Inflation to remain above 10pc
KATHMANDU, APR 28:
A respite from the rise in general price level is not in sight for Nepalis as the monetary authority of Nepal has officially announced that inflation this fiscal year will be in double digits.
“This year, the average rate of inflation will remain above 10 per cent as supply side factors are still difficult to contain,” said governor of Nepal Rastra Bank (NRB) Dr Yubaraj Khatiwada, during the 58th anniversary celebrations of NRB today.
Inflation is hovering over 10 per cent since the beginning of the fiscal year. The central bank had revised the inflation estimate during the mid-term monetary policy review to 9.5 per cent from 7.5 per cent. However, average inflation in the past eight months stands at 10.2 per cent.
“Nepal is going through a period of low growth rate and high inflation which is dangerous for an economy,” he added. Nepal will be achieving growth of 3.6 per cent this fiscal year, according to the Central Bureau of Statistics. NRB had also pulled growth expectation down to 4.1 per cent from 5.5 per cent.
“The monetary policy has a difficult time in pulling the economy in the right path when one factor — growth — and another — inflation —is running high,” said the central bank governor.
The governor expressed that macroeconomic indicators at the moment are mixed. “While foreign exchange reserves, banking sector performance, growth of deposit and credit, and capital market indicators are showing positive signs, the situation of exports, speed of inflation and state of government expenses are negative,” he said.
In the last eight months, trade deficit reached Rs 309.5 billion, as exports went up by a mere five per cent while imports surged by 22.1 per cent. The growing deficit in trade balance also impacted the balance of payments situation which remains at a surplus of Rs 11 billion.
Dr Khatiwada expressed his satisfaction with the present situation of the banking sector but pointed out that NRB will demarcate the ownership of banks between bankers and business persons within the next three years. NRB has already completed a Bank and Financial Institution Investors Survey for the purpose.
The governor assured that the base rate that was implemented in January 2013 is working towards narrowing the difference between lending and deposit rates.
“The liquidity with banks that seems to be a bit crushing at present will ease as soon as money in government coffers worth Rs 57 billion is released,” he said. So far, credit has grown by 13.8 per cent, while deposits grew by only six per cent that has started to affect the liquidity of banks.
NRB to launch new Rs 100 note
Nepal Rastra Bank has revamped the look of Rs 100 notes with special emphasis on Lumbini. The notes will now have the image of Nepal’s territorial map, along with images of Ashok Stambh and Mayadevi at Lumbini. Along with these images, the note will also contain a scripture saying ‘Lumbini – The Birth Place of Buddha’. Moreover, the currency notes that are printed from now on will also contain the year of printing.
Source: THT
