Thursday, July 28, 2011
Links for July 28, 2011
Lower CRR will not help liquidity---Republica
A week ago, the central bank announced that it would lower the Cash Reserve Ratio (CRR) for banks from 5.5 percent to 5 percent. This 0.5 percent lower CRR was expected to result in a cash infusion of Rs 4 billion into the market.
Rameshwor Khanal, however, writes that this is a myth. Since Statutory Liquid Ratio (SLR) is still unchanged at 15 percent, whatever money is saved from the lower CRR simply goes towards maintaining the SLR. Therefore, no money is actually infused into the market to ease the liquidity. He claims that the liquidity claim by NRB is a "myth".
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Nepal tops FIFA ranking in South Asia---Nepalnews
Despite 9-0 loss to Jordan in the World Cup qualifiers, Nepal now ranks 136th. Here are the latest rankings:
Nepal ranks 136
Bangladesh ranks 147
India ranks 153
Maldives ranks 160
Pakistan ranks 171
Sri Lanka ranks 176
Afghanistan ranks 179 (I don't how Afghanistan is in "South Asia"?)
Bhutan ranks 201
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200 percent incentive for Revenue staff?---Republica
Incentives should be passed by the cabinet, so claim many. But, Ministry of Finance in the latest budget tried to pass the 200 percent incentive to revenue staff through the backdoor. That is the accusation.
Who's right? Who's wrong? Never easy to tell since this is Nepalese government, bureaucracy and politics. But, 200 percent incentive? In my layman's mind, that is a ridiculous provision. The revenue staffs are also government employees. They already get incentives for doing their job. It's called "monthly wages". They should be treated like any other government employee.
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India halts tea export from Nepal via Kakarvitta---Kantipur
Nepalese exporters had to have their tea tested by India every 6 months. Now, the Indian customs is saying that the tea being exported from Nepal through India has to be tested "EVERY TIME". This means every batch of export has to be tested.
This is the exact reason why SAARC has been an utter failure. Do we have a SAFTA (South Asian Free Trade Agreement)? If we do, then it's useless.
My neighborhood club has made more contributions to Nepal's well-being than SAARC and SAFTA have ever made.
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AND, just for fun, the top countries of Africa in terms of GDP are (hat-tip to www.marginalrevolution.com) :
A week ago, the central bank announced that it would lower the Cash Reserve Ratio (CRR) for banks from 5.5 percent to 5 percent. This 0.5 percent lower CRR was expected to result in a cash infusion of Rs 4 billion into the market.
Rameshwor Khanal, however, writes that this is a myth. Since Statutory Liquid Ratio (SLR) is still unchanged at 15 percent, whatever money is saved from the lower CRR simply goes towards maintaining the SLR. Therefore, no money is actually infused into the market to ease the liquidity. He claims that the liquidity claim by NRB is a "myth".
------------------------------------------------------------------------------
Nepal tops FIFA ranking in South Asia---Nepalnews
Despite 9-0 loss to Jordan in the World Cup qualifiers, Nepal now ranks 136th. Here are the latest rankings:
Nepal ranks 136
Bangladesh ranks 147
India ranks 153
Maldives ranks 160
Pakistan ranks 171
Sri Lanka ranks 176
Afghanistan ranks 179 (I don't how Afghanistan is in "South Asia"?)
Bhutan ranks 201
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200 percent incentive for Revenue staff?---Republica
Incentives should be passed by the cabinet, so claim many. But, Ministry of Finance in the latest budget tried to pass the 200 percent incentive to revenue staff through the backdoor. That is the accusation.
Who's right? Who's wrong? Never easy to tell since this is Nepalese government, bureaucracy and politics. But, 200 percent incentive? In my layman's mind, that is a ridiculous provision. The revenue staffs are also government employees. They already get incentives for doing their job. It's called "monthly wages". They should be treated like any other government employee.
--------------------------------------------------------------
India halts tea export from Nepal via Kakarvitta---Kantipur
Nepalese exporters had to have their tea tested by India every 6 months. Now, the Indian customs is saying that the tea being exported from Nepal through India has to be tested "EVERY TIME". This means every batch of export has to be tested.
This is the exact reason why SAARC has been an utter failure. Do we have a SAFTA (South Asian Free Trade Agreement)? If we do, then it's useless.
My neighborhood club has made more contributions to Nepal's well-being than SAARC and SAFTA have ever made.
----------------------------------------------------------------------
AND, just for fun, the top countries of Africa in terms of GDP are (hat-tip to www.marginalrevolution.com) :
Labels: central bank of nepal, CRR, FIFA ranking, revenue, SAARC, SAFTA, SLR, tea
Wednesday, July 27, 2011
Links for July 27, 2011
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Migrant workers return from Malaysia with no money---Nepalnews
I have written in the past about Nepalese workers being promised a certain wage and not receiving it after landing in the destination country. Our newspapers keep writing about such types of mental and physical abuses that Nepalese workers face in the Middle East and other countries. This case from Malaysia is just one more story. I wonder when our government is going to act and make sure our workers are not exploited.
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Republica's Editorial urges NRB to respond to merger calls---Republica
The editorial argues in favor of mergers to protect the failing BFIs. Although it makes sense to try and save the BFIs from going belly up, personally, I am against mergers. These BFIs sprouted up due to private investors trying to make quick bucks and huge profits. If they fail, they should exit the market just like any other business entity in a capitalist market. Simple. My arguments are here.
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Nepal Tourism Year being promoted in Washington DC---Republica
It is a good idea. DC gets a lot of tourists. If only a fraction of those become attracted with the advertisement and pay a visit to Nepal, it will be good for our tourism industry.
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Real estate market poor---Republica
In 2009/10, the government earned Rs 6 billion in revenue from real estate deals. In 2010/11, it earned only Rs 3.21 billion. This is way off target of Rs 6.3 billion that the government had announced it would earn.
Dealers have been cutting rates by as much as 30 percent in the last year, but sales have still fallen by over 50 percent compared to last year. In Kathmandu, sales dropped by 53 percent. In Bhaktapur and Lalitpur, sales dropped by 52 percent.
Reckless loans by BFIs is a major cause for the asset bubble of Nepal for the last few years. I predict that this bubble will burst by 2015. Remittance money cannot keep this bubble floating forever.
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Far-west students demand a university---Nepalnews
I have not been to the far-west of Nepal. But, it is true that the region does not have a single university. This is a shame.
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19 died in Tanahun district last year due to Tuberculosis---Nepalnews
TB has a cure. TB medicine is available for free in Nepal at any government health posts and hospitals. Yet, 19 people died last year in a single district due to TB. This is a shame. This shows that something is wrong with the Nepalese information system and public service delivery system.
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NRB governor urges NRNs to invest in Nepal---Himalayan Times
Dr Yubraj Khatiwada urged NRNs to invest in Nepal through Hydropower Development and Investment Company.
Migrant workers return from Malaysia with no money---Nepalnews
I have written in the past about Nepalese workers being promised a certain wage and not receiving it after landing in the destination country. Our newspapers keep writing about such types of mental and physical abuses that Nepalese workers face in the Middle East and other countries. This case from Malaysia is just one more story. I wonder when our government is going to act and make sure our workers are not exploited.
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Republica's Editorial urges NRB to respond to merger calls---Republica
The editorial argues in favor of mergers to protect the failing BFIs. Although it makes sense to try and save the BFIs from going belly up, personally, I am against mergers. These BFIs sprouted up due to private investors trying to make quick bucks and huge profits. If they fail, they should exit the market just like any other business entity in a capitalist market. Simple. My arguments are here.
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Nepal Tourism Year being promoted in Washington DC---Republica
It is a good idea. DC gets a lot of tourists. If only a fraction of those become attracted with the advertisement and pay a visit to Nepal, it will be good for our tourism industry.
Real estate market poor---Republica
In 2009/10, the government earned Rs 6 billion in revenue from real estate deals. In 2010/11, it earned only Rs 3.21 billion. This is way off target of Rs 6.3 billion that the government had announced it would earn.
Dealers have been cutting rates by as much as 30 percent in the last year, but sales have still fallen by over 50 percent compared to last year. In Kathmandu, sales dropped by 53 percent. In Bhaktapur and Lalitpur, sales dropped by 52 percent.
Reckless loans by BFIs is a major cause for the asset bubble of Nepal for the last few years. I predict that this bubble will burst by 2015. Remittance money cannot keep this bubble floating forever.
-----------------------------------------------------------------
Far-west students demand a university---Nepalnews
I have not been to the far-west of Nepal. But, it is true that the region does not have a single university. This is a shame.
-----------------------------------------------------------------
19 died in Tanahun district last year due to Tuberculosis---Nepalnews
TB has a cure. TB medicine is available for free in Nepal at any government health posts and hospitals. Yet, 19 people died last year in a single district due to TB. This is a shame. This shows that something is wrong with the Nepalese information system and public service delivery system.
-------------------------------------------------------------------
NRB governor urges NRNs to invest in Nepal---Himalayan Times
Dr Yubraj Khatiwada urged NRNs to invest in Nepal through Hydropower Development and Investment Company.
Labels: central bank of nepal, mergers, migration, nepal tourism year, real estate, remittance, TB, tuberculosis
Tuesday, July 26, 2011
Poem: अलिकति प्रयास गर (Dedicated to the people of Norway)
I dedicate this to those that lost their loved ones in Norway, and who, in times of such crisis, need support. Don't give up. Keep Faith. And, keep walking. The journey is not complete, yet.
"अलिकति प्रयास गर"
विवशतामा परि मर्नैपर्छ भन्ने
कहाँ लेख्या छ र!
विवश भई मरेका तिमीले
कति देख्या छ र!
म पनि विवश छु
तर म हाँसिराख्या छु
हेर, म अझै बाँचिराख्या छु।
संसार यस्तै छ-
यहाँ सँधैजसो
कोही जित्छन्, कोही हार्छन्
कोही मर्छन्, कोही मार्छन्
दु:खका महासागर भेटिन्छन् यहाँ
कहीं कतै
एक मुठ्ठी सुख भेटेमा
अलिकति हाँस्ने प्रयास गर,
मृत्युका अनेकन् आहट सुनिन्छन् यहाँ
कहीं कतै
एक टुक्रा जीवन भेटेमा
अलिकति बाँच्ने प्रयास गर।
जिन्दगी दौडने क्षमता तिमीमा
हराए जस्तो छ
तिम्रो जिन्दगीले कतै बाटो
बिराए जस्तो छ,
जिन्दगी महासागरै होला!
त के भो?
एक मुठ्ठी प्राण कसेर
अलिकति पौडने प्रयास गर,
जिन्दगी म्याराथुनै होला!
त के भो?
एक जोडी घुँडा धसेर
अलिकति दौडने प्रयास गर।
"अलिकति प्रयास गर"
विवशतामा परि मर्नैपर्छ भन्ने
कहाँ लेख्या छ र!
विवश भई मरेका तिमीले
कति देख्या छ र!
म पनि विवश छु
तर म हाँसिराख्या छु
हेर, म अझै बाँचिराख्या छु।
संसार यस्तै छ-
यहाँ सँधैजसो
कोही जित्छन्, कोही हार्छन्
कोही मर्छन्, कोही मार्छन्
दु:खका महासागर भेटिन्छन् यहाँ
कहीं कतै
एक मुठ्ठी सुख भेटेमा
अलिकति हाँस्ने प्रयास गर,
मृत्युका अनेकन् आहट सुनिन्छन् यहाँ
कहीं कतै
एक टुक्रा जीवन भेटेमा
अलिकति बाँच्ने प्रयास गर।
जिन्दगी दौडने क्षमता तिमीमा
हराए जस्तो छ
तिम्रो जिन्दगीले कतै बाटो
बिराए जस्तो छ,
जिन्दगी महासागरै होला!
त के भो?
एक मुठ्ठी प्राण कसेर
अलिकति पौडने प्रयास गर,
जिन्दगी म्याराथुनै होला!
त के भो?
एक जोडी घुँडा धसेर
अलिकति दौडने प्रयास गर।
United States 2001 and Norway 2011
I want to start with a reference to September 11, 2001.
I had arrived to the United States as a student only a few weeks ago (on August 23 or 24...I don't remember the exact date). On September 11, 2001, I had a class that morning from 7:30 am to 9 am. I do not remember what class it was. But, I had just come back from the class, and had gone to the cafeteria to get some breakfast. I took my breakfast, took a seat in one of the numerous tables in the dining area, and started eating my breakfast while watching CNN along with 50 to 60 other students. Suddenly, CNN started running a ticker: "America Under Attack?" with the question mark at the end. A few minutes later, it started showing live video of one of the twin towers burning. Nobody in our cafeteria, and at CNN, knew what had caused it. A few minutes later, CNN started reporting that a small plane had hit the tower. A minute later, the small plane turned into a Boeing. A minute later, the "accident" turned into a "terror strike".
I, along with other students in the cafeteria, did not return to our classes. We stayed there and watched with horror. People had suddenly started jumping off of the burning tower. I could not watch the live video; I turned my eyes away. Some time had passed, and we saw another plane come and smash into the second tower. Everyone in the cafeteria was shocked. It was true. America was under attack. By whom and Why? Those were the only questions that remained in our minds.
I also remember the speech that George Bush gave, a few days later, standing in the rubble of the fallen towers. He vowed to "hunt" and "bring to justice" the "terrorists" who had dared to attack the United States, the "beacon of democracy" to the world.
Now, ten years later, Norway was under attack. As with 9/11, nobody knew for sometime "by whom" and "why". However, unlike George Bush, who was hasty to guess the attackers, and what would be done with them, the Norwegian Prime Minister showed sanity and calmness in his remarks. Instead of launching into revengeful words like "hunt" and labeling the attackers as "terrorists", he showed restraint, and simply called for Norwegians to be calm, collected, and fight for democracy even more because it was obvious that the attacks had the capacity to undermine Norwegian democracy.
I watched the Norwegian Prime Minister's speech on the day of the attack. And, how I wished George Bush had given a speech like that. And, today, the Prime Minister gave another speech, much longer than the speech on the day of the attack. It has all the qualities you expect from a true democratic leader and a democratic country. Norway, today in this time of crisis, shows how important the idea and ideals of democracy are. At times of this crisis, Norway is showing us how and why we should care for democracy. I only wish we learn something from our Norwegian friends.
Today's speech below (original source: Office of the Prime Minister, Norway website):
I had arrived to the United States as a student only a few weeks ago (on August 23 or 24...I don't remember the exact date). On September 11, 2001, I had a class that morning from 7:30 am to 9 am. I do not remember what class it was. But, I had just come back from the class, and had gone to the cafeteria to get some breakfast. I took my breakfast, took a seat in one of the numerous tables in the dining area, and started eating my breakfast while watching CNN along with 50 to 60 other students. Suddenly, CNN started running a ticker: "America Under Attack?" with the question mark at the end. A few minutes later, it started showing live video of one of the twin towers burning. Nobody in our cafeteria, and at CNN, knew what had caused it. A few minutes later, CNN started reporting that a small plane had hit the tower. A minute later, the small plane turned into a Boeing. A minute later, the "accident" turned into a "terror strike".
I, along with other students in the cafeteria, did not return to our classes. We stayed there and watched with horror. People had suddenly started jumping off of the burning tower. I could not watch the live video; I turned my eyes away. Some time had passed, and we saw another plane come and smash into the second tower. Everyone in the cafeteria was shocked. It was true. America was under attack. By whom and Why? Those were the only questions that remained in our minds.
I also remember the speech that George Bush gave, a few days later, standing in the rubble of the fallen towers. He vowed to "hunt" and "bring to justice" the "terrorists" who had dared to attack the United States, the "beacon of democracy" to the world.
Now, ten years later, Norway was under attack. As with 9/11, nobody knew for sometime "by whom" and "why". However, unlike George Bush, who was hasty to guess the attackers, and what would be done with them, the Norwegian Prime Minister showed sanity and calmness in his remarks. Instead of launching into revengeful words like "hunt" and labeling the attackers as "terrorists", he showed restraint, and simply called for Norwegians to be calm, collected, and fight for democracy even more because it was obvious that the attacks had the capacity to undermine Norwegian democracy.
I watched the Norwegian Prime Minister's speech on the day of the attack. And, how I wished George Bush had given a speech like that. And, today, the Prime Minister gave another speech, much longer than the speech on the day of the attack. It has all the qualities you expect from a true democratic leader and a democratic country. Norway, today in this time of crisis, shows how important the idea and ideals of democracy are. At times of this crisis, Norway is showing us how and why we should care for democracy. I only wish we learn something from our Norwegian friends.
Today's speech below (original source: Office of the Prime Minister, Norway website):
Dear all of you,What a sight! I am standing face to face with the will of the people. You are the will of the people. Thousands and thousands of Norwegians – in Oslo and all over the country – are doing what you are this evening. Taking over the streets, the squares, the public space, with the same defiant message:We are brokenhearted, but we are not broken. With torches and roses we are sending a message out to the world:We will not allow fear to break us. And we will not allow the fear of fear to silence us.
The sea of people I see in front of me today and the warmth I feel from people all over the country convinces me that I am right.Norway will pass the test. Evil can kill individuals, but it can never defeat a whole people. This evening the Norwegian people are writing history. With the strongest weapons in the world – freedom of speech and democracy – we are staking out the course for Norway after 22 July 2011.
There will be a Norway before and Norway after 22 July. But it is we who will decide how that Norway will be.Norway will be recognizable. Our response has grown in strength through the incomprehensible hours, days and nights we have been through, and it is amplified powerfully this evening:More openness, more democracy. Resolve and strength. That is us. That is Norway. We will take back our security!
Since the attacks in Oslo and on Utøya, we have been united in shock, despair and grief. And we will continue to be, but it will not only be like this. Slowly, the first of us will begin to be able to face everyday life again. Others will need more time. It is important that we respect these differences. All forms of grief are equally normal.
Still we must take care of one another.Show that we care. Talk to those who have been hardest hit. Be fellow human beings. We who are gathered here have a message to all of you who have lost one of your loved ones:We are here for you.
We will also look towards Norway after 22 July 2011. We must be careful not to draw too many or too definite conclusions while we are a nation in mourning, but there are certain things we can promise one another this evening.
Firstly,Out of all this pain, we can glimpse something valuable that has taken root. What we see this evening may be the largest and most important march that the Norwegian people have taken part in since the Second World War. A march for democracy, solidarity and tolerance.
People all over the country are standing shoulder to shoulder at this moment. We can learn from this. Do more of this.Each and every one of us can make the fabric of democracy as little stronger. This is what we are seeing here.
Secondly,I want to say this to all the young people here. The massacre on Utøya was an attack against young people’s dream of being able to help to make the world a better place. Your dreams have been brutally crushed. But your dreams can be fulfilled. You can keep the spirit of this evening alive. You can make a difference. Do that! I have a simple request to make of you.Get involved. Care. Join an organisation. Take part in debates.Use your vote. Free elections are the jewel in the crown of democracy.By taking part, you are saying a resounding yes to democracy.
Finally,I am infinitely grateful to be living in a country where, at a critical time, people take to the streets with flowers and candles to protect democracy. To honour and commemorate those we have lost. This shows that Nordahl Grieg was right: “We are so few in this country; each of the fallen is a brother and friend.”
We will carry this with us as we start to shape Norway after 22 July 2011. Our fathers and mothers promised us, “There will never be another 9 April.” We say, “There will never be another 22 July.”
Labels: 22 July 2011, norway, september 11
Links for July 26, 2011
20 ministries have not paid their electric bills---Nepalnews
Nepal Electric Authority has given 15 days' time to 20 different ministries to pay their electricity bill. Otherwise, their lines will be cut off. The biggest defaulters are: Home Ministry with Rs 175 million, Health Ministry with Rs 152 million, and Peace Ministry with Rs 136 million.
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Are waterways feasible in Nepal?---Republica
The government has a feeling that waterways might be feasible in Koshi, Bheri and Gandaki. Mahakali and Narayani are also possible prospects.
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Some numbers out of a news article on migrant workers---Kantipur
*In 2009/10, 294,094 left Nepal for work
*In 2010/11, 354,716 left Nepal for work. Out of these, 10,416 were women.
*In 2009/10, Qatar took 57,430 Nepalese as workers. In 2010/11, it took another 102,966. Qatar is now the second largest destination for Nepalese workers, after Malaysia. This trend will continue until 2022, the year when Qatar hosts the Football World Cup.
*In 2009/10, Saudi Arabia took 63,700 Nepalese as workers. In 2010/11, it took another 71,116.
*In 2010/11, UAE took 44,464, and Kuwait took 15,187 Nepalese as workers.
*In 2009/10, Malaysia took 113,982 Nepalese as workers. In 2010/11, it took another 105,906.
*The following is the list of destination countries for Nepalese workers for 2009/10 and 10/11.
Country 2009-10 // 2010-11
Malaysia 113,982 // 105,906
Qatar 57,340 // 102,966
Saudi Arabia 63,700 // 71,116
UAE 33,840 // 44,464
Kuwait 8,255 // 15,187
Bahrain 4,234 // 4,647
EPS Korea 2,418 // 3,703
Oman 3,285 // 2,442
Lebanon 3,788 // 151
Libya 1,622 // 291
TOTAL 292,464 // 350,873
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50,043 Nepalese take Korean Language Proficiency Test this year---Kantipur
On July 23rd, I wrote about Nepalese taking the Korean Language Proficiency Test. This is the updated number of test takers.Out of these 50,043 test takers, a total of 7,100 will be taken by South Korea as workers in 2012.
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Why do criminals wear gang colors? (PDF file)
Common sense tells us that openly wearing a gang color might get you shot by members of opposing gangs. Yet, criminals are always observed wearing their gang colors. Why?
I have not read this research, yet. But, I think it should be interesting.
Hat tip: Tyler Cowen (www.marginalrevolution.com)
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Nepal Electric Authority has given 15 days' time to 20 different ministries to pay their electricity bill. Otherwise, their lines will be cut off. The biggest defaulters are: Home Ministry with Rs 175 million, Health Ministry with Rs 152 million, and Peace Ministry with Rs 136 million.
-----------------------------------------------------------------------------
Are waterways feasible in Nepal?---Republica
The government has a feeling that waterways might be feasible in Koshi, Bheri and Gandaki. Mahakali and Narayani are also possible prospects.
------------------------------------------------------------------------------
Some numbers out of a news article on migrant workers---Kantipur
*In 2009/10, 294,094 left Nepal for work
*In 2010/11, 354,716 left Nepal for work. Out of these, 10,416 were women.
*In 2009/10, Qatar took 57,430 Nepalese as workers. In 2010/11, it took another 102,966. Qatar is now the second largest destination for Nepalese workers, after Malaysia. This trend will continue until 2022, the year when Qatar hosts the Football World Cup.
*In 2009/10, Saudi Arabia took 63,700 Nepalese as workers. In 2010/11, it took another 71,116.
*In 2010/11, UAE took 44,464, and Kuwait took 15,187 Nepalese as workers.
*In 2009/10, Malaysia took 113,982 Nepalese as workers. In 2010/11, it took another 105,906.
*The following is the list of destination countries for Nepalese workers for 2009/10 and 10/11.
Country 2009-10 // 2010-11
Malaysia 113,982 // 105,906
Qatar 57,340 // 102,966
Saudi Arabia 63,700 // 71,116
UAE 33,840 // 44,464
Kuwait 8,255 // 15,187
Bahrain 4,234 // 4,647
EPS Korea 2,418 // 3,703
Oman 3,285 // 2,442
Lebanon 3,788 // 151
Libya 1,622 // 291
TOTAL 292,464 // 350,873
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50,043 Nepalese take Korean Language Proficiency Test this year---Kantipur
On July 23rd, I wrote about Nepalese taking the Korean Language Proficiency Test. This is the updated number of test takers.Out of these 50,043 test takers, a total of 7,100 will be taken by South Korea as workers in 2012.
---------------------------------------------------------------------
Why do criminals wear gang colors? (PDF file)
Common sense tells us that openly wearing a gang color might get you shot by members of opposing gangs. Yet, criminals are always observed wearing their gang colors. Why?
I have not read this research, yet. But, I think it should be interesting.
Hat tip: Tyler Cowen (www.marginalrevolution.com)
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Labels: migration, ministries, nepal electric authority, waterways
Monday, July 25, 2011
Are we stuck with high inflation?
The Republica link is here
Inflation in Nepal during the 1990s was high. Everything in the market—from a nail to a kilogram of rice to a car—was expensive. Nepal had just got democracy in 1990, and needed time to bring things in order. Policymaking—monetary or fiscal—was affected due to multiple changing of governments throughout the 1990s. Therefore, inflation during that decade stayed high, with the highest being 21 percent in 1992. After 1992, it started declining and was 7 percent in 1995. But, the unstable civil, political, and economic climate created by the start of the Maoist rebellion in 1996 resulted in inflation creeping up again to 11 percent by 1999.
Despite the political fracas and the strengthening Maoist rebellion, decade of 2000 brought better policies and saw decent economic growth. Inflation kept falling, and was even negative during 2004. When Maoists stepped up their final push, the resulting disorder, chaos and frequent shutdowns hampered economic policies. Inflation rose to 11 percent in 2005. When Maoists laid down their arms in 2006, their subsequent inclusion in the political process was followed by lower inflation in 2006 and 2007.
Average inflation in Nepal was 6.2 percent in 2006/07. By 2008/09, it more than doubled to 13.1 percent—the worst in the decade. Most of the increase could be explained by the frequent shutdowns and roadblocks during that year. Despite being relatively unaffected by the worldwide financial crisis of 2008, poor economic conditions meant that inflation stayed at 13 percent in 2009. Improved conditions in 2009/10 lowered it to 11 percent in 2010. However, this was still higher than what we as consumers had bargained for. Today, the good news is that it has been falling again. The bad news is that it is not falling fast enough.
International Monetary Fund (IMF) has predicted that average inflation is going to be around 8 percent in 2011, 5.5 percent in 2012, and 5 percent thereafter until 2015. But, it is not clear if IMF’s predictions are for core inflation or for headline inflation. There is a difference because core inflation does not include the inflationary impacts from the volatile fuel and food sectors. Even if IMF’s numbers are correct, these predictions have to be taken with a pinch of salt because these seem to be nominal values. Real inflation is still high. It will stay high unless rising fuel and food prices are not contained.
Technically, inflation is measured as a change in the Consumer Price Index (CPI) where CPI represents the prices in the market for various goods and services. Economists and policymakers do not like inflation. An increase in inflation reduces a person’s real purchasing power in the market with his/her level of income. Higher and fluctuating inflation rates make the market conditions unstable and uncertain. That, in turn, results in monetary policies becoming ineffective in obtaining their objectives.
Inflation is especially important to monetary policymakers in Nepal Rastra Bank (NRB). However, two major problems confound the NRB’s policymakers and make their jobs difficult. First, inflation is a self-fulfilling prophecy in the sense that inflationary expectations of people—about what the future inflation could be—contributes to the actual inflation in the future. Second, when NRB implements a monetary policy this quarter to tackle inflation, the results of its effectiveness will not appear until the next quarter or two. These two problems make their decision of implementing effective monetary policy against inflation all the more difficult.
Although very little can be done to avoid these, we can at least attempt to measure them. In many countries, these are estimated through surveys that measure consumer confidence. A survey this quarter would ask consumers about their inflationary expectations of the future. Thus, such surveys would provide policymakers with at least some reasonable information about consumer expectations, and therefore, direction of future inflation.
Conducting such a survey in Nepal would help NRB’s policymakers. After all, nobody knows the market better than the consumers who deal with changing market prices day in and day out. Collective wisdom of everyday consumers engaging in the market is a lot better than that of two NRB policymakers trying to figure out market behavior in their office rooms. These surveys are very easy to conduct. Frankly, I don’t know why NRB has not conducted them, yet.
In recent years, there have been improvements in some sectors in Nepal, and prices have stabilized in many parts of the economy. But, high inflation persists today with 70 percent of the rise being attributed to the rise in basic food prices. Changing climate, erratic rainfall, shortage of agricultural labor, reduced agricultural productivity and rapid urbanization in the last decade have been the main reasons why food prices have risen by an exorbitant rate. That, in turn, has fed the rising headline inflation.
Food prices are the largest part of Nepal’s CPI. So, rising food prices are the reason why inflation has not fallen faster in Nepal. Any drop in inflation from other sectors keeps being negated by the increase in food prices. Our increasing population and increasing per-capita income has meant that our demand for food is also increasing. However, a huge percentage of food that we consume is imported. Duties, taxes, transportation costs, and competition among consumers make the food that we consume expensive for us. Unless increasing demand is met by increasing supply, we will keep suffering due to food deficit and food-caused inflation.
There are two choices to significantly reduce inflation in Nepal: We increase our food production, or we switch our diet to include more locally grown food. The second option is improbable because no consumer likes being told what or what not to eat. So, the only option left is to increase production. But, given how our agriculture and food production has been on a decline for years, an increase in production is not going to happen anytime soon. Therefore, we are stuck with high inflation rates, hovering at a minimum of 8 percent, for another decade. Our only hope is a miracle.
This opinion piece was published in Republica on July 25, 2011
Inflation in Nepal during the 1990s was high. Everything in the market—from a nail to a kilogram of rice to a car—was expensive. Nepal had just got democracy in 1990, and needed time to bring things in order. Policymaking—monetary or fiscal—was affected due to multiple changing of governments throughout the 1990s. Therefore, inflation during that decade stayed high, with the highest being 21 percent in 1992. After 1992, it started declining and was 7 percent in 1995. But, the unstable civil, political, and economic climate created by the start of the Maoist rebellion in 1996 resulted in inflation creeping up again to 11 percent by 1999.
Despite the political fracas and the strengthening Maoist rebellion, decade of 2000 brought better policies and saw decent economic growth. Inflation kept falling, and was even negative during 2004. When Maoists stepped up their final push, the resulting disorder, chaos and frequent shutdowns hampered economic policies. Inflation rose to 11 percent in 2005. When Maoists laid down their arms in 2006, their subsequent inclusion in the political process was followed by lower inflation in 2006 and 2007.
Average inflation in Nepal was 6.2 percent in 2006/07. By 2008/09, it more than doubled to 13.1 percent—the worst in the decade. Most of the increase could be explained by the frequent shutdowns and roadblocks during that year. Despite being relatively unaffected by the worldwide financial crisis of 2008, poor economic conditions meant that inflation stayed at 13 percent in 2009. Improved conditions in 2009/10 lowered it to 11 percent in 2010. However, this was still higher than what we as consumers had bargained for. Today, the good news is that it has been falling again. The bad news is that it is not falling fast enough.
International Monetary Fund (IMF) has predicted that average inflation is going to be around 8 percent in 2011, 5.5 percent in 2012, and 5 percent thereafter until 2015. But, it is not clear if IMF’s predictions are for core inflation or for headline inflation. There is a difference because core inflation does not include the inflationary impacts from the volatile fuel and food sectors. Even if IMF’s numbers are correct, these predictions have to be taken with a pinch of salt because these seem to be nominal values. Real inflation is still high. It will stay high unless rising fuel and food prices are not contained.
Technically, inflation is measured as a change in the Consumer Price Index (CPI) where CPI represents the prices in the market for various goods and services. Economists and policymakers do not like inflation. An increase in inflation reduces a person’s real purchasing power in the market with his/her level of income. Higher and fluctuating inflation rates make the market conditions unstable and uncertain. That, in turn, results in monetary policies becoming ineffective in obtaining their objectives.
Inflation is especially important to monetary policymakers in Nepal Rastra Bank (NRB). However, two major problems confound the NRB’s policymakers and make their jobs difficult. First, inflation is a self-fulfilling prophecy in the sense that inflationary expectations of people—about what the future inflation could be—contributes to the actual inflation in the future. Second, when NRB implements a monetary policy this quarter to tackle inflation, the results of its effectiveness will not appear until the next quarter or two. These two problems make their decision of implementing effective monetary policy against inflation all the more difficult.
Although very little can be done to avoid these, we can at least attempt to measure them. In many countries, these are estimated through surveys that measure consumer confidence. A survey this quarter would ask consumers about their inflationary expectations of the future. Thus, such surveys would provide policymakers with at least some reasonable information about consumer expectations, and therefore, direction of future inflation.
Conducting such a survey in Nepal would help NRB’s policymakers. After all, nobody knows the market better than the consumers who deal with changing market prices day in and day out. Collective wisdom of everyday consumers engaging in the market is a lot better than that of two NRB policymakers trying to figure out market behavior in their office rooms. These surveys are very easy to conduct. Frankly, I don’t know why NRB has not conducted them, yet.
In recent years, there have been improvements in some sectors in Nepal, and prices have stabilized in many parts of the economy. But, high inflation persists today with 70 percent of the rise being attributed to the rise in basic food prices. Changing climate, erratic rainfall, shortage of agricultural labor, reduced agricultural productivity and rapid urbanization in the last decade have been the main reasons why food prices have risen by an exorbitant rate. That, in turn, has fed the rising headline inflation.
Food prices are the largest part of Nepal’s CPI. So, rising food prices are the reason why inflation has not fallen faster in Nepal. Any drop in inflation from other sectors keeps being negated by the increase in food prices. Our increasing population and increasing per-capita income has meant that our demand for food is also increasing. However, a huge percentage of food that we consume is imported. Duties, taxes, transportation costs, and competition among consumers make the food that we consume expensive for us. Unless increasing demand is met by increasing supply, we will keep suffering due to food deficit and food-caused inflation.
There are two choices to significantly reduce inflation in Nepal: We increase our food production, or we switch our diet to include more locally grown food. The second option is improbable because no consumer likes being told what or what not to eat. So, the only option left is to increase production. But, given how our agriculture and food production has been on a decline for years, an increase in production is not going to happen anytime soon. Therefore, we are stuck with high inflation rates, hovering at a minimum of 8 percent, for another decade. Our only hope is a miracle.
This opinion piece was published in Republica on July 25, 2011
Labels: central bank of nepal, inflation, Nepalese Economy
Saturday, July 23, 2011
Links for July 23, 2011
Hari Bansh Jha writes about why NRs and IRs peg should remain---Institute for Defense Studies and Analyses
Mr Jha wrote last month in Republica about why he thinks the peg between NRs and IRs should remain. Why is Institute for Defense Studies and Analyses publishing articles on NRs and IRs peg? It isn't a "defense" issue for either Nepal or India.
I disagree with Mr Jha's logic, and I have written in detail about those disagreements.
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Should the rural flights be subsidized?---Republica
On one hand, subsidized flights will help rural folks travel by plane more frequently, thus saving their time and money.On the other hand, private airplane operators are claiming that it is not feasible for them to operate subsidized flights. Their main reason being that if there is to be subsidy provided for rural flights, the government has to provide the entire subsidy, and should not be asking the private airplane operators to contribute. The private operators contend that they are already operating on razor thin margins, and asking them to contribute to the subsidy would actually create a financial loss.
I don't know what to think about this case. I would love to see more rural folks being able to afford plane rides. But, I can also understand the private operators' concern about hurting their bottom line. So, I think I have no opinion on this.
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26,076 take Korean Language Test---Republica
And, this is only the first round. There will be more test takers in another round. In 2009 there were 42,050 Nepalese who took the Korean Language Test.
If we start adding up all those that took the Korean test since 2004 in Nepal, and if we assume that these test takers had at least taken some classes on the language and knew the language at beginner's level, then there are now thousands of Nepalese who know Korean. The same thing could be said of Japanese language. There are now thousands of Nepalese who know at least beginner's level Japanese language.
My question is: Are Korean and Japanese going to be one of the major languages in Nepal in the future? Should we start emulating the western education system, and start teaching foreign languages to our kids in our schools?
Unlike the western countries where the focus is on French, German, and Spanish, the Nepalese education system could focus on Japanese, Korean and Chinese. That would make it easier for the low-skilled as well has high-skilled Nepalese to land good job and business opportunities in these rich Asian countries.
Mr Jha wrote last month in Republica about why he thinks the peg between NRs and IRs should remain. Why is Institute for Defense Studies and Analyses publishing articles on NRs and IRs peg? It isn't a "defense" issue for either Nepal or India.
I disagree with Mr Jha's logic, and I have written in detail about those disagreements.
-------------------------------------------------------------------------
Should the rural flights be subsidized?---Republica
On one hand, subsidized flights will help rural folks travel by plane more frequently, thus saving their time and money.On the other hand, private airplane operators are claiming that it is not feasible for them to operate subsidized flights. Their main reason being that if there is to be subsidy provided for rural flights, the government has to provide the entire subsidy, and should not be asking the private airplane operators to contribute. The private operators contend that they are already operating on razor thin margins, and asking them to contribute to the subsidy would actually create a financial loss.
I don't know what to think about this case. I would love to see more rural folks being able to afford plane rides. But, I can also understand the private operators' concern about hurting their bottom line. So, I think I have no opinion on this.
-------------------------------------------------------------------------------
26,076 take Korean Language Test---Republica
And, this is only the first round. There will be more test takers in another round. In 2009 there were 42,050 Nepalese who took the Korean Language Test.
If we start adding up all those that took the Korean test since 2004 in Nepal, and if we assume that these test takers had at least taken some classes on the language and knew the language at beginner's level, then there are now thousands of Nepalese who know Korean. The same thing could be said of Japanese language. There are now thousands of Nepalese who know at least beginner's level Japanese language.
My question is: Are Korean and Japanese going to be one of the major languages in Nepal in the future? Should we start emulating the western education system, and start teaching foreign languages to our kids in our schools?
Unlike the western countries where the focus is on French, German, and Spanish, the Nepalese education system could focus on Japanese, Korean and Chinese. That would make it easier for the low-skilled as well has high-skilled Nepalese to land good job and business opportunities in these rich Asian countries.
Wednesday, July 20, 2011
Links for July 20, 2011
Prakash Ghimire dai has an article on Remittance---Kathmandu Post
The important part of this article is the "foreign employment bond". Most people in Nepal are not aware of this bond. Apparently, it was introduced by the Nepalese government to attract remittances with an aim to channel that money to productive use. However, what are those "channels"? The government has not made that clear, as far as I know. Also, Prakash dai writes that the failure of this bond is mainly because of near-sightedness of the government. How can the migrant workers invest their remittance income in such bonds if 78 percent barely earn enough to feed their families?
Nepal Rastra Bank is going to reduce the Cash Reserve Ratio---Kantipur
Currently, Nepal Rastra Bank requires a Cash Reserve Ratio (CRR) of 5.5 percent. It is proposing to reduce it to 5 percent. It estimates that this will open up Rs 3 billion of cash which will help ease the liquidity crisis. I think this is nonsense. Rs 3 billion cash infusion is not going to make even a minor dent in the liquidity market. I believe that NRB is simply pandering to the requests of some influential BFIs. This is very typical of NRB--it is simply pleasing its cronies.
Nepalese could get permission for USD500 prepaid card each year to carry out internet purchases---Republica
Well, it sounds nice and all, but it means I still cannot buy a new laptop over the internet. Because it costs more than USD500. And, my Debit cards from Nepalese Banks don't work for internet transactions.
Banks rush to Baglung to cash-in on remittance income---Republica
Yesterday, there was a news article about 190+ schools in Baglung getting girls' toilets built. And, now there's news of banks rushing to Baglung district to open branches to benefit from remittance income. Baglung is suddenly starting to look like a happening place. And, it has every reason to be. Baglung receives "tens of millions of rupees every day" in incoming remittance income. As a result, there are now several banks and finance companies including "14 commercial banks".
The important part of this article is the "foreign employment bond". Most people in Nepal are not aware of this bond. Apparently, it was introduced by the Nepalese government to attract remittances with an aim to channel that money to productive use. However, what are those "channels"? The government has not made that clear, as far as I know. Also, Prakash dai writes that the failure of this bond is mainly because of near-sightedness of the government. How can the migrant workers invest their remittance income in such bonds if 78 percent barely earn enough to feed their families?
Nepal Rastra Bank is going to reduce the Cash Reserve Ratio---Kantipur
Currently, Nepal Rastra Bank requires a Cash Reserve Ratio (CRR) of 5.5 percent. It is proposing to reduce it to 5 percent. It estimates that this will open up Rs 3 billion of cash which will help ease the liquidity crisis. I think this is nonsense. Rs 3 billion cash infusion is not going to make even a minor dent in the liquidity market. I believe that NRB is simply pandering to the requests of some influential BFIs. This is very typical of NRB--it is simply pleasing its cronies.
Nepalese could get permission for USD500 prepaid card each year to carry out internet purchases---Republica
Well, it sounds nice and all, but it means I still cannot buy a new laptop over the internet. Because it costs more than USD500. And, my Debit cards from Nepalese Banks don't work for internet transactions.
Banks rush to Baglung to cash-in on remittance income---Republica
Yesterday, there was a news article about 190+ schools in Baglung getting girls' toilets built. And, now there's news of banks rushing to Baglung district to open branches to benefit from remittance income. Baglung is suddenly starting to look like a happening place. And, it has every reason to be. Baglung receives "tens of millions of rupees every day" in incoming remittance income. As a result, there are now several banks and finance companies including "14 commercial banks".
Tuesday, July 19, 2011
Links for July 19, 2011
Police personnel in jail for the Sudan scam post their bails---Nepalnews
I do not know how much a Senior Superintendent of Police (SSP) gets paid. But, apparently, a bank trusts him enough to give a bank guarantee worth Rs 7 million to post bail. The Inspector General of Police (IGP)is still in jail for not being able to post a Rs 50 million in bail. The Assistant-IGP, though, is out of jail after posting a Rs 10 million in bail. Here's a trick question: who is the richest among the three?
Unions already against Finance Minister's "deceptive" pay hike proposal---Nepalnews
The Finance Minister (FM) announced in the budget speech a few days ago that senior level employees would receive a pay raise of 31% and junior level employees will receive a pay raise of 42%. But, employee unions smell a rat in those numbers. They accuse the FM of trying to do away with "dearness allowance" (essentially an inflation allowance). They claim that once the dearness allowance is done away with, the pay raise for junior employees will only be 25%, thus much lower than what the FM is lying to the public with (the 42% figure).
National Planning Commission urges the government to promote biodiesel---Kantipur
NPC suggests that farmers should be given subsidy to plant Jatropha plants whose seeds can produce oil that can be used as a substitute for diesel. I don't agree with the NPC because they are looking at the very short term impact. The United States did the same thing to promote bio-diesel years ago. They gave subsidies to farmers to generate biodiesel from corn (maize). The result was that, yes, the bio-diesel met some demand but it hurt the overall food supply. The same thing will happen in Nepal. In hopes of high return, farmers will stop planting essential crops and start planting Jatropha. This will hurt the already food-deficit country of ours. So, NPC is being short-sighted in this suggestion of theirs. We are a very small country. Trying to solve the petroleum supply problem is not our advantage.
195 toilets for girls built in Baglung schools---Republica
I have read reports that suggested that one of the main reasons girls did not attend schools in poor and developing countries is the lack of toilets for girls in the schools. And, that is understandable. So, it is a good thing that the Ministry of Education and District Education Office of Baglung are doing. They are building toilets for girls in the public schools of Baglung. Good for them, and good for the girls.
Nepal's 2011 Census records "third gender" but with some problems---The New Republic
The article is written by a Fulbright scholar pursuing his research in the LGBTI communities of Nepal. It has anecdotes and highlights some of the problems regarding recording the "third gender" in the census forms. Apparently, the census has two forms, and third genders are recorded only in the first, and not in the second form. This makes the data collection almost useless, almost.
Finally, the pie chart below shows the DFID assistance to Nepal for the 2009/10 period. It is clear that most of it goes to programs that support the issues of governance and growth.
I do not know how much a Senior Superintendent of Police (SSP) gets paid. But, apparently, a bank trusts him enough to give a bank guarantee worth Rs 7 million to post bail. The Inspector General of Police (IGP)is still in jail for not being able to post a Rs 50 million in bail. The Assistant-IGP, though, is out of jail after posting a Rs 10 million in bail. Here's a trick question: who is the richest among the three?
Unions already against Finance Minister's "deceptive" pay hike proposal---Nepalnews
The Finance Minister (FM) announced in the budget speech a few days ago that senior level employees would receive a pay raise of 31% and junior level employees will receive a pay raise of 42%. But, employee unions smell a rat in those numbers. They accuse the FM of trying to do away with "dearness allowance" (essentially an inflation allowance). They claim that once the dearness allowance is done away with, the pay raise for junior employees will only be 25%, thus much lower than what the FM is lying to the public with (the 42% figure).
National Planning Commission urges the government to promote biodiesel---Kantipur
NPC suggests that farmers should be given subsidy to plant Jatropha plants whose seeds can produce oil that can be used as a substitute for diesel. I don't agree with the NPC because they are looking at the very short term impact. The United States did the same thing to promote bio-diesel years ago. They gave subsidies to farmers to generate biodiesel from corn (maize). The result was that, yes, the bio-diesel met some demand but it hurt the overall food supply. The same thing will happen in Nepal. In hopes of high return, farmers will stop planting essential crops and start planting Jatropha. This will hurt the already food-deficit country of ours. So, NPC is being short-sighted in this suggestion of theirs. We are a very small country. Trying to solve the petroleum supply problem is not our advantage.
195 toilets for girls built in Baglung schools---Republica
I have read reports that suggested that one of the main reasons girls did not attend schools in poor and developing countries is the lack of toilets for girls in the schools. And, that is understandable. So, it is a good thing that the Ministry of Education and District Education Office of Baglung are doing. They are building toilets for girls in the public schools of Baglung. Good for them, and good for the girls.
Nepal's 2011 Census records "third gender" but with some problems---The New Republic
The article is written by a Fulbright scholar pursuing his research in the LGBTI communities of Nepal. It has anecdotes and highlights some of the problems regarding recording the "third gender" in the census forms. Apparently, the census has two forms, and third genders are recorded only in the first, and not in the second form. This makes the data collection almost useless, almost.
Finally, the pie chart below shows the DFID assistance to Nepal for the 2009/10 period. It is clear that most of it goes to programs that support the issues of governance and growth.
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