Economic targets attainable: NRB
KATHMANDU,DEC 3:
The central bank has claimed the economic targets for the current fiscal year seem to be attainable if the figures have to be believed in.
“The GDP growth rate of 5 per cent seems to be achievable as agriculture and non-agriculture sectors are reporting growth of 4 per cent and 4.5 per cent, respectively,” informed Nepal Rastra Bank (NRB) governor Dr Yubraj Khatiwada during a press conference painting a rosy picture of economy. He singled out seven per cent inflation as the exception for being difficult to attain as supply side factors that are fuelling price rise are still at large. Despite the improvement in other fronts, inflation is still bobbling between eight to nine per cent due to fundamental externalities.
“The increased income of the householders has shifted the demand pattern while supply is not at par pushing the prices up, so bringing back the balance will take time,” pointed out governor Khatiwada. This year’s monetary policy estimated to expand broad money supply by 12.5 per cent to maintain the Gross Domestic Production (GDP) growth rate of 5 per cent and general inflation at 7 per cent. However, International Monetary Fund (IMF) has projected Nepal to be able to attain 3.75 per cent GDP growth with eight per cent inflation, this current fiscal year.
The monetary measures were aimed at maintaining Balance of Payment (BoP) surplus of Rs 5 billion to manage foreign exchange reserve to maintain the import of merchandise and services for minimum of six months.The BoP situation has hit the record surplus level at Rs 33.8 billion in the third month of current fiscal year. The current foreign reserve is enough to finance merchandise and service export for next 8.6 months.
“The BoP surplus is not a windfall gain as being depicted but the increased remittance inflow and service account surplus is accountable,” said governor explaining the reason behind incredulous growth in surplus amount in three months.
As for the current liquidity surplus in the banking sector, governor expressed his doubts that this could even turn out to be bubble has to be considered before trying to do away with the excess liquidity in haste.
Realty needs correction
The central bank governor has expressed that real estate market can be salvaged if the realtors are ready to opt for price correction. “If the artificially blown up prices of lands and houses are brought back to real level attracting more costumers is not difficult as Nepali have enough money at present,” he said. He also pointed out that Nepal Rastra Bank’s regulation of maintaining maximum lending to single sector up to 25 per cent is not hindrance for banks and financial institutions to increase credit to real estate. “The total exposure to realty is 18 per cent but banks do not have confidence on realty’s payback capacity so credit had contracted,” he pointed out.
Source: THT
