELL’s dividend repatriation that led to release of amount that was held off by Supreme Court on the request of tax authorities.
What is the position of BFI lending and deposit?
The ongoing CCD ratio crunch in the banking industry had formed a pessimistic view among the general public. As per the reports, the deposits at BFIs increased 6.8 percent in the review period compared to a growth of 8.9 percent in the corresponding period of the previous year. Credit to the private sector from BFIs increased 13.5 percent in the review period compared to a growth of 15.1 percent in the corresponding period of the previous year. NRB has been continuously encouraging the loan towards highly productive sector. In response to this direction, the increase in hire purchase loan was 8.4 percent, overdraft loan was 10.9 percent and real estate loan (including residential personal home loan) was 10.7 percent in the review period.
Implication: The CCD ratio crunch is significantly visible in the data published by NRB. Given the same market segment for all the BFIs and direction of NRB to increase the paid up capital has led to diminishing lending and deposit of BFIs.
See the full picture of Nepal's BFI's deposit and lending rate in Sharesansar's New Economy section
What is the position of interest rate?
The weighted average 91-day Treasury bill rate increased to 3.93 percent in the seventh month of 2017/18 from 2.64 percent a year ago. The weighted average inter-bank transaction rate among commercial banks, increased to 4.31 percent from 4.13 percent in the review month. The average base rate of commercial banks increased to 10.19 percent.
See the full picture of interest rate of Nepal in sharesansar's new economy section.
What is the position of import and export?
As per the NRB report, the export price index decreased 1.2 percent while import price index increased 1.9 percent in the seventh months of 2017/18. Consequently, the Terms of Trade (TOT) index decreased 3.1 percent compared to an increase of 4.7 percent in the corresponding period of the previous year.
Implication: Nepal is still dependent upon other countries in order to fulfill the necessities of the general public. The decreasing export further implies Nepal’s decreasing efficiency in producing its own goods and services.
How do you perceive the published macroeconomic and financial situation report by NRB? Do you perceive the upcoming future for Nepalese economy optimistically? Please do provide your views in the comment section below.
See the Inflation scenario of Nepal in Sharesansar's New Economy section
What is the position of government revenue, expenditure and budget deficit, surplus?
The government expenditure has increased from Rs 313.3 billion (as per corresponding period of previous year) to Rs 428.88 billion. In terms of revenue collection, it has increased by 19.5% percent which amounts to Rs 381.34 billion. However, in the previous year, the government revenue had increased by a whopping 65% which stood at Rs 319.15 billion. The accelerating government expenditure and weakening government revenue concluded to a deficit budgetary position of Rs 26.47 billion.
Implication: Although budget deficit is usually considered good for the economy like ours, in the current scenario, the decline in government revenue has raised concern towards the economy.
See the full picture of Nepal's government revenue and expenditure in Sharesansar's New Economy section
See the full picture of Nepal's budget in Sharesansar's New Economy section
What is the position of remittance?
The worker’s remittance increased 1.7% which stands at Rs 401.35 billion. The number of foreign employment, on the other hand, decreased by 4.9% for the month of Magh, 2074. The net transfer receipts decreased 3.0% which amounts to Rs 460.85 billion. As per the data of the same period in previous year, the worker’s remittance had increased 5.2% while the number of Nepalese workers going for foreign employment had decreased 6.7%.
Implication: The decrease in remittance inflow is anticipated to be a problem for short run until and unless the country prepares itself to be self-reliant.
See the history of Nepal's remittance in Sharesansar's New Economy section
What is the position of capital expenditure?
The government initially targeted to spend Rs 335.17 billion as capital expenditure. At the end of Magh, 2074 only 17.92% of the budgeted capital expenditure was utilized. It amounts to Rs 60.08 billion.
Implication: This resembles the slow pace of development activities taking place in the country. It further implies country’s inefficiency in mobilizing the resources to meet the targeted budget.
See Nepal's capital expenditure
in Sharesansar's New Economy section
What is the position of current account and BOP?
The current account reveals an unpleasant scenario with a deficit of Rs 141.06 billion. In the same period of previous year, the current account deficit stood at Rs 10.66 billion.
Implication: This significant rise in current account deficit has resulted to tighter financial conditions. The cause for the increase in current account deficit has been attributed to the accelerating imports and dividend payment of foreign investment. One such real world example can be labeled as NCELL’s dividend repatriation that led to release of amount that was held off by Supreme Court on the request of tax authorities.
What is the position of BFI lending and deposit?
The ongoing CCD ratio crunch in the banking industry had formed a pessimistic view among the general public. As per the reports, the deposits at BFIs increased 6.8 percent in the review period compared to a growth of 8.9 percent in the corresponding period of the previous year. Credit to the private sector from BFIs increased 13.5 percent in the review period compared to a growth of 15.1 percent in the corresponding period of the previous year. NRB has been continuously encouraging the loan towards highly productive sector. In response to this direction, the increase in hire purchase loan was 8.4 percent, overdraft loan was 10.9 percent and real estate loan (including residential personal home loan) was 10.7 percent in the review period.
Implication: The CCD ratio crunch is significantly visible in the data published by NRB. Given the same market segment for all the BFIs and direction of NRB to increase the paid up capital has led to diminishing lending and deposit of BFIs.
See the full picture of Nepal's BFI's deposit and lending rate in Sharesansar's New Economy section
What is the position of interest rate?
The weighted average 91-day Treasury bill rate increased to 3.93 percent in the seventh month of 2017/18 from 2.64 percent a year ago. The weighted average inter-bank transaction rate among commercial banks, increased to 4.31 percent from 4.13 percent in the review month. The average base rate of commercial banks increased to 10.19 percent.
See the full picture of interest rate of Nepal in sharesansar's new economy section.
What is the position of import and export?
As per the NRB report, the export price index decreased 1.2 percent while import price index increased 1.9 percent in the seventh months of 2017/18. Consequently, the Terms of Trade (TOT) index decreased 3.1 percent compared to an increase of 4.7 percent in the corresponding period of the previous year.
Implication: Nepal is still dependent upon other countries in order to fulfill the necessities of the general public. The decreasing export further implies Nepal’s decreasing efficiency in producing its own goods and services.
How do you perceive the published macroeconomic and financial situation report by NRB? Do you perceive the upcoming future for Nepalese economy optimistically? Please do provide your views in the comment section below.
