Views of a Nepali Economist

. Vegetable prices drop in Kathmandu

Thanks to rise in production and end of festivals, price of most of the vegetables has gone down

Maoist affiliated union causes popular Fire and Ice pizza restaurant to shut down

...the management was forced to close down the restaurant after the Maoist affiliated All Nepal Hotel Workers´ Association started a dispute over appointment of a new restaurant manager...members of the association along with its president manhandled some employees and misbehaved with the management

NRB caps Class B‚ C chief executives' salary

The central bank has directed the financial institutions — except class A commercial banks — to determine the remuneration for their CEOs based on the institution’s financial indicators...The central bank has asked the financial institutions to fix the salary of CEO based on the financial institutions’ business size, size of lending and deposits, size of operating profit, return on capital among others in the last three years.

Trade deficit up to Rs 330.34 billion

The total exports is still less than six times (Rs 64.56 billion from total merchandise) the import of Rs 394.90 billion

...the share of India in Nepal’s total trade increased to 66.4 per cent in 2010-11 compared to 59.1 per cent a fiscal year ago

...overall Balance of Payment (BoP) that had remained in deficit till the ten months ended with a ‘surprise’ Rs 2.93 billion surplus against a deficit of Rs 3.63 billion in a fiscal year...current account deficit shrank to Rs 11.91 billion from a deficit of Rs 28.14 billion a year ago...net transfer account registered a growth of 8.9 per cent to Rs 307.86 billion compared to that of a year ago...pension receipts rose by 12.2 per cent to Rs 28.99 billion...workers’ remittances increased by 9.4 per cent to Rs 253.55 billion...FDI of Rs 6.44 billion was recorded compared to the level of Rs 2.85 billion a fiscal year ago...capital transfer increased by 26.5 per cent to Rs 15.91 billion compared to the level of Rs 12.58 billion a fiscal ago...gross foreign exchange reserves increased by a mere 1.2 per cent to Rs 272.10 billion in mid-July from the level of Rs 268.91 billion as at mid-July 2010...Of total reserve, NRB’s reserves augmented by 3.8 per cent to Rs 213.09 billion in mid-July 2011 from a level of Rs 205.37 billion as at mid-July 2010...gross foreign exchange reserves in Us dollar terms increased by 6.2 per cent to $3.84 billion in mid-July...Based on the trend of import during the review year, the current level of reserves is sufficient for financing merchandise imports of 8.4 months and merchandise and service imports of 7.3 months

Ginger farming all the rage among Kailali farmers

As much as 3,000 metric tons of ginger is produced from 500 hectares of land in the VDCs...ginger worth around Rs 100 million was supplied to India from hilly districts in the Far-Western Development Region last year

Rukum farmers reap rich rewards of asparagus farming

...each farmer has...earned Rs 150,000 to Rs 300,000 from the commercial asparagus farming every year

An interview with Surya Nepal's corporate vice president about whether or not their garment factory will repoen

Labels: exports, inflation, Kailali, labor unions, nepal rastra bank, Rukum, surya nepal

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1. Korean Language Test results out
*50,043 applicants had taken the test
*only 15,298 passed
*13,298 applicants will work in production related job and remaining 2,000 in agriculture sector
*South Korea is a lucrative destination for Nepali workers with a monthly average income of $1,000

2.Deposits in commercial banks up in Q4

RBB, which has the highest deposit base among commercial banks, saw its deposits rise 13.44 percent in Q4 against a growth of 4.02 percent in the previous quarter. The bank collected deposits worth Rs 8.75 billion during Q4. RBB’s total deposits as of the end of fiscal 2010-11 amounted to Rs 73.92 billion.

Nepal Bank Limited collected more than Rs 4.47 billion in deposits during Q4. Its total deposits at the end of fiscal 2010-11 stood at Rs 46.80 billion, up 10.56 percent from the previous quarter.

Agricultural Development Bank saw its deposits going up 6.17 percent in the last quarter against a growth of 1.61 percent in previous quarter.

3. Chinese team to study Ring Road widening has arrived in Kathmandu

The 18-member team has geotechnical engineers, traffic engineers, material engineers and other technical experts.

The team will spend 40 days in Kathmandu to do a survey for widening 9.5 km of the 27-km long Ring Road in the first phase.

The Ring Road improvement project will upgrade the current four-lane road to eight lanes (a four-lane, two-way main road, a four-lane, two-way relief road, a two-way bicycle path and a two-way pedestrian path, including bus stations and parking lots).

The road widening work is expected to be completed by 2013 utilising resources received as grant assistance from China annually.

On Feb 28, 2011, the Chinese government had agreed to provide a grant assistance of RMB 50 million (Rs 547 million) for widening the Ring Road and other projects. The technical team will design a simple urban flyover; three pedestrian overpasses will also be built. Even though the locations for the flyover and overpasses have not been fixed, the project is likely to select Kalanki Chowk to build the flyover with a signalised intersection underneath for pedestrians.

4. Indian overland tourist arrivals up 74pc

*298,821 Indian tourists visited Nepal in 2009 via land routes
*520,522 Indian tourists visited Nepal in 2010 via land routes
*This is a 74 percent increase

*154,086 third-country tourists entered Nepal by land in 2010

*Major entry points for Indian tourists were: Vittamod (Janakpur) with 17 percent, Birgunj with 13 percent, Kakarbhitta with 8 percent, Biratnagar with 5 percent, Nepalgunj and Mahendranagar with 3 percent each and Dhangadhi with 1 percent.

*96,928 vehicles entered Nepal through eight border points in 2010, an increment of 22 percent over the previous year's figures.
*46 percent of tourists coming via Indian land routes came by public bus and 39 percent by private vehicles.

*For 2010:
Entry Point // Number of Tourists // Percent Of the total
Birgunj // 89,544 // 13 Percent
Vittamod (Janakpur) // 112,038 // 17 Percent
Kakkarbhitta // 55,098 // 8 Percent
Biratnagar // 32,320 // 5 Percent
Nepalgunj // 17,919 // 3 Percent
Dhangadhi // 8,730 // 1 Percent
Mahendranagar // 21,117 // 3 Percent
Bhairahawa // 337,842 // 50 Percent

5. BFIs barred from opening accounts amongst themselves
According to the NRB:

Financial institutions should collect deposits and lend...If they park their deposits in other institutions, it will create anomalies. Therefore, we have decided to stop it

I believe this is a good step by the NRB especially because:

NRB’s latest statistics show that commercial banks have deposits worth Rs 670 billion, development banks Rs 90 billion and finance companies Rs 84 billion.

6. Whole-Genome Study proves that Nepalese UN-peacekeepers brought Cholera to Haiti that has killed 6000 people so far

7. Bhutanese refugee numbers in Nepal nearly halved after re-settlement overseas

8. New Hydropower rules in Nepal makes it difficult for Indian investors to invest in Nepal

Labels: ADBL, Bhutan, china, cholera, haiti, hydroppower, korean language test, liquidity, migration, NBB, nepal rastra bank, refugees, ring road, tourism

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1. Nepal Rastra Bank's Governor, Dr Yubraj Khatiwada, advises the BFIs to regulate themselves.

This is very worrying to hear from the Governor. I agree, in general, about BFIs having to pay more heed in keeping their books and lending/borrowing practices balanced. But, asking the BFIs to "regulate" themselves is precisely the reason why de-regulated economies like the US and Europe suffered the financial crisis in 2007. The governor should be careful before dispensing such risky suggestions.

2. A nice article about inflationary expectations (using the US example)

3. Here's an excellent question: Is Nepal turning into a "constitutional anarchy"?

4. Surya Nepal shuts down its factory in Biratnagar that produces world famous brands--John Players and Springwood. Usually, I am a pro-union guy, but this incident shows how Nepalese tend to take the union concept to its extreme and hack our own legs.

5. 50,000th Bhutanese refugee leaves Nepal to settle overseas. Personally, I see a failure of Nepalese diplomats to talk with their Indian counterparts to solve this crisis. It's a shame. The Bhutanese should have been able to go back to where they belonged--in their own country, Bhutan. But, failure of Indian and Nepalese diplomats hurt these refugees for the last two decades.

6. ICRA to begin credit rating in Nepal

7. Nepal's credit rating. The world bank paper is here (PDF document).

Labels: Bhutan, central bank of nepal, credit rating, inflation, nepal rastra bank, refugees

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1. Is Capitalism Dead?

2. Nepal Telecom plans to improve the service quality. Finally!

3. Government to provide jobs to unemployed Nepalese youths.
*All 14 zones will eventually have Employment Information Centers
*Currently, youths who have registered in Model EICs in Kathmandu and Biratnagar will be given jobs
*2332 youths from Kathmandu and 2000 from Biratnagar have applied for the scheme
*35,000 youths have registered for the program for 2011/12
*Rs 1 million has been allocated for current program

4. IMF urges Nepalese government to give more power to the Nepal Rastra Bank, the central bank, to handle sick banks

5. Relationship between Nepalese and Indian inflation

 

It is pretty clear that most of the time, Nepalese inflation always is a few points higher than Indian inflation. The primary reason for this is due to the fact that price of commodities--food or otherwise--consumed in Nepal come from or through India. Therefore, the Nepalese price for the same commodity is a few rupees higher than in India due to factors like transportation costs and retailers' profits. The other reason is also the pegging between NRs and IRs. Any rise in inflation in India has to be accompanied by a few percentage higher rise in inflation in Nepal to avoid any NRs flowing from Nepal into India. The reason why NRs flows to India in such cases is because higher inflation in India means higher interest rates in India to combat inflation. In such instances, if Nepalese interest rates remain low, people will take their money to India to take advantage of higher interest rates in India.

6. Sectoral Contribution to GDP


Like any developing nation, Nepalese agricultural contribution to GDP is declining while services is increasing. The recent surveys from 2010 and 2011 will probably show that agriculture is now only around 30 percent of GDP.

Labels: capitalism, central bank of nepal, GDP, IMF, inflation, nepal rastra bank, nepal telecom