Wednesday, September 16, 2009

MACRO ECONOMIC SITUATION 2008-09 - Remittance Inflow in 2008-09 Highest Yet

Nepal received the highest ever remittances in 2008-09 exceeding this year's Monetary Policy's expectation of Rs 200 billion. According to current macroeconomic situation -- based on annual data of the fiscal year 2008-09 -published by Nepal Rastra Bank here on Sunday, Nepal received Rs 209.69 billion in 2008-09. It is 35.8 per cent of the gross domestic product.

Exceeds expectations,registers Rs 209.69 billion

Nepal received the highest ever remittance in 2008-09 exceeding this year' Monetary Policy (MP) expectation of Rs 200 billion.

"Nepal received Rs 209.69 billion in 2008-09," said the current macroeconomic situation -- based on annual data of the fiscal year 2008-09 -- published by Nepal Rastra Bank (NRB) here today. It is 35.8 per cent of the gross domestic product (GDP).

The overall Balance of Payment (BoP) rose to Rs 37.7 billion surplus in comparison to a surplus of Rs 29.7 billion a year ago. "The current account also recorded a massive surplus of Rs 41.4 billion compared to a surplus of Rs 23.7 billion in 2007-08 due to rise in net transfers -- remittance -- by 36.5 per cent," the central bank said.

According to a preliminary estimate of Central Bureau of Statistics (CBS), the real GDP growth stood at 3.8 per cent at basic price and 4.7 per cent at producers' price during the last fiscal year, the NRB report said.

In accordance with the currently released statistics by CBS, the manufacturing production index increased marginally by 0.19 per cent in 200809 against last year's decrease of 0.94 per cent.

The ratio of total consumption to GDP increased by 3.2 percentage points to 92 per cent. "As a consequence, the gross domestic savings remained only at eight per cent of the GDP ," it said.

In the review year, the ratio of investment to GDP stood at 31.8 per cent compared to 29.7 per cent in the preceding year.
The gross fixed capital formation reached 21.2 per cent with a marginal rise from 21.1 per cent in 2007-08.

"The inflow of foreign direct investment is not encouraging in the review year and that must be attributed to the gloomy investment climate. The number of joint venture projects increased by 8.5 per cent to 230, while the foreign investment tied with these projects decreased by 36.4 per cent to Rs 6245 million," said the report. Earlier in 2007-08, 212 joint venture projects with total FDI amounting to Rs 9811 million were registered in the Department of Industry.

The report also said that the annual average consumer inflation increased to almost double -- 13.2 per cent in comparison to an increase of 7.7 per cent in 2007-08 due to mainly on account of annual average price rise by 16.7 per cent on food and beverages group. The annual average price of nonfood and service group increased by 9.5 per cent During the last fiscal year, exports went up by 13.5 per cent in contrast to a nominal decline of 0.2 per cent a year ago. Exports to India rose by 6.2 per cent as against a decline of 7.6 per cent in the previous year. Likewise, exports to other countries expanded by 26.9 per cent compared to an increase of 17.3 per cent a year ago, it said.

"However, the total imports also soared by 28.2 per cent in comparison to an increase of 14 per cent a year earlier," the report pointed out.

Grants rose by 27.6 per cent compared to a growth of 15.2 per cent in the preceding year. In mid-July 2009, the gross foreign exchange reserves stood at Rs 280.0 billion -- an increse of 31.7 per cent compared to the level in mid-July 2008. The current level of reserves is adequate for financing merchandise imports for 11.8 months and merchandise and service imports for 9.7 months.

However, the government budget deficit -- on cash basis -- increased by 16.3 per cent to Rs 26.2 billion in 2008-09 as against a deficit of Rs 22.5 billion in 2007-08.

During the review period , revenue mobilisation increased significantly by 33.2 per cent to Rs 143.3 billion.
Revenue had risen by 22.7 per cent to Rs 107.6 billion in 200708, according to the NRB. Consequently, the revenue to GDP ratio moved up to 14.9 per cent.

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