Balance of Payment to remain deficit this fiscal year

Central bank governor said that Balance of Payment (BoP) will remain deficit in this fiscal year against the Monetary Policy 2010-11 target of Rs 9 billion surplus.
"The current account and financial account deficits are hurting Balance of Payment," said Nepal Rastra Bank Dr Yubraj Khatiwada here today.
Huge withdrawal of Indian Currency from Indian banks through ATMs and open border contributed to the deficit that was projected to be at Rs 9 billion surplus.
In the first seven months of the current fiscal year, the IC withdrawal through ATMs in India has been recorded at Rs 19 billion against Rs 3 billion in the same period of the last fiscal year. "The huge amount of IC withdrawal was also due to increasing informal economy at the Nepal-India border," he said, adding that the problem in reimbursement and low foreign aid mobilisation has also hurt the balance of Payment situation.
The governor has however, claimed that the economy is not in bad shape, though there are some problems. "The Fiscal Policy and Monetary Policy are on right track," he claimed, adding that the forex reserve is also in the comfortable position despite Nepal has to buy Indian currency selling the dollar.
There is problem in some of the financial institutions but the whole financial system is doing fine, Khatiwada said. "The capital market is in the corrective mood and low supply of easy money has also pulled the current secondary market.