The country's economy is in a mixed state: Governor Adhikari

"Despite the slowdown in credit growth and economic activity due to the decrease in overall demand, this year the bank was successful in improving the external sector and maintaining foreign exchange reserves, controlling inflation, strengthening the payment system and maintaining financial stability," said the Governor's official. , 'As in the previous financial year, the remittance inflow has been high in the current year as well. Remittance inflow has increased significantly and imports have decreased, which has helped to manage liquidity and reduce the pressure on interest rates.

Governor Adhikari also claimed that the basis for increasing economic activity has been created due to sufficient liquidity and decreasing interest rates of loans. He said that while the growth rate of wholesale price and salary and wage rate index is low, even in India, the country from which Nepal imports more than two-thirds, inflation is decreasing and the pressure on the price situation is gradually decreasing.

According to the current year's consumer price index, the price increase rate will remain within the prescribed limit of six and a half percent, the governor's official said. However, due to the ongoing conflict in Russia-Ukraine and the countries of the Middle East and restrictions imposed by some countries on food exports, there is still a risk that the prices of fuel and food may fluctuate. He said.

In the financial year 2080/81, the growth rate of agricultural production is expected to be satisfactory due to timely planting, favorable weather conditions and easy supply of fertilizers, the Governor's official mentioned. Similarly, he said that the economic growth rate will be at an average level in the current year due to the addition of about six megawatts of hydropower generation and improvements in the tourism sector.

'Government's capital expenditure is not being met as expected and since a significant number of young people have gone abroad for foreign employment and studies in recent years, internal demand is lax. "Especially construction, trade and manufacturing industries have been more affected by economic relaxation", he said.

He also said that the non-performing loan ratio has increased as the banking system is under pressure due to some relaxation in economic activity. According to the National Bank, the average non-performing loans of banks and financial institutions reached 3.73 percent of the total loans last February.

However, as of the end of February, the net liquid assets of banks and financial institutions were 29.41 percent of total deposits and 12.44 percent of total capital risk-weighted assets, so the financial position of banks and financial institutions in Nepal is in a strong state. He said that Rashtra Bank has formulated some important laws and procedures for the management of the monetary and financial sector. 'Banks and Financial Institutions Act, 2073 and Nepal Rashtra Bank Act, 2058 have been drafted and the amendment process has been moved forward. A draft amendment to the Banking Offenses and Punishment Act, 2064 and a draft law on social responsibility have been submitted to the Government of Nepal', the governor's official said, 'Foreign Exchange (Regulation) Act, 2019; After reviewing the Payments and Payments Act, 2075 and the Bill of Exchange Act, 2034, the work has been progressed in drafting the amendment draft.

It was also informed that the draft law related to lease finance, restructuring and securitization of financial assets is in the process of being drafted. Similarly, the Payment and Payment Regulations, 2077 have been amended to further clarify the provisions related to mergers and acquisitions of organizations licensed to perform payment-related activities. The National Bank has said that it has been implemented.

The permission policy to be granted to the payment related institutions, 2079, Nepal Rastra Bank, Foreign Investment and Foreign Credit Management Regulations, 2078 (with the third amendment) issued and Nepal Rastra Bank Foreign Regulation Transaction Licensing and Inspection Regulations, 2077 have been amended. .

economic and monetary indicators

Nepal Rastra Bank, which is the central bank of Nepal, has entered its 69th year after completing 68 years of its establishment. On the occasion of the anniversary, the governor officer also presented various economic and monetary indicators related to the country's economy. According to the World Economic Outlook published by the International Monetary Fund in April 2024, the growth rate of the world economy in 2024 is projected to be 3.0 percent. The economy of developed countries has grown by 1.6 percent in 2023, and it is projected to grow by 1.6 percent in 2024.

Similarly, the economy of the emerging and developing countries, which grew by 4.3 percent in 2023, is projected by the fund to grow by 4.2 percent in 2024. In 2024, the fund forecasts that the economy of neighboring countries India will grow by 6.8 percent and China's economy by 4.6 percent.

World inflation is improving. According to the International Monetary Fund, the world inflation was 6.8 percent in 2023, and it is projected to be 5.9 percent in 2024. The average inflation rate of developed economies is 4.6 percent, and it is projected to be 2.0 percent in 2024. Similarly, the average inflation rate of emerging and developing economies, which was 8.3 percent in 2023, is predicted by the fund to be 8.3 percent in 2024.

In the financial year 2080/81, it is expected that agricultural production will increase due to timely planting, favorable weather and timely rains and easy supply of fertilizers. The improvement in remittance flow has strengthened the external sector, increased liquidity in the banking system and reduced interest rates of loans, creating a basis for economic activity to run.

It seems that the economic growth rate in the current year will improve compared to the previous year, in terms of the arrival of foreign tourists reaching the pre-Covid level and the export of electricity and cement increasing. According to the Ministry of Agriculture and Livestock Development, in the financial year 2080/81, although the area planted with paddy decreased by 0.61 percent, the production of paddy increased by 4.33 percent.

According to the National Statistics Office, the economic growth rate of the second quarter of the current year is four percent. During this period, there has been a decrease in industrial production, while the production of accommodation and food services, electricity and gas sector, transport and storage sector has increased significantly.

As a whole, the economic growth rate of the current year can be around 3 to 4 percent, according to the estimate of the international organizations, the annual point consumer inflation in the month of February 2080 is 4.82 percent. In the same month of the previous year, such inflation was 7.44 percent.

In the month of February, the inflation of the food and beverage group was 5.94 percent and the inflation of the non-food and service group was 3.95 percent. The average consumer inflation for the first eight months of the year 2080/81 is 6.08 percent. In the same period of the previous year, such inflation was 7.93 percent.

In the month of February, the annual point wholesale inflation is 3.69 percent. In the same month of the previous year, such inflation was 7.10 percent. By the second quarter of the current year, the annual point salary and wage rate index has increased by 5.56 percent.

According to the Comptroller General's Office, by the end of March 2080, the current expenditure is Rs. 6 trillion 44.2 billion, the capital expenditure is Rs. 97.38 billion and the expenditure under the financial system is Rs. 1.67 billion 99 billion. It is 51.93 percent of the allocated budget.