Prices of vegetables, fruits, sugar and sweets, clothing, footwear and transport went sky high, according to the central bank report.
During the first 11 months of the current fiscal year, of the items under food and beverage group, price index of vegetables sub-groups increased by the highest rate of 46.6 per cent compared to the decrease of 13.4 per cent in the same period of a fiscal year ago, it said, adding that the year-on-year inflation — as measured by the consumer price index — has increased to 8.8 per cent in mid-June from 8.2 per cent in the same period a fiscal year ago.
Similarly, the price indices of fruits and sugar and sweets, which had increased by 10.9 per cent and 20.3 per cent respectively in the same period of a fiscal year ago, increased by 28.2 per cent and 23.4 per cent, respectively.
"The index of food and beverage group increased by 14.3 per cent and the index of non-food and services group increased by 4.3 per cent, respectively, the macroeconomic report based on the first 11 months of the last fiscal year 2010-11 revealed. "The indices of these groups had increased by 9.8 per cent and seven per cent, respectively in the same period of 2009-10."
Similarly, the price indices of tobacco products, restaurant and hotel and cereals grains increased by 15.3 per cent, 13.9 per cent and 10.4 per cent respectively compared to the increase of 9.8 per cent, 18.2 per cent and 13.5 per cent respectively in the same period a year ago.
"The price indices of milk products and egg and meat and fish increased by 16.9 per cent and 5.5 per cent respectively against the increase of 15.2 per cent and 11.3 per cent in the same period of a year ago, whereas the index of legume varieties, which had increased by 16.4 per cent in the same period of the previous year, decreased by 6.5 per cent.
Within the group of non-food and services, the price index of clothing and footwear increased by 14.7 per cent compared to an increase of 7.7 per cent in the corresponding period of the previous year.
The price index of transport, which had increased by 0.1 per cent in the same period of a year ago, increased by 11 per cent during the review period.
Similarly, the price index of housing and utilities, which had increased by 9.8 per cent in the same period of a fiscal year ago, increased by 2.8 per cent only, whereas the price index of communication, which had remained unchanged in the same period of the previous year, declined by 13 per cent.
Valley most expensive
KATHMANDU: Region-wise, the price index in Kathmandu Valley increased by 10.5 per cent followed by 9.9 per cent in Hills and 6.9 per cent in Tarai in the first 11 months of the last fiscal year. The respective growth rates were seven per cent, 9.8 per cent and eight per cent in the same period a fiscal year ago, according to the central bank.
Sunday, July 31, 2011
Saturday, July 30, 2011
Asia's growth to moderate on rising inflation, weak global demand
After a strong rebound in 2010, economic growth in emerging East Asia will moderate this year and in 2012 as authorities continue to battle inflation and as advanced economies try to shore up an anemic recovery, aqccording to the July edition of the Asian Development Bank’s (ADB) Asia Economic Monitor (AEM).
The report forecasts aggregate GDP growth for emerging East Asia economies of 7.9 per cent in 2011 and 7.7 per cent in 2012. In 2010 aggregate growth reached 9.3 per cent.
“Growth is easing in most of emerging East Asia as authorities wind down fiscal stimulus measures and tighten monetary policies to counter rising inflation,” said Iwan Azis, Head of ADB’s Office of Regional Economic Integration that prepared the report. “This is actually a good thing so stronger economies like the People’s Republic of China (PRC) don’t overheat.
"The AEM, a semiannual report, assesses the outlook of the 10 members of the Association of Southeast Asian Nations (ASEAN); the PRC; Hong Kong, China; Republic of Korea; and Taipei, China.
Growth in PRC moderated slightly to 9.5 per cent in the second quarter of 2011 from 9.7 per cent in the first quarter. Looking ahead, a slow external environment and tighter monetary stance are expected to moderate growth to more sustainable levels of 9.6 per cent for the full year and 9.2 per cent in 2012.
The highly trade-dependent Newly Industrialised Economies of Hong Kong, China; Republic of Korea; Singapore and Taipei, China should also see a return to more sustainable long- term levels of growth as a weakened external environment slows exports.
Three of ASEAN’s middle income economies—Malaysia, the Philippines and Thailand—should see growth taper due to diminished export demand and tighter monetary policy. Indonesia stands to buck the trend with strong domestic demand expected to drive growth to 6.4 per cent in 2011, above its 6.1 per cent growth in 2010.
The ADB report highlights the risk of rising inflation leading to wage-price spirals that could derail the region’s growth. Other risks to the outlook include a more tepid than expected recovery in Japan and unresolved debt problems in the US and eurozone; increasing financial market volatility; and destabilising capital flows.
The report also contains a special section on how authorities can respond to inflation driven by surging commodity prices. It suggests that a pragmatic approach to a range of policies may help governments manage the inflationary impact of sustained and volatile changes in commodity prices. It also points out that greater exchange rate flexibility can help mitigate the effects of global commodity price surges on domestic prices.
The report forecasts aggregate GDP growth for emerging East Asia economies of 7.9 per cent in 2011 and 7.7 per cent in 2012. In 2010 aggregate growth reached 9.3 per cent.
“Growth is easing in most of emerging East Asia as authorities wind down fiscal stimulus measures and tighten monetary policies to counter rising inflation,” said Iwan Azis, Head of ADB’s Office of Regional Economic Integration that prepared the report. “This is actually a good thing so stronger economies like the People’s Republic of China (PRC) don’t overheat.
"The AEM, a semiannual report, assesses the outlook of the 10 members of the Association of Southeast Asian Nations (ASEAN); the PRC; Hong Kong, China; Republic of Korea; and Taipei, China.
Growth in PRC moderated slightly to 9.5 per cent in the second quarter of 2011 from 9.7 per cent in the first quarter. Looking ahead, a slow external environment and tighter monetary stance are expected to moderate growth to more sustainable levels of 9.6 per cent for the full year and 9.2 per cent in 2012.
The highly trade-dependent Newly Industrialised Economies of Hong Kong, China; Republic of Korea; Singapore and Taipei, China should also see a return to more sustainable long- term levels of growth as a weakened external environment slows exports.
Three of ASEAN’s middle income economies—Malaysia, the Philippines and Thailand—should see growth taper due to diminished export demand and tighter monetary policy. Indonesia stands to buck the trend with strong domestic demand expected to drive growth to 6.4 per cent in 2011, above its 6.1 per cent growth in 2010.
The ADB report highlights the risk of rising inflation leading to wage-price spirals that could derail the region’s growth. Other risks to the outlook include a more tepid than expected recovery in Japan and unresolved debt problems in the US and eurozone; increasing financial market volatility; and destabilising capital flows.
The report also contains a special section on how authorities can respond to inflation driven by surging commodity prices. It suggests that a pragmatic approach to a range of policies may help governments manage the inflationary impact of sustained and volatile changes in commodity prices. It also points out that greater exchange rate flexibility can help mitigate the effects of global commodity price surges on domestic prices.
Friday, July 29, 2011
Hike in salary fails to boost government employees’ moral
In the budget for the current fiscal year, the government has hiked salary of civil servants by 21.95 per cent to boost their moral and efficiency, but a survey revealed that hike in salary never boosted their moral.
"There is no direct relation between salary hike and employees' moral," according to the research 'Relation between Employees moral and organisation' conducted by the Revenue Administration Training Centre, a government agency.
Employee satisfaction is a measure of how happy workers are with their job and working environment. Keeping morale high among workers can be of tremendous benefit as happy workers will be more likely to be more productive and stay loyal to the institutions.
However, government employees are neither loyal nor happy. "They do not encourage their children, relatives and young graduates to enter the government service," said senior training officer Bashu Sharma, who was part of the research.
The government employees do not trust their own organisations and feel insecure all the time, the research revealed attributing to political bickering, unionism, negative feeling in the working atmosphere, rampant corruption, and exposure to the side and outside society as the causes for their feeling inferior.
"The officer level and above are more frustrated than the lower levels," the report stated, adding that more talented employees are more frustrated compared to average ones.
"In the last one decade, the young talented graduates have not shown any interest to join government services that has also raised question over the Public Service Commission's exam pattern too,” revealed the survey that was carried out in and outside the Valley among 1,000 government officials. “Of which 50 per cent were from the Valley and another 50 per cent from out of the Valley.”
A former senior bureaucrat also agreed that the salary is never a motivating factor for the government employees. "It is the recognition, prestige and power that attract the people towards government job," said former finance secretary Rameshwor Prasad Khanal. The younger, talented graduates is yet to realise it,” he said, adding that lack of government's marketing and inferiority complex among the higher level government employees also dispelled the new generation from entering the cvil service.
The ministries like Finance Ministry and Foreign Ministry has enough places for talented young graduates for career, Khanal said
"There is no direct relation between salary hike and employees' moral," according to the research 'Relation between Employees moral and organisation' conducted by the Revenue Administration Training Centre, a government agency.
Employee satisfaction is a measure of how happy workers are with their job and working environment. Keeping morale high among workers can be of tremendous benefit as happy workers will be more likely to be more productive and stay loyal to the institutions.
However, government employees are neither loyal nor happy. "They do not encourage their children, relatives and young graduates to enter the government service," said senior training officer Bashu Sharma, who was part of the research.
The government employees do not trust their own organisations and feel insecure all the time, the research revealed attributing to political bickering, unionism, negative feeling in the working atmosphere, rampant corruption, and exposure to the side and outside society as the causes for their feeling inferior.
"The officer level and above are more frustrated than the lower levels," the report stated, adding that more talented employees are more frustrated compared to average ones.
"In the last one decade, the young talented graduates have not shown any interest to join government services that has also raised question over the Public Service Commission's exam pattern too,” revealed the survey that was carried out in and outside the Valley among 1,000 government officials. “Of which 50 per cent were from the Valley and another 50 per cent from out of the Valley.”
A former senior bureaucrat also agreed that the salary is never a motivating factor for the government employees. "It is the recognition, prestige and power that attract the people towards government job," said former finance secretary Rameshwor Prasad Khanal. The younger, talented graduates is yet to realise it,” he said, adding that lack of government's marketing and inferiority complex among the higher level government employees also dispelled the new generation from entering the cvil service.
The ministries like Finance Ministry and Foreign Ministry has enough places for talented young graduates for career, Khanal said
Thursday, July 28, 2011
Petroleum products' import bill doubles in two years
Rising petroleum products prices and increasing number of vehicles not only consumed total exports of the country but also been posing threat to macroeconomic stability as petroleum products import bill has doubled in last two years.
In the fiscal year 2008-09, the country had imported Rs 37.06 billion worth petroleum products. But in the first 11 months of the last fiscal year 2010-11, the country has imported petroleum products worth Rs 68.16 billion — almost double compared to two years ago.
However, export receipt stood at only Rs 58.14 billion — over Rs 10 billion less than petroleum products' import — in the same period, according to the central bank.
According to the current macroeconomic situation based on the first 11 months of the last fiscal year, the country has exported Rs 58.14 billion worth merchandise that is an increase by 5.6 per cent. "Such exports had declined by 10.3 per cent to Rs 55.07 billion in the same period in 2009-10," it said, adding that exports to India went up by eight per cent — due to increase in exports of zinc sheet, jute goods, thread, juice, and cardamom — against a drop of 4.8 per cent in the same period of a fiscal year ago.
Similarly, exports to other countries increased by one per cent — due to mainly increase in the export of pashmina, woolen carpet, tanned skin and tea — against a plunge by 19.2 per cent in the same period of in 2009-10.
The report said that the merchandise imports, on the other hand, increased by 5.7 per cent to Rs 358.40 billion — six times the exports — widening the total trade deficit by 5.7 per cent to Rs 300.27 billion.
Such imports had risen by 33.7 per cent to Rs 339.08 billion in the same period of 2009-10, it said, adding that imports from India soared by 22.8 per cent compared to a growth of 35.2 per cent in the same period of a fiscal year ago. "Likewise, imports from other countries plummeted by 17.6 per cent in contrast to a growth of 31.7 per cent in the same period of 2009-10," the central bank said, attributing the import of petroleum products, MS billet, cold rolled sheet in coil, medicine and electrical equipments for increased imports from India, whereas gold, readymade garments, steel rod and sheet, other machinery and parts and betelnuts import declined from other countries.
During the eleven months, iron and steel articles has the highest percentage share among the major commodities in exports. In the total exports, iron and steel articles have 16.07 per cent share that is worth Rs 9.29 billion. India, USA, Bangladesh, Germany, UK, France, Turkey, Canada, Italy, Japan, China, and Australia remained the major importers, whereas India, China, UAE, Argentina, Indonesia, Thailand, Korea, Malaysia, Japan, USA, Singapore, and Saudi Arabia remained the major exporters.
The overall Balance of Payment (BoP) observed a 'surprise' surplus of Rs 249.1 million by mid-June against a deficit of Rs 10.86 billion in the same period a fiscal year ago.
The Freight on Board (FoB)-based merchandise trade deficit increased by 5.5 per cent to Rs 289.97 billion compared to a deficit that had grown by 48.7 per cent in the same period last year.
However, the country's life line net transfer account registered a growth of 9.9 per cent to Rs 280.40 billion compared to that of a year ago. Under the transfers sub-group, grants increased by five per cent to Rs 25.97 billion while pension receipts rose by 6.2 per cent to Rs 25.55 billion. "Likewise, workers' remittances increased by 10.1 per cent to Rs 229.52 billion," the report said, adding that on a monthly basis, the remittance inflows decreased by 7.9 per cent in mid-June compared to the value of the mid-May.
Likewise, under the financial account, foreign direct investment of Rs 6.06 billion was recorded compared to the level of Rs 2.41 billion in the same period a fiscal year ago.
The gross foreign exchange reserves increased marginally by 0.3 per cent to Rs 269.77 billion in mid-June from a level of Rs 268.91 billion as of mid-July 2010. The reserves had gone down by 11 per cent to Rs 255.13 billion in the same period a fiscal year ago. On the monthly basis, foreign exchange reserve of Rs 10.76 billion increased in the month of mid-June from a month ago. "Out of total reserve, NRB's reserves rose by four per cent to Rs 213.54 billion from a level of Rs 205.37 billion as at mid-July 2010," it said, adding that the gross foreign exchange reserves in US dollar terms increased by 4.5 per cent to $3.77 billion in mid-June.
Based on the trend of import during the eleven months of the current fiscal 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.Similarly, the central bank purchased Indian currency equivalent to Rs 178.10 billion through the sale of $2.46 billion in the Indian money market in the first 11 months of the current fiscal year.
Petroleum products import bill
2008-09 -- Rs 37.06 billion
2009-10 -- Rs 46 billion
2010-11* -- Rs 68.16 billion
(*In the first 11 months. Source: Nepal Rastra Bank.)
In the fiscal year 2008-09, the country had imported Rs 37.06 billion worth petroleum products. But in the first 11 months of the last fiscal year 2010-11, the country has imported petroleum products worth Rs 68.16 billion — almost double compared to two years ago.
However, export receipt stood at only Rs 58.14 billion — over Rs 10 billion less than petroleum products' import — in the same period, according to the central bank.
According to the current macroeconomic situation based on the first 11 months of the last fiscal year, the country has exported Rs 58.14 billion worth merchandise that is an increase by 5.6 per cent. "Such exports had declined by 10.3 per cent to Rs 55.07 billion in the same period in 2009-10," it said, adding that exports to India went up by eight per cent — due to increase in exports of zinc sheet, jute goods, thread, juice, and cardamom — against a drop of 4.8 per cent in the same period of a fiscal year ago.
Similarly, exports to other countries increased by one per cent — due to mainly increase in the export of pashmina, woolen carpet, tanned skin and tea — against a plunge by 19.2 per cent in the same period of in 2009-10.
The report said that the merchandise imports, on the other hand, increased by 5.7 per cent to Rs 358.40 billion — six times the exports — widening the total trade deficit by 5.7 per cent to Rs 300.27 billion.
Such imports had risen by 33.7 per cent to Rs 339.08 billion in the same period of 2009-10, it said, adding that imports from India soared by 22.8 per cent compared to a growth of 35.2 per cent in the same period of a fiscal year ago. "Likewise, imports from other countries plummeted by 17.6 per cent in contrast to a growth of 31.7 per cent in the same period of 2009-10," the central bank said, attributing the import of petroleum products, MS billet, cold rolled sheet in coil, medicine and electrical equipments for increased imports from India, whereas gold, readymade garments, steel rod and sheet, other machinery and parts and betelnuts import declined from other countries.
During the eleven months, iron and steel articles has the highest percentage share among the major commodities in exports. In the total exports, iron and steel articles have 16.07 per cent share that is worth Rs 9.29 billion. India, USA, Bangladesh, Germany, UK, France, Turkey, Canada, Italy, Japan, China, and Australia remained the major importers, whereas India, China, UAE, Argentina, Indonesia, Thailand, Korea, Malaysia, Japan, USA, Singapore, and Saudi Arabia remained the major exporters.
The overall Balance of Payment (BoP) observed a 'surprise' surplus of Rs 249.1 million by mid-June against a deficit of Rs 10.86 billion in the same period a fiscal year ago.
The Freight on Board (FoB)-based merchandise trade deficit increased by 5.5 per cent to Rs 289.97 billion compared to a deficit that had grown by 48.7 per cent in the same period last year.
However, the country's life line net transfer account registered a growth of 9.9 per cent to Rs 280.40 billion compared to that of a year ago. Under the transfers sub-group, grants increased by five per cent to Rs 25.97 billion while pension receipts rose by 6.2 per cent to Rs 25.55 billion. "Likewise, workers' remittances increased by 10.1 per cent to Rs 229.52 billion," the report said, adding that on a monthly basis, the remittance inflows decreased by 7.9 per cent in mid-June compared to the value of the mid-May.
Likewise, under the financial account, foreign direct investment of Rs 6.06 billion was recorded compared to the level of Rs 2.41 billion in the same period a fiscal year ago.
The gross foreign exchange reserves increased marginally by 0.3 per cent to Rs 269.77 billion in mid-June from a level of Rs 268.91 billion as of mid-July 2010. The reserves had gone down by 11 per cent to Rs 255.13 billion in the same period a fiscal year ago. On the monthly basis, foreign exchange reserve of Rs 10.76 billion increased in the month of mid-June from a month ago. "Out of total reserve, NRB's reserves rose by four per cent to Rs 213.54 billion from a level of Rs 205.37 billion as at mid-July 2010," it said, adding that the gross foreign exchange reserves in US dollar terms increased by 4.5 per cent to $3.77 billion in mid-June.
Based on the trend of import during the eleven months of the current fiscal 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.Similarly, the central bank purchased Indian currency equivalent to Rs 178.10 billion through the sale of $2.46 billion in the Indian money market in the first 11 months of the current fiscal year.
Petroleum products import bill
2008-09 -- Rs 37.06 billion
2009-10 -- Rs 46 billion
2010-11* -- Rs 68.16 billion
(*In the first 11 months. Source: Nepal Rastra Bank.)
Wednesday, July 27, 2011
Workers demand equal rise in salary
Splinter trade union of UCPN-Maoist has demanded a minimum salary of Rs 12,400 to make it equal to that of civil servants.
The government has in the budget for the current fiscal year increased the lary of civil servants -- on July 15 -- by 21.95 per cent.
Secretary of the UCPN-Maoist and coordinator of ANTUF Posta Bahadur Bogati demanded to increase monthly salary to Rs 12,400 and daily wage to Rs 650. "Minimum wage must be increased to Rs 12,400 to make the salary equal to the civil servant according to the new rise they got in the current fiscal year's budget," he said.
Though, Jamma Kattel led ANTUF, along with GEFONT and NTUC, is still in favour of March 24 agreement but the splinter trade unions of UCPN-Maoist added further demands in minimum wage after the salary hike of civil servants in budget 2011-12.
All Nepal Security Workers Association has also joined the bandwagon in agitation from Tuesday demanding implementation of minimum wage according to April 16.
Nearly a dozen trade unions are in agitation since July 21 and others are following to pressure the government and employers for their salary hike.
Ten trade unions, signatory of April 16 agreement with Ministry of Labour and Transport Management, have urged the government to implement agreement in words. The ministry had agreed to hike monthly salary to Rs 6,200 and daily wage to Rs 231 following two-week long strike in Sunsari-Morang and Hetauda-Birgunj industrial corridors.
It had also published the hike in the gazette but the empoyers moved to the Court for the stay order and the Court also issued stay order agains the Gazette that was published unilaterally by the government bypassing the committee under the Labour Ministry, that can only decide on the salary hike.
Two fractions of CPN-Maoist affiliated trade union, All Nepal Trade Union Federation (ANTUF), and small trade unions close to Madhesi political parties were in April 16 agreement while ANTUF led by Shalikram Jamma Kattel along with the CPN-UML and Nepal Congress affiliated trade unions had already signed an agreement with employers on March 24.
Nepal Trade Union Congress (NTUC), General Federation of Nepalese Trade Unions (GEFONT) and ANTUF had agreed to hike workers salary to Rs 6,100 and daily wage Rs 226 in negotiation with employers– Federation of Nepalese Chambers of Commerce and Industry and Confederation of Nepalese Industries –on March 24. The agreement has introduced social security provision for workers for the first time. However, the government endorsed April l6 agreement in national gazette on May 23 hiking the salary by Rs 100. The employers and three major trade unions, those hold over 80 per cent industrial sector workers are against the government's unilateral decision of April 16.
FNCCI had filed a case against the government decision in minimum wage and got stay order from Supreme Court on June 3. Meanwhile, Independent Democratic Confederation of Nepalese Trade Union filed counter petition on July 14 seeking reversal of the stay order and order to implement minimum wage published in national Gazette. “We are stick to April 16 agreement and it should be implemented in words,” said Badri Bajagai, coordinator of a fraction of ANTUF.
According to him, they will go on indefinite strike from July 31, if employers do not obey the national Gazette.
The government has in the budget for the current fiscal year increased the lary of civil servants -- on July 15 -- by 21.95 per cent.
Secretary of the UCPN-Maoist and coordinator of ANTUF Posta Bahadur Bogati demanded to increase monthly salary to Rs 12,400 and daily wage to Rs 650. "Minimum wage must be increased to Rs 12,400 to make the salary equal to the civil servant according to the new rise they got in the current fiscal year's budget," he said.
Though, Jamma Kattel led ANTUF, along with GEFONT and NTUC, is still in favour of March 24 agreement but the splinter trade unions of UCPN-Maoist added further demands in minimum wage after the salary hike of civil servants in budget 2011-12.
All Nepal Security Workers Association has also joined the bandwagon in agitation from Tuesday demanding implementation of minimum wage according to April 16.
Nearly a dozen trade unions are in agitation since July 21 and others are following to pressure the government and employers for their salary hike.
Ten trade unions, signatory of April 16 agreement with Ministry of Labour and Transport Management, have urged the government to implement agreement in words. The ministry had agreed to hike monthly salary to Rs 6,200 and daily wage to Rs 231 following two-week long strike in Sunsari-Morang and Hetauda-Birgunj industrial corridors.
It had also published the hike in the gazette but the empoyers moved to the Court for the stay order and the Court also issued stay order agains the Gazette that was published unilaterally by the government bypassing the committee under the Labour Ministry, that can only decide on the salary hike.
Two fractions of CPN-Maoist affiliated trade union, All Nepal Trade Union Federation (ANTUF), and small trade unions close to Madhesi political parties were in April 16 agreement while ANTUF led by Shalikram Jamma Kattel along with the CPN-UML and Nepal Congress affiliated trade unions had already signed an agreement with employers on March 24.
Nepal Trade Union Congress (NTUC), General Federation of Nepalese Trade Unions (GEFONT) and ANTUF had agreed to hike workers salary to Rs 6,100 and daily wage Rs 226 in negotiation with employers– Federation of Nepalese Chambers of Commerce and Industry and Confederation of Nepalese Industries –on March 24. The agreement has introduced social security provision for workers for the first time. However, the government endorsed April l6 agreement in national gazette on May 23 hiking the salary by Rs 100. The employers and three major trade unions, those hold over 80 per cent industrial sector workers are against the government's unilateral decision of April 16.
FNCCI had filed a case against the government decision in minimum wage and got stay order from Supreme Court on June 3. Meanwhile, Independent Democratic Confederation of Nepalese Trade Union filed counter petition on July 14 seeking reversal of the stay order and order to implement minimum wage published in national Gazette. “We are stick to April 16 agreement and it should be implemented in words,” said Badri Bajagai, coordinator of a fraction of ANTUF.
According to him, they will go on indefinite strike from July 31, if employers do not obey the national Gazette.
Tuesday, July 26, 2011
APG upgrades Nepal’s ranking in fighting against dirty money
Nepal has improved its ranking in fighting against inflow of dirty money.
The 14th annual meeting of Asia/Pacific Group on Money Laundering (APG) has approved Nepal’s mutual evaluation report in implementing international standards to combat money laundering and the financing of terrorism.
“Of the total 40 plus nine compliance of Financial Action Task Force (FATF), Nepal now has fulfilled four of the recommendations,” said deputy governor of the central bank Maha Prasad Adhikari, after returning from the annual meeting — organised by India on July 18-22.
However, Nepal has to do a lot more, he said, adding that some six evaluation reports were filed to be discussed and the plenary approved Nepal’s report unanimously after a series of discussions.
The annual meeting — attended by over 350 senior government officials from Asia/Pacific region and around the world — was inaugurated by Indian finance minister Pranab Mukharji and attended by Financial Action Task Force (FATF) president Giancarlo Del Bufalo of Mexico.
The APG members undergo a mutual evaluation and prepare a Mutual Evaluation Report that presents a probing assessment of the levels of compliance with the international standards and recommend actions. The APG is an international organisation — regionally focused — consisting of 40 members and a number of international and regional observers including the UN, IMF, FATF, Asian Development Bank and World Bank.
It is closely affiliated with the Financial Action Task Force (FATF), whose secretariat is located in the OECD headquarters in Paris. All APG members commit to effectively implement the FATF’s international standards for anti-money laundering and combating the financing of terrorism, referred to as the 40 plus nine Recommendations. Part of the commitment includes implementing measures against terrorists listed by the UN in the UNSC 1267 Consolidated List.
The plenary saw some 30 progress reports, which were adopted after discussions. By the sideline of the annual APG meeting several donors meeting also took place.
The closing media conference on July 22 was attended by APG co-chair K Jose Cyriac, APG co-chair Tony Negus and APG executive secretary Gordon Hook. Nepal’s team included central bank deputy governor Maha Prasad Adhikari, Financial Information Unit — under the central bank — chief Dharmaraj Sapkota, DIG of Nepal Police and representatives from Finance Ministry and Law Ministry.
The APG was officially established as a regional organisation in 1997 at the fourth Asia/Pacific Money Laundering Symposium in Bangkok. It ensures that mechanisms are in place for international cooperation, given the international dimension to money laundering and terrorist financing.
Earlier on July 2010, the 13th Annual Meeting was held in Singapore. Nepal was evaluated in the APG’s first round of evaluations in 2005 and in the second round in 2010. Nepal became the member of the APG in June 2002. Nepal is developing its anti-money laundering strategies and combating the financing of terrorism laundering system. The country has recently amended Anti-Money Laundering Act and has established an FIU, apart from ratifying two key UN Conventions to fight against the flow of dirty money.
Although estimating the amount of worldwide money laundering is problematic, the International Monetary Fund (IMF) has estimated that between two per cent and five per cent of global GDP per year is generated annually as the proceeds of crime — in US funds that is an amount in the trillions of dollars — the largest sources of which are illicit drug manufacturing and trafficking, arms and people smuggling, corruption, fraud, extortion, kidnapping and theft.
FATF has prescribed 40 plus nine recommendations on terrorist Financing. The following are the nine special recommendations:
Recognising the vital importance of taking action to combat the financing of terrorism, the FATF has agreed these Recommendations, which, when combined with the FATF Forty Recommendations on money laundering, set out the basic framework to detect, prevent and suppress the financing of terrorism and terrorist acts.
1. Ratification and implementation of UN instrument
Each country should take immediate steps to ratify and to implement fully the 1999 United Nations International Convention for the Suppression of the Financing of Terrorism.
Countries should also immediately implement the United Nations resolutions relating to the prevention and suppression of the financing of terrorist acts, particularly United Nations Security Council Resolution 1373.
2. Criminalising the financing of terrorism and associated money laundering
Each country should criminalise the financing of terrorism, terrorist acts and terrorist organisations. Countries should ensure that such offences are designated as money aundering predicate offences.
3. Freezing and Confiscating terrorist assets
Each country should implement measures to freeze without delay funds or other assets of terrorists, those who finance terrorism and terrorist organisations in accordance with the United Nations resolutions relating to the prevention and suppression of the financing of terrorist acts.
Each country should also adopt and implement measures, including legislative ones, which would enable the competent authorities to seize and confiscate property that is the proceeds of, or used in, or intended or allocated for use in, the financing of terrorism, terrorist acts or terrorist organisations.
4. Reporting suspecious transactions related to terrorism
If financial institutions, or other businesses or entities subject to anti-money laundering obligations, suspect or have reasonable grounds to suspect that funds are linked or related to, or are to be used for terrorism, terrorist acts or by terrorist organisations, they should be required to report promptly their suspicions to the competent authorities.
5. International cooperation
Each country should afford another country, on the basis of a treaty, arrangement or other mechanism for mutual legal assistance or information exchange, the greatest possible measure of assistance in connection with criminal, civil enforcement, and administrative investigations, inquiries and proceedings relating to the financing of terrorism, terrorist acts and terrorist organisations.
Countries should also take all possible measures to ensure that they do not provide safe havens for individuals charged with the financing of terrorism, terrorist acts or terrorist organisations, and should have procedures in place to extradite, where possible, such individuals.
6. Alternative remittance
Each country should take measures to ensure that persons or legal entities, including agents, that provide a service for the transmission of money or value, including transmission through an informal money or value transfer system or network, should be licensed or registered and subject to all the FATF Recommendations that apply to banks and non-bank financial institutions. Each country should ensure that persons or legal entities that carry out this service illegally are subject to administrative, civil or criminal sanctions.
7. Wire transfer
Countries should take measures to require financial institutions, including money remitters, to include accurate and meaningful originator information (name, address and account number) on funds transfers and related messages that are sent, and the information should remain with the transfer or related message through the payment chain.
Countries should take measures to ensure that financial institutions, including money remitters, conduct enhanced scrutiny of and monitor for suspicious activity funds transfers which do not contain complete originator information (name, address and account number).
8. NGOs
Countries should review the adequacy of laws and regulations that relate to entities that can be abused for the financing of terrorism. Non-profit organisations are particularly vulnerable, and countries should ensure that they cannot be misused:
(i) by terrorist organisations posing as legitimate entities;
(ii) to exploit legitimate entities as conduits for terrorist financing, including for the purpose of escaping asset freezing measures; and
(iii) to conceal or obscure the clandestine diversion of funds intended for legitimate purposes to terrorist organisations.
9. Cash couriers
Countries should have measures in place to detect the physical cross-border transportation of currency and bearer negotiable instruments, including a declaration system or other disclosure obligation.
Countries should ensure that their competent authorities have the legal authority to stop or restrain currency or bearer negotiable instruments that are suspected to be related to terrorist financing or money laundering, or that are falsely declared or disclosed.
Countries should ensure that effective, proportionate and dissuasive sanctions are available to deal with persons who make false declaration(s) or disclosure(s). In cases where the currency or bearer negotiable instruments are related to terrorist financing or money laundering, countries should also adopt measures, including legislative ones consistent with Recommendation 3 and Special Recommendation III, which would enable the confiscation of such currency or instruments.
The 14th annual meeting of Asia/Pacific Group on Money Laundering (APG) has approved Nepal’s mutual evaluation report in implementing international standards to combat money laundering and the financing of terrorism.
“Of the total 40 plus nine compliance of Financial Action Task Force (FATF), Nepal now has fulfilled four of the recommendations,” said deputy governor of the central bank Maha Prasad Adhikari, after returning from the annual meeting — organised by India on July 18-22.
However, Nepal has to do a lot more, he said, adding that some six evaluation reports were filed to be discussed and the plenary approved Nepal’s report unanimously after a series of discussions.
The annual meeting — attended by over 350 senior government officials from Asia/Pacific region and around the world — was inaugurated by Indian finance minister Pranab Mukharji and attended by Financial Action Task Force (FATF) president Giancarlo Del Bufalo of Mexico.
The APG members undergo a mutual evaluation and prepare a Mutual Evaluation Report that presents a probing assessment of the levels of compliance with the international standards and recommend actions. The APG is an international organisation — regionally focused — consisting of 40 members and a number of international and regional observers including the UN, IMF, FATF, Asian Development Bank and World Bank.
It is closely affiliated with the Financial Action Task Force (FATF), whose secretariat is located in the OECD headquarters in Paris. All APG members commit to effectively implement the FATF’s international standards for anti-money laundering and combating the financing of terrorism, referred to as the 40 plus nine Recommendations. Part of the commitment includes implementing measures against terrorists listed by the UN in the UNSC 1267 Consolidated List.
The plenary saw some 30 progress reports, which were adopted after discussions. By the sideline of the annual APG meeting several donors meeting also took place.
The closing media conference on July 22 was attended by APG co-chair K Jose Cyriac, APG co-chair Tony Negus and APG executive secretary Gordon Hook. Nepal’s team included central bank deputy governor Maha Prasad Adhikari, Financial Information Unit — under the central bank — chief Dharmaraj Sapkota, DIG of Nepal Police and representatives from Finance Ministry and Law Ministry.
The APG was officially established as a regional organisation in 1997 at the fourth Asia/Pacific Money Laundering Symposium in Bangkok. It ensures that mechanisms are in place for international cooperation, given the international dimension to money laundering and terrorist financing.
Earlier on July 2010, the 13th Annual Meeting was held in Singapore. Nepal was evaluated in the APG’s first round of evaluations in 2005 and in the second round in 2010. Nepal became the member of the APG in June 2002. Nepal is developing its anti-money laundering strategies and combating the financing of terrorism laundering system. The country has recently amended Anti-Money Laundering Act and has established an FIU, apart from ratifying two key UN Conventions to fight against the flow of dirty money.
Although estimating the amount of worldwide money laundering is problematic, the International Monetary Fund (IMF) has estimated that between two per cent and five per cent of global GDP per year is generated annually as the proceeds of crime — in US funds that is an amount in the trillions of dollars — the largest sources of which are illicit drug manufacturing and trafficking, arms and people smuggling, corruption, fraud, extortion, kidnapping and theft.
FATF has prescribed 40 plus nine recommendations on terrorist Financing. The following are the nine special recommendations:
Recognising the vital importance of taking action to combat the financing of terrorism, the FATF has agreed these Recommendations, which, when combined with the FATF Forty Recommendations on money laundering, set out the basic framework to detect, prevent and suppress the financing of terrorism and terrorist acts.
1. Ratification and implementation of UN instrument
Each country should take immediate steps to ratify and to implement fully the 1999 United Nations International Convention for the Suppression of the Financing of Terrorism.
Countries should also immediately implement the United Nations resolutions relating to the prevention and suppression of the financing of terrorist acts, particularly United Nations Security Council Resolution 1373.
2. Criminalising the financing of terrorism and associated money laundering
Each country should criminalise the financing of terrorism, terrorist acts and terrorist organisations. Countries should ensure that such offences are designated as money aundering predicate offences.
3. Freezing and Confiscating terrorist assets
Each country should implement measures to freeze without delay funds or other assets of terrorists, those who finance terrorism and terrorist organisations in accordance with the United Nations resolutions relating to the prevention and suppression of the financing of terrorist acts.
Each country should also adopt and implement measures, including legislative ones, which would enable the competent authorities to seize and confiscate property that is the proceeds of, or used in, or intended or allocated for use in, the financing of terrorism, terrorist acts or terrorist organisations.
4. Reporting suspecious transactions related to terrorism
If financial institutions, or other businesses or entities subject to anti-money laundering obligations, suspect or have reasonable grounds to suspect that funds are linked or related to, or are to be used for terrorism, terrorist acts or by terrorist organisations, they should be required to report promptly their suspicions to the competent authorities.
5. International cooperation
Each country should afford another country, on the basis of a treaty, arrangement or other mechanism for mutual legal assistance or information exchange, the greatest possible measure of assistance in connection with criminal, civil enforcement, and administrative investigations, inquiries and proceedings relating to the financing of terrorism, terrorist acts and terrorist organisations.
Countries should also take all possible measures to ensure that they do not provide safe havens for individuals charged with the financing of terrorism, terrorist acts or terrorist organisations, and should have procedures in place to extradite, where possible, such individuals.
6. Alternative remittance
Each country should take measures to ensure that persons or legal entities, including agents, that provide a service for the transmission of money or value, including transmission through an informal money or value transfer system or network, should be licensed or registered and subject to all the FATF Recommendations that apply to banks and non-bank financial institutions. Each country should ensure that persons or legal entities that carry out this service illegally are subject to administrative, civil or criminal sanctions.
7. Wire transfer
Countries should take measures to require financial institutions, including money remitters, to include accurate and meaningful originator information (name, address and account number) on funds transfers and related messages that are sent, and the information should remain with the transfer or related message through the payment chain.
Countries should take measures to ensure that financial institutions, including money remitters, conduct enhanced scrutiny of and monitor for suspicious activity funds transfers which do not contain complete originator information (name, address and account number).
8. NGOs
Countries should review the adequacy of laws and regulations that relate to entities that can be abused for the financing of terrorism. Non-profit organisations are particularly vulnerable, and countries should ensure that they cannot be misused:
(i) by terrorist organisations posing as legitimate entities;
(ii) to exploit legitimate entities as conduits for terrorist financing, including for the purpose of escaping asset freezing measures; and
(iii) to conceal or obscure the clandestine diversion of funds intended for legitimate purposes to terrorist organisations.
9. Cash couriers
Countries should have measures in place to detect the physical cross-border transportation of currency and bearer negotiable instruments, including a declaration system or other disclosure obligation.
Countries should ensure that their competent authorities have the legal authority to stop or restrain currency or bearer negotiable instruments that are suspected to be related to terrorist financing or money laundering, or that are falsely declared or disclosed.
Countries should ensure that effective, proportionate and dissuasive sanctions are available to deal with persons who make false declaration(s) or disclosure(s). In cases where the currency or bearer negotiable instruments are related to terrorist financing or money laundering, countries should also adopt measures, including legislative ones consistent with Recommendation 3 and Special Recommendation III, which would enable the confiscation of such currency or instruments.
Monday, July 25, 2011
Inefficiency, red tape hit economy hard
Inefficiency and red tape are hurting the economy, according to experts.
“The economy has been dogged by inefficiency and corruption,” said Prof Dr Madan Kumar Dahal in an interaction on ‘Global Economic and Financial Market Developments and Outlook-Implications for Nepal’, organised by Federation of Nepalese Chambers of Commerce and Industry (FNCCI) here in the Valley today.
“Higher dependency on agriculture has to be reduced and agriculture labour should be shifted to other productive sectors to propel economic growth,” he prescribed, adding that Nepal also needs to bring changes in the revenue structure to make the country more competitive.
“Otherwise, Nepal could take economic benefits from neither China nor India as the present world is all about market not ideology,” Dahal added.
The country’s trade deficit has been increasing with both China and India in recent years, former governor Deependra Bahadur Chhetri, said, adding that Nepal needs to exploit the opportunities from both the rising economic giants.
The rising consumerism is not helping Nepal increase domestic production due to lack of proper connectivity with the market place, he added.
However, former finance secretary Rameshwor Prasad Khanal opined that rise in consumption should also be looked at from positive perspective also as it sets the ground for rise in domestic production.
“Policies should, therefore, be targetted towards productive sectors and not try and tame consumption,” he said, adding that power outage and politically-instigated labour trouble have been the key reasons of lower productivity in industrial and service sector.
Similarly, agriculture productivity is low mainly because of infrastructure bottlenecks like irrigation, rural roads, market connectivity and not because of what is widely believed as lower subsidies like cheap chemical fertilizer or seeds. “It cannot help produce more as it’s very costly to take the produce to the market.”
However, revisiting in policy is required to increase the production of industries and should be focused on minerals and agro-based industries, the former bureaucrat said, adding that increasing agricultural productivity will help ease pressure on prices. “Thus Monetary Policy needs to be cautious but doing away with supply chain bottlenecks and allowing industries to operate at their full capacity can only bring respite from ever-rising prices.”
He also urged correction in the current budget tendency during the middle of fiscal year as it would bring macro-economic instability.Similarly, overhauling of the internal control system of the banks and financial institutions, improving corporate governance and merger and consolidation will increase the risk-bearing capacity; and banks and financial should themselves also regulate internally for the financial sector stability, he suggested.
On the occasion, representative of International Monetary Fund (IMF) to India and Nepal Dr Sanjaya Panth suggested strong supervision and enforcement of prudential regulations to safeguard the heath of financial sector.
“Expansionary budget will bring macro economic instability,” he said, adding that manufacturing sector is shrinking and consumption — not the investment — has been driving Nepali economy. “The remittance and consumption fuelled the economy, but productivity lagged behind leading to loss of competitiveness of domestic industries hurting the economic growth,” he added.
“The economy has been dogged by inefficiency and corruption,” said Prof Dr Madan Kumar Dahal in an interaction on ‘Global Economic and Financial Market Developments and Outlook-Implications for Nepal’, organised by Federation of Nepalese Chambers of Commerce and Industry (FNCCI) here in the Valley today.
“Higher dependency on agriculture has to be reduced and agriculture labour should be shifted to other productive sectors to propel economic growth,” he prescribed, adding that Nepal also needs to bring changes in the revenue structure to make the country more competitive.
“Otherwise, Nepal could take economic benefits from neither China nor India as the present world is all about market not ideology,” Dahal added.
The country’s trade deficit has been increasing with both China and India in recent years, former governor Deependra Bahadur Chhetri, said, adding that Nepal needs to exploit the opportunities from both the rising economic giants.
The rising consumerism is not helping Nepal increase domestic production due to lack of proper connectivity with the market place, he added.
However, former finance secretary Rameshwor Prasad Khanal opined that rise in consumption should also be looked at from positive perspective also as it sets the ground for rise in domestic production.
“Policies should, therefore, be targetted towards productive sectors and not try and tame consumption,” he said, adding that power outage and politically-instigated labour trouble have been the key reasons of lower productivity in industrial and service sector.
Similarly, agriculture productivity is low mainly because of infrastructure bottlenecks like irrigation, rural roads, market connectivity and not because of what is widely believed as lower subsidies like cheap chemical fertilizer or seeds. “It cannot help produce more as it’s very costly to take the produce to the market.”
However, revisiting in policy is required to increase the production of industries and should be focused on minerals and agro-based industries, the former bureaucrat said, adding that increasing agricultural productivity will help ease pressure on prices. “Thus Monetary Policy needs to be cautious but doing away with supply chain bottlenecks and allowing industries to operate at their full capacity can only bring respite from ever-rising prices.”
He also urged correction in the current budget tendency during the middle of fiscal year as it would bring macro-economic instability.Similarly, overhauling of the internal control system of the banks and financial institutions, improving corporate governance and merger and consolidation will increase the risk-bearing capacity; and banks and financial should themselves also regulate internally for the financial sector stability, he suggested.
On the occasion, representative of International Monetary Fund (IMF) to India and Nepal Dr Sanjaya Panth suggested strong supervision and enforcement of prudential regulations to safeguard the heath of financial sector.
“Expansionary budget will bring macro economic instability,” he said, adding that manufacturing sector is shrinking and consumption — not the investment — has been driving Nepali economy. “The remittance and consumption fuelled the economy, but productivity lagged behind leading to loss of competitiveness of domestic industries hurting the economic growth,” he added.
Kumari mobile cash bags international award
Kumari Bank bagged the coveted mBillionth Award South Asia for its Kumari mobile cash product -- in the m-business and commerce, banking category -- in the mBillionth 2011 South Asia International Summit 2011 in New Delhi on Satyurday.
The mBillionth Award 2011 was a platform that recognised some of the key innovative applications and services and honoured excellence in the arena of mobile communications across South Asia.
India’s State union minister of Communications and IT Sachin Pilot was the chief guest of the summit.
Out of a total of more than 200 applications from across Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka, some 21 were selected as winners spread across 11 core categories, with Kumari Bank, the sole winner representing Nepal.
"The bank is extremely proud to have won this award for a product that has less than a year of life under its belt," said the bank's CEO Radhesh Pant.
"In a very short time span, the product has helped the bank break traditional barriers in providing access to finance to the poor and solve inherently burning issues in the domestic banking sector," he added.
With 70 per cent of the population yet to be tapped into formal banking, the bank believes that the promise echoed by the product, in improving access to sustainable financial resources, is real and achievable.
Pant mentioned that the summit sponsored by internationally acclaimed telecommunications giant Vodafone was deservedly an appropriate platform, not just for the bank to showcase its innovation, but also for Nepal to show the world that Nepal also has the capability to be recognised as an incubator for innovative minds.
"The award has served as an outlet for the bank to scale even greater heights in the days to come," he added.
The first of its kind, Kumari Mobile Cash pioneered the 'mobile wallet' concept in Nepal, which allows users to store cash balances in their mobile phones. Users are then able to deposit and withdraw cash from their mobile phones, and use the stored cash value for various purposes like remittance, bill payments, and airtime recharge, with the push of a few buttons. Currently, customers can avail of the service from anyone of Kumari Bank’s 29 branches or from its 189 authorised agents dispersed across the country.
The service was launched one year ago, in partnership with Leapfrog Technology Inc, an American firm based in Boston, MA, USA with a development centre in Nepal.
The mBillionth Award 2011 was a platform that recognised some of the key innovative applications and services and honoured excellence in the arena of mobile communications across South Asia.
India’s State union minister of Communications and IT Sachin Pilot was the chief guest of the summit.
Out of a total of more than 200 applications from across Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka, some 21 were selected as winners spread across 11 core categories, with Kumari Bank, the sole winner representing Nepal.
"The bank is extremely proud to have won this award for a product that has less than a year of life under its belt," said the bank's CEO Radhesh Pant.
"In a very short time span, the product has helped the bank break traditional barriers in providing access to finance to the poor and solve inherently burning issues in the domestic banking sector," he added.
With 70 per cent of the population yet to be tapped into formal banking, the bank believes that the promise echoed by the product, in improving access to sustainable financial resources, is real and achievable.
Pant mentioned that the summit sponsored by internationally acclaimed telecommunications giant Vodafone was deservedly an appropriate platform, not just for the bank to showcase its innovation, but also for Nepal to show the world that Nepal also has the capability to be recognised as an incubator for innovative minds.
"The award has served as an outlet for the bank to scale even greater heights in the days to come," he added.
The first of its kind, Kumari Mobile Cash pioneered the 'mobile wallet' concept in Nepal, which allows users to store cash balances in their mobile phones. Users are then able to deposit and withdraw cash from their mobile phones, and use the stored cash value for various purposes like remittance, bill payments, and airtime recharge, with the push of a few buttons. Currently, customers can avail of the service from anyone of Kumari Bank’s 29 branches or from its 189 authorised agents dispersed across the country.
The service was launched one year ago, in partnership with Leapfrog Technology Inc, an American firm based in Boston, MA, USA with a development centre in Nepal.
Sunday, July 24, 2011
IMF team takes stock of financial institutions
A team of International Monetary Fund (IMF) is studying the current problem in the financial sector.
"The four-member team is studying current problems in the financial sector," central bank spokesperson Bhaskarmani Gyawali said, adding that the mission's visit is a regular one.
The visiting mission after interacting with senior government and central bank officials will recommend the central bank on managing current problems faced by the financial institutions.
"The team will recommend the central bank some measures after their study," he added.
The team is also scanning the balance sheets of some banks and financial institutions to look into possible 'weaknesses' in the statements, as according to the statements their financial health seems good but some institutions have been in trouble recently.
Since long, the IMF has been recommending the central bank to stop issuing the licence to new financial institutions fearing that mushrooming banks and financial institutions might put the entire financial system into risk.
The visiting mission will assess vulnerability and weaknesses, and review the measures taken by the central bank to prevent the systemic risk in the future.
There are 31 commercial banks, 87 development banks, 78 finance companies and 21 microfinance development banks making it to a total of 217 banks and financial institutions licenced by the central bank.
The increasing number of banks and financial institutions have made it difficult for the central bank to regulate and monitor them due to lack of manpower.
The increase in number of the banks and finance companies has, instead, harmed rather than expanding access to finance.
Meanwhile, the International Monetary Fund (IMF) has released the results of the second annual Financial Access Survey (FAS) which does not feature Nepal.
The project was unveiled at the World Bank-IMF Annual Meetings in Istanbul in October 2009 and the results from the inaugural FAS were released in June 2010. The FAS database disseminates key indicators of geographic and demographic outreach of financial services, as well as the underlying data. The reach of financial services is measured by bank branch network, availability of automated teller machines, and by three key financial instruments: deposits, loans, and insurance.
New data on outstanding deposits and loans of households were added for the 2011 FAS. The database aims at supporting policymakers and researchers to strengthen their understanding of the determinants and implications of financial access and usage. The disseminated financial access indicators can help identify knowledge gaps and appropriate policies for broadening financial access, and enable the authorities to monitor the effectiveness of policies over time.
About 140 countries participated in the 2011 FAS, and the FAS website now contains annual data for about 160 respondents covering a seven-year period (2004–2010), including data for all G-20 countries.
The project’s data collection effort, with initial financial support from the government of the Netherlands, complements the work done by the UN and the World Bank in the context of the UN Advisors Group on Inclusive Financial Sectors in which the IMF is represented.
The Project’s periodic surveys make use of the IMF's existing broad network of country correspondents for the IMF's flagship statistical publication — the International Financial Statistics (IFS). The collected annual key financial access indicators are publicly disseminated and support analytical work on the identification of knowledge gaps and the setting of priorities for policies on broadening financial access; monitoring the effectiveness of these policies over time; and advancing research and analysis to strengthen understanding of the determinants and implications of financial access and usage.
"The four-member team is studying current problems in the financial sector," central bank spokesperson Bhaskarmani Gyawali said, adding that the mission's visit is a regular one.
The visiting mission after interacting with senior government and central bank officials will recommend the central bank on managing current problems faced by the financial institutions.
"The team will recommend the central bank some measures after their study," he added.
The team is also scanning the balance sheets of some banks and financial institutions to look into possible 'weaknesses' in the statements, as according to the statements their financial health seems good but some institutions have been in trouble recently.
Since long, the IMF has been recommending the central bank to stop issuing the licence to new financial institutions fearing that mushrooming banks and financial institutions might put the entire financial system into risk.
The visiting mission will assess vulnerability and weaknesses, and review the measures taken by the central bank to prevent the systemic risk in the future.
There are 31 commercial banks, 87 development banks, 78 finance companies and 21 microfinance development banks making it to a total of 217 banks and financial institutions licenced by the central bank.
The increasing number of banks and financial institutions have made it difficult for the central bank to regulate and monitor them due to lack of manpower.
The increase in number of the banks and finance companies has, instead, harmed rather than expanding access to finance.
Meanwhile, the International Monetary Fund (IMF) has released the results of the second annual Financial Access Survey (FAS) which does not feature Nepal.
The project was unveiled at the World Bank-IMF Annual Meetings in Istanbul in October 2009 and the results from the inaugural FAS were released in June 2010. The FAS database disseminates key indicators of geographic and demographic outreach of financial services, as well as the underlying data. The reach of financial services is measured by bank branch network, availability of automated teller machines, and by three key financial instruments: deposits, loans, and insurance.
New data on outstanding deposits and loans of households were added for the 2011 FAS. The database aims at supporting policymakers and researchers to strengthen their understanding of the determinants and implications of financial access and usage. The disseminated financial access indicators can help identify knowledge gaps and appropriate policies for broadening financial access, and enable the authorities to monitor the effectiveness of policies over time.
About 140 countries participated in the 2011 FAS, and the FAS website now contains annual data for about 160 respondents covering a seven-year period (2004–2010), including data for all G-20 countries.
The project’s data collection effort, with initial financial support from the government of the Netherlands, complements the work done by the UN and the World Bank in the context of the UN Advisors Group on Inclusive Financial Sectors in which the IMF is represented.
The Project’s periodic surveys make use of the IMF's existing broad network of country correspondents for the IMF's flagship statistical publication — the International Financial Statistics (IFS). The collected annual key financial access indicators are publicly disseminated and support analytical work on the identification of knowledge gaps and the setting of priorities for policies on broadening financial access; monitoring the effectiveness of these policies over time; and advancing research and analysis to strengthen understanding of the determinants and implications of financial access and usage.
Nabil Invest launches portfolio management services
Nabil Invest is launching its Portfolio Management Services (PMS) from tomorrow.
Portfolio Management Services is a portfolio of securities -- equity, debt or other instruments -- held in client’s name but managed by a professional manager with specific investment objectives drawn in line with client’s risk appetite and return expectations.
Nabil Invest -- a Portfolio Manager licensed by Securities Board of Nepal (Sebon) -- offers innovative products with different return, targets and objectives, said Nabil Invest that offers discretionary, non-discretionary, advisory and administrative portfolio management services catering to investors needs.
"The Nabil Invest team includes experienced associates and analysts, who diversifies clients assets to minimise risks and manages it efficiently to ensure that the Client's financial expectations are met," it added.
Nabil Bank with its mission to be the first choice provider of complete financial solutions ventured into capital market related activities and incepted its subsidiary — Nabil Investment Banking (Nabil Invest) — which renders investment banking related services to the masses.
The promoter of the company includes Nabil Bank while CG Finco is an institutional investor.
Portfolio Management Services is a portfolio of securities -- equity, debt or other instruments -- held in client’s name but managed by a professional manager with specific investment objectives drawn in line with client’s risk appetite and return expectations.
Nabil Invest -- a Portfolio Manager licensed by Securities Board of Nepal (Sebon) -- offers innovative products with different return, targets and objectives, said Nabil Invest that offers discretionary, non-discretionary, advisory and administrative portfolio management services catering to investors needs.
"The Nabil Invest team includes experienced associates and analysts, who diversifies clients assets to minimise risks and manages it efficiently to ensure that the Client's financial expectations are met," it added.
Nabil Bank with its mission to be the first choice provider of complete financial solutions ventured into capital market related activities and incepted its subsidiary — Nabil Investment Banking (Nabil Invest) — which renders investment banking related services to the masses.
The promoter of the company includes Nabil Bank while CG Finco is an institutional investor.
Saturday, July 23, 2011
Staple cereal prices remain stable in May
The price of staple cereals has remained relatively stable in the last one month, according to a report.
"The average price of coarse rice has increased by a nominal 0.9 per cent, while that of wheat flour has decreased by 1.2 per cent in the past one month," according to the report jointly prepared by World Food Programme Nepal (WFP), Ministry of Agriculture and Cooperatives-Department of Agriculture, Agribusiness Promotion and Marketing Development Directorate, Federation of Nepalese Chamber of Commerce and Industries/Agro Enterprise Centre and Consumer Interest Protection Forum.
In the markets regularly monitored by the ministry and and WFP, the national average price of most of the commodities remained stable in the month of June compared to May.
The average price of coarse rice was Rs 35.4 per kg, while that of wheat flour and potato were Rs 35.3 and Rs 21.7 per kg respectively. In the last quarter, the national average prices of mustard oil and coarse rice increased by three per cent and 2.2 per cent respectively, while that of broken lentil, black gram and wheat flour decreased by 9.1 per cent, 6.8 per cent and 4.9 per cent respectively.In major consumer markets, the average price of coarse rice increased by 1.3 per cent, while that of wheat flour remained same, according to the report. The average price of coarse rice increased by 2.8 per cent in mountain and hill markets with road access and by 0.8 per cent in Tarai markets compared to a month ago.
The price of coarse rice in mountain markets without road access like Dolpa remained high and stable at Rs 95 per kg. However, the average price of wheat flour decreased by 2.2 per cent in mountain and hill, and by 0.9 per cent in Tarai markets compared to May.
However, price of wheat flour is likely to be stable in the next month, while prices of coarse rice and lentils are likely to increase until the next harvest which is normally expected in October-November.
The recent rise of fuel prices in India, and disruption of road transportation due to natural hazards like landslides and floods in the monsoon is likely to put upward pressure on food prices in hill and mountain markets.
Similarly, in the wholesale market monitored by FNCCI/AEC, the average price of coarse rice from five large markets — Birtamod, Kathmandu, Butwal, Surkhet and Dhangadi — increased by 12.6 per cent to Rs 33.1 in June compared to a month ago, the report said, adding that the year-on-year price inflation in mid-May remained at 9.5 per cent compared to 8.8 per cent in the previous period.
The food and beverage price index increased by 16 per cent, while the index of vegetable sub groups increased by the highest rate of 48.3 per cent compared to 3.8 per cent decline in the previous period.
Petrol price increased from Rs 97 in March to Rs 102 per litre in May. The report attributed continuous rise in petroleum prices to an increase in food transportation costs leading to rise in food prices.
As a result, the year-on-year transport price index in mid-May rose by 10.1 per cent compared to previous period.
"The average price of coarse rice has increased by a nominal 0.9 per cent, while that of wheat flour has decreased by 1.2 per cent in the past one month," according to the report jointly prepared by World Food Programme Nepal (WFP), Ministry of Agriculture and Cooperatives-Department of Agriculture, Agribusiness Promotion and Marketing Development Directorate, Federation of Nepalese Chamber of Commerce and Industries/Agro Enterprise Centre and Consumer Interest Protection Forum.
In the markets regularly monitored by the ministry and and WFP, the national average price of most of the commodities remained stable in the month of June compared to May.
The average price of coarse rice was Rs 35.4 per kg, while that of wheat flour and potato were Rs 35.3 and Rs 21.7 per kg respectively. In the last quarter, the national average prices of mustard oil and coarse rice increased by three per cent and 2.2 per cent respectively, while that of broken lentil, black gram and wheat flour decreased by 9.1 per cent, 6.8 per cent and 4.9 per cent respectively.In major consumer markets, the average price of coarse rice increased by 1.3 per cent, while that of wheat flour remained same, according to the report. The average price of coarse rice increased by 2.8 per cent in mountain and hill markets with road access and by 0.8 per cent in Tarai markets compared to a month ago.
The price of coarse rice in mountain markets without road access like Dolpa remained high and stable at Rs 95 per kg. However, the average price of wheat flour decreased by 2.2 per cent in mountain and hill, and by 0.9 per cent in Tarai markets compared to May.
However, price of wheat flour is likely to be stable in the next month, while prices of coarse rice and lentils are likely to increase until the next harvest which is normally expected in October-November.
The recent rise of fuel prices in India, and disruption of road transportation due to natural hazards like landslides and floods in the monsoon is likely to put upward pressure on food prices in hill and mountain markets.
Similarly, in the wholesale market monitored by FNCCI/AEC, the average price of coarse rice from five large markets — Birtamod, Kathmandu, Butwal, Surkhet and Dhangadi — increased by 12.6 per cent to Rs 33.1 in June compared to a month ago, the report said, adding that the year-on-year price inflation in mid-May remained at 9.5 per cent compared to 8.8 per cent in the previous period.
The food and beverage price index increased by 16 per cent, while the index of vegetable sub groups increased by the highest rate of 48.3 per cent compared to 3.8 per cent decline in the previous period.
Petrol price increased from Rs 97 in March to Rs 102 per litre in May. The report attributed continuous rise in petroleum prices to an increase in food transportation costs leading to rise in food prices.
As a result, the year-on-year transport price index in mid-May rose by 10.1 per cent compared to previous period.
Friday, July 22, 2011
Western hills vulnerable to food security
Despite a marginal surplus in the national cereal balance, Nepal will still sustain a significant population vulnerable to food insecurity -- particularly those with limited economic access and residing in remote and rural areas of Mid- and Far-Western hill and mountain districts, according to a report.
The country saw good cereal output, said the report Crops Situation produced jointly by Ministry of Agriculture and Cooperatives, World Food Programme (WFP), and the Food and Agriculture Organisation (FAO) as part of strengthening and institutionalisation of Nepal Food Security Monitoring System-NeKSAP with the funding from the European Union (EU).
Rainfall in March-April has been favourable for timely planting of spring paddy and spring maize, it said, adding that the anticipated beginning of the monsoon with a forecast of normal rainfall is, still, expected so far to be favourable for the next summer crops production.
In the fiscal year 2010-11, the country witnessed wheat production increase by 12.2 per cent to 1.75 million Metric Tonnes (MT) compared to 1.56 million MT a fiscal year ago.
Similarly, barley output has increased by 9.6 per cent to 30.2 thousand MT compared to 27.6 thousand MT last year.
The production of buckwheat -- which is also included in cereal food balance computation from this year -- was also up.
In 2010-11, the production of overall cereal crops has increased by 10.9 per cent to 8.62 million MT compared to 7.76 million MT a year ago.
Similarly, the overall edible cereal crop production shows a total of 110,000 MT (up by two per cent) surplus this year in contrast to 330,000 MT (down by six per cent) deficit last year, the report added.
An increase in the overall cereal output is attributed by a number of factors such as adequate precipitation across the country during plantation and growing period, fertilizer subsidy in some hill and mountain districts, and the support to agricultural productivity enhancement programme from both government and non-government organisations.
The country saw good cereal output, said the report Crops Situation produced jointly by Ministry of Agriculture and Cooperatives, World Food Programme (WFP), and the Food and Agriculture Organisation (FAO) as part of strengthening and institutionalisation of Nepal Food Security Monitoring System-NeKSAP with the funding from the European Union (EU).
Rainfall in March-April has been favourable for timely planting of spring paddy and spring maize, it said, adding that the anticipated beginning of the monsoon with a forecast of normal rainfall is, still, expected so far to be favourable for the next summer crops production.
In the fiscal year 2010-11, the country witnessed wheat production increase by 12.2 per cent to 1.75 million Metric Tonnes (MT) compared to 1.56 million MT a fiscal year ago.
Similarly, barley output has increased by 9.6 per cent to 30.2 thousand MT compared to 27.6 thousand MT last year.
The production of buckwheat -- which is also included in cereal food balance computation from this year -- was also up.
In 2010-11, the production of overall cereal crops has increased by 10.9 per cent to 8.62 million MT compared to 7.76 million MT a year ago.
Similarly, the overall edible cereal crop production shows a total of 110,000 MT (up by two per cent) surplus this year in contrast to 330,000 MT (down by six per cent) deficit last year, the report added.
An increase in the overall cereal output is attributed by a number of factors such as adequate precipitation across the country during plantation and growing period, fertilizer subsidy in some hill and mountain districts, and the support to agricultural productivity enhancement programme from both government and non-government organisations.
Thursday, July 21, 2011
Government’s Rs 5 billion overdraft under scanner
The government has taken over Rs 5 billion overdraft in the last month of the fiscal year 2010-11.
The treasury had surplus of Rs 14.30 billion in the first 11 months, according to the central bank data but in the last one month, the government has spent all the surplus and also asked for the over draft from the central bank, the government's financial manager.
The central bank governor Dr Yubraj Khatiwada said that the government has taken overdraft but could not explain the surprising rise in government expenditure by the end of the fiscal year.
Tradition has it that the successive governments distribute budgets by the end of the fiscal year to their party cadres and constituencies.
According to the law, the government can take overdraft not exceeding total revenue mobilisation's five per cent of the last fiscal year. The government had mobilised Rs 179.90 billion revenue in the fiscal year 2009-10 exceeding the target of Rs 176.5 billion. In the fiscal year 2010-11, the government can take over draft of around Rs 8 billion. "However, it has to be transparent,' the Finance Ministry source, said, adding that the government has to justify the expenditure.The unexpected rise in the government expenditure and also only in the last month has raised eyebrows. "As recently the Finance Ministry has been involved in financial scams, the overdraft also should be thoroughly investigated," central bank board member Prof Dr Bishwhamber Pyakurel, said, adding that the high ranking bureaucracy should be held responsible.
Recently, the central bank had transferred Rs 1.84 billion to revenue headings in the directives of Finance Ministry. After the Public Accounts Committee's directives, the Finance Ministry has corrected its mistake.
According to the source, the government has not started any new project that needs massive investment in the last month of the fiscal year 2010-11 that could need a whopping Rs 20 billion.
The surplus of Rs 14.30 billion the government had till 11th month was enough for the outstanding expenditures, the source said, warning that the indiscipline on government expenditure will bring financial instability hurting the macroeconomic stability.
The treasury had surplus of Rs 14.30 billion in the first 11 months, according to the central bank data but in the last one month, the government has spent all the surplus and also asked for the over draft from the central bank, the government's financial manager.
The central bank governor Dr Yubraj Khatiwada said that the government has taken overdraft but could not explain the surprising rise in government expenditure by the end of the fiscal year.
Tradition has it that the successive governments distribute budgets by the end of the fiscal year to their party cadres and constituencies.
According to the law, the government can take overdraft not exceeding total revenue mobilisation's five per cent of the last fiscal year. The government had mobilised Rs 179.90 billion revenue in the fiscal year 2009-10 exceeding the target of Rs 176.5 billion. In the fiscal year 2010-11, the government can take over draft of around Rs 8 billion. "However, it has to be transparent,' the Finance Ministry source, said, adding that the government has to justify the expenditure.The unexpected rise in the government expenditure and also only in the last month has raised eyebrows. "As recently the Finance Ministry has been involved in financial scams, the overdraft also should be thoroughly investigated," central bank board member Prof Dr Bishwhamber Pyakurel, said, adding that the high ranking bureaucracy should be held responsible.
Recently, the central bank had transferred Rs 1.84 billion to revenue headings in the directives of Finance Ministry. After the Public Accounts Committee's directives, the Finance Ministry has corrected its mistake.
According to the source, the government has not started any new project that needs massive investment in the last month of the fiscal year 2010-11 that could need a whopping Rs 20 billion.
The surplus of Rs 14.30 billion the government had till 11th month was enough for the outstanding expenditures, the source said, warning that the indiscipline on government expenditure will bring financial instability hurting the macroeconomic stability.
Monetary Policy reduces CRR by 50 basis points
The central bank brought a cautious Monetary Policy for the fiscal year 2011-12 that however could be a little embarrassing for the fiscal policy.
The Monetary Policy has reduced the Cash Reserve Ratio (CRR) by 50 basis points or 0.5 percentage point to five per cent. “To ease the liquidity situation, the policy has reduced CRR by 0.5 percentage point to five per cent," said central bank governor Dr Yubraj Khatiwada. The revised CRR is estimated to instantly release around Rs 4 billion in the financial system.
However, the banks have to reduce their Credit to Deposit (CD) ratio by the mid-January – that is in six months to – 80 per cent from current 85 per cent, which will curb the lending capacity of the banks.
The Monetary Policy has targeted seven per cent inflation and five per cent growth rate following the budget for the current fiscal year 2011-12.“To support the budget’s growth rate of five per cent, the central bank is planning 12.5 per cent broad money supply," Khatiwada said without elaborating its implications on price hike. In the last fiscal year too, the Monetary Policy had aimed seven per cent inflation and planned 15 per cent money supply.
However, the money supply remained 3.5 per cent – of commercial banks – and 7.3 per cent including commercial banks, development banks and finance companies. But the inflation remained over 10 per cent in an average.
The central bank governor accepted that the overall macroeconomic policy needs revision as the Monetary Policy could not achieve inflation and Balance of Payment (BoP) target. The BoP that was Rs 11.67 billion deficit in the first 10 months of the fiscal year, has however, recorded a ‘miraculous’ surplus of around Rs 1 billion by the end of 2010-11, he said, attributing 'surprise surplus' to foreign grants and aids released in the last month.
For the current fiscal year, the Monetary Policy has targetted Rs 5 billion BoP surplus.
The Monetary Policy did not change bank rate – the most awaited by the banks and financial institutions – refinancing rate and Statutory Liquidity Ratio (SLR), but promised to revise refinancing according to liquidity need.
The Monetary Policy has however increased foreign exchange facilities as a citizen can get exchange facility of $2,500 for once or $5000 in a fiscal year at maximum revising the facility from last fiscal year's $2000 and $4000.
Similarly, NRNs can open bank account in foreign currency and special arrangement will be made for Nepalis also to open bank account in foreign countries. "The banks can exchange foreign currency up to $1,000 provided the beneficiary supplies credible source of foreign exchange with identity," according to the Monetary Policy that has increased deprived sector lending to 3.5 per cent, though in phase-wise manner to increase this rate by 0.5 percentage point for next two years due to failure in directing lending towards productive sector and deprived sector
The Policy has addressed the crisis of trust on banking channels by extending deposit insurance up to Rs 200,000 to commercial banks as well to make the small depositors feel safe. The banks and financial institutions deposits have also seen a rise of 8.2 per cent to Rs 788.72 billion by the end of fiscal year.
However, the foreign exchange reserve has increased by a mere Rs 2 billion in a fiscal year to Rs 270 billion in the fiscal year 2010-11 from a fiscal year ago's Rs 268 billion.
Though, merger has become a buzz word in the recent days, the Monetary Policy has offered nothing to encourage mergers. Apart from encouraging the banks and financial institutions to open branches in the selected nine districts, where there is no access to finance, the Policy has increased the deprived sector lending and directed to banks and financial institutions to include a collateral free loan of up to Rs 200,000 for the study of technical education under deprived sector lending.
The micro finance institutions will also be encouraged to go to the districts, where there is no financial access, it said.
Monetary Policy target for the fiscal year 2011-12
Growth: five per centInflation: seven per cent
Broad Money Supply: 12.5 per cent
Balance of Payments surplus: Rs 5 billion
Deposit growth: 13 per cent
Achievement in fiscal year 2011-12
Growth: 3.47 per cent (by the first half of FY)
Inflation: 9.6 per cent (by the first 10 months)
Money Supply expansion: 3.7 per cent (by the first 10 months)
Balance of Payments: Rs 1 billion surplus (end of fiscal year)
Foreign Exchange Reserve: Rs 270 billion (end of fiscal year)
Fiscal Policy keeps mum on cooperatives
The Monetary Policy is silent on cooperatives supervision and monitoring as spelt by the budget. The Monetary Policy is supposed to support the budget – the government's Fiscal Policy – however the central bank is in a fix by the government obsession to the cooperatives and bringing them under the central bank.
The government has without homework and consultation has asked the central bank to monitor the cooperatives but the banks and financial institutions come under the Nepal Rastra Bank Act, Bafia and Financial Crime Act, whereas the cooperatives are under the Cooperatives Act. The NRB Act does not allow the central bank to monitor let alone punish the cooperatives.
The central bank – the regulatory authority of monetary market -- currently supervise and monitor 219 banks and financial institutions including 31 commercial banks, 87 development bank, 80 finance companies (78 in operation), and 21 micro finance development banks.
At a time, when the central bank has not been able to supervise the banks and financial institutions that it has licenced due to lack of enough manpower has been asked by the government to supervise the cooperatives that could lead to more casualties.
The central bank board members are against the inclusion of cooperatives against the NRB Act under the central bank.
The Monetary Policy has reduced the Cash Reserve Ratio (CRR) by 50 basis points or 0.5 percentage point to five per cent. “To ease the liquidity situation, the policy has reduced CRR by 0.5 percentage point to five per cent," said central bank governor Dr Yubraj Khatiwada. The revised CRR is estimated to instantly release around Rs 4 billion in the financial system.
However, the banks have to reduce their Credit to Deposit (CD) ratio by the mid-January – that is in six months to – 80 per cent from current 85 per cent, which will curb the lending capacity of the banks.
The Monetary Policy has targeted seven per cent inflation and five per cent growth rate following the budget for the current fiscal year 2011-12.“To support the budget’s growth rate of five per cent, the central bank is planning 12.5 per cent broad money supply," Khatiwada said without elaborating its implications on price hike. In the last fiscal year too, the Monetary Policy had aimed seven per cent inflation and planned 15 per cent money supply.
However, the money supply remained 3.5 per cent – of commercial banks – and 7.3 per cent including commercial banks, development banks and finance companies. But the inflation remained over 10 per cent in an average.
The central bank governor accepted that the overall macroeconomic policy needs revision as the Monetary Policy could not achieve inflation and Balance of Payment (BoP) target. The BoP that was Rs 11.67 billion deficit in the first 10 months of the fiscal year, has however, recorded a ‘miraculous’ surplus of around Rs 1 billion by the end of 2010-11, he said, attributing 'surprise surplus' to foreign grants and aids released in the last month.
For the current fiscal year, the Monetary Policy has targetted Rs 5 billion BoP surplus.
The Monetary Policy did not change bank rate – the most awaited by the banks and financial institutions – refinancing rate and Statutory Liquidity Ratio (SLR), but promised to revise refinancing according to liquidity need.
The Monetary Policy has however increased foreign exchange facilities as a citizen can get exchange facility of $2,500 for once or $5000 in a fiscal year at maximum revising the facility from last fiscal year's $2000 and $4000.
Similarly, NRNs can open bank account in foreign currency and special arrangement will be made for Nepalis also to open bank account in foreign countries. "The banks can exchange foreign currency up to $1,000 provided the beneficiary supplies credible source of foreign exchange with identity," according to the Monetary Policy that has increased deprived sector lending to 3.5 per cent, though in phase-wise manner to increase this rate by 0.5 percentage point for next two years due to failure in directing lending towards productive sector and deprived sector
The Policy has addressed the crisis of trust on banking channels by extending deposit insurance up to Rs 200,000 to commercial banks as well to make the small depositors feel safe. The banks and financial institutions deposits have also seen a rise of 8.2 per cent to Rs 788.72 billion by the end of fiscal year.
However, the foreign exchange reserve has increased by a mere Rs 2 billion in a fiscal year to Rs 270 billion in the fiscal year 2010-11 from a fiscal year ago's Rs 268 billion.
Though, merger has become a buzz word in the recent days, the Monetary Policy has offered nothing to encourage mergers. Apart from encouraging the banks and financial institutions to open branches in the selected nine districts, where there is no access to finance, the Policy has increased the deprived sector lending and directed to banks and financial institutions to include a collateral free loan of up to Rs 200,000 for the study of technical education under deprived sector lending.
The micro finance institutions will also be encouraged to go to the districts, where there is no financial access, it said.
Monetary Policy target for the fiscal year 2011-12
Growth: five per centInflation: seven per cent
Broad Money Supply: 12.5 per cent
Balance of Payments surplus: Rs 5 billion
Deposit growth: 13 per cent
Achievement in fiscal year 2011-12
Growth: 3.47 per cent (by the first half of FY)
Inflation: 9.6 per cent (by the first 10 months)
Money Supply expansion: 3.7 per cent (by the first 10 months)
Balance of Payments: Rs 1 billion surplus (end of fiscal year)
Foreign Exchange Reserve: Rs 270 billion (end of fiscal year)
Fiscal Policy keeps mum on cooperatives
The Monetary Policy is silent on cooperatives supervision and monitoring as spelt by the budget. The Monetary Policy is supposed to support the budget – the government's Fiscal Policy – however the central bank is in a fix by the government obsession to the cooperatives and bringing them under the central bank.
The government has without homework and consultation has asked the central bank to monitor the cooperatives but the banks and financial institutions come under the Nepal Rastra Bank Act, Bafia and Financial Crime Act, whereas the cooperatives are under the Cooperatives Act. The NRB Act does not allow the central bank to monitor let alone punish the cooperatives.
The central bank – the regulatory authority of monetary market -- currently supervise and monitor 219 banks and financial institutions including 31 commercial banks, 87 development bank, 80 finance companies (78 in operation), and 21 micro finance development banks.
At a time, when the central bank has not been able to supervise the banks and financial institutions that it has licenced due to lack of enough manpower has been asked by the government to supervise the cooperatives that could lead to more casualties.
The central bank board members are against the inclusion of cooperatives against the NRB Act under the central bank.
Wednesday, July 20, 2011
Finance Ministry not to revise salary hike decision
Despite the employees continuous picketing of Finance Ministry, the ministry is determined to stick to its decision and not revising it upwards.
“We cannot revise salary structure according to the demand of the employees,” a source at the ministry said, joking that the equal salary hike asked by the employees cannot bring socialism in the country.
Salary is tied up with positions and performances but the employees have been asking for Rs 5,000 hike irrespective to the positions from lower to the higher level to make it socially equitable.
The budget for the current fiscal year has been hiked salary by 21.95 per cent in real terms. However, according to the budget for the current fiscal year, the salary has been hiked ranging from 30.39 per cent to 42.86 per cent considering the current rate of inflation according to the recommendations of a committee headed by chief secretary to keep the high morale of all government employees including civil servants, army, police, and teachers.
But the budget has adjusted dearness allowance of last year to the new pay scale making it a hike of 21.95 per cent in real term.
But the employees, who are picketing the Finance Ministry since last three days, are asking for Rs 5,000 hike irrespective to the ranks. According to the current hike the minimum hike of a lower level comes to Rs 1,800 and a higher level comes to Rs 8,000, the employees said.
According to the Finance Ministry, it is the highest hike so far after 2000-01.
After the hike in the budget for the current fiscal year, the government will have to bear additional burden of Rs 21 billion. Of the Rs 21 billion, Rs 7 billion has been adjusted from the last fiscal year’s dearness allowance, and the real additional burden to the government this fiscal year will come to Rs 14 billion only, the ministry source said, adding that the salary of Defence, Home and Education Ministry has been already transferred under the ministries’ heading.
The budget by Mahesh Acharya for the fiscal year 2000-01 had significantly scaled up the salary structures of army, police, civil servants, teachers and professors.
It had revised the salary of government staffs by 16 to 90 per cent so that the lowest graded staff's salary was fixed at Rs 3000 and the highest graded one's salary had reached Rs 15,000.
“We cannot revise salary structure according to the demand of the employees,” a source at the ministry said, joking that the equal salary hike asked by the employees cannot bring socialism in the country.
Salary is tied up with positions and performances but the employees have been asking for Rs 5,000 hike irrespective to the positions from lower to the higher level to make it socially equitable.
The budget for the current fiscal year has been hiked salary by 21.95 per cent in real terms. However, according to the budget for the current fiscal year, the salary has been hiked ranging from 30.39 per cent to 42.86 per cent considering the current rate of inflation according to the recommendations of a committee headed by chief secretary to keep the high morale of all government employees including civil servants, army, police, and teachers.
But the budget has adjusted dearness allowance of last year to the new pay scale making it a hike of 21.95 per cent in real term.
But the employees, who are picketing the Finance Ministry since last three days, are asking for Rs 5,000 hike irrespective to the ranks. According to the current hike the minimum hike of a lower level comes to Rs 1,800 and a higher level comes to Rs 8,000, the employees said.
According to the Finance Ministry, it is the highest hike so far after 2000-01.
After the hike in the budget for the current fiscal year, the government will have to bear additional burden of Rs 21 billion. Of the Rs 21 billion, Rs 7 billion has been adjusted from the last fiscal year’s dearness allowance, and the real additional burden to the government this fiscal year will come to Rs 14 billion only, the ministry source said, adding that the salary of Defence, Home and Education Ministry has been already transferred under the ministries’ heading.
The budget by Mahesh Acharya for the fiscal year 2000-01 had significantly scaled up the salary structures of army, police, civil servants, teachers and professors.
It had revised the salary of government staffs by 16 to 90 per cent so that the lowest graded staff's salary was fixed at Rs 3000 and the highest graded one's salary had reached Rs 15,000.
Foreign Direct Investment to Africa continues to fall
Foreign direct investment to Africa continues to fall in 2010, according to a report that revealed that intraregional flows has yet to be realised to their potential.
Similarly, Global foreign direct investment (FDI) also rose modestly by five per cent in 2010, though still 37 per cent below the 2007 peak, according to the World Investment Report 2011 by UNCTAD.
However, FDI flows at the end of the year were still below their pre-crisis average and far below their peak in 2007. The report predicted that the recovery in FDI will continue in 2011, thus returning to the pre-crisis average.
Overall, investment continues to lag behind recoveries in global industrial output and world trade, which are already back to their pre-crisis levels.
Similarly, the report revealed that non-FDI modes of international production are increasingly shaping global value chains, global investment crisis and political unrest weigh on recovery of foreign direct investment in West Asia, investments in Latin America and the Caribbean are driven by developing Asian firms in the oil and gas sector, investment links between developing and transition economies are gaining momentum, UNCTAD report says; overall flows to South-East Europe declined in 2010; those to CIS region rose slightly, new records set for FDI in and out of developing Asia , and FDI to the US recovered in 2010, but that to Europe and Japan continued to decline.
The report also warned that the recent rise in investment restrictions and review procedures have increased risk of protectionism.
With the theme ‘Non-equity Modes of International Production and Development’, this year’s report presented original, ahead-of-curve analyses on why and how non-equity modes (NEMs) like contract manufacturing, services outsourcing, contract farming, franchising and licensing are increasingly used by TNCs in managing their global value chains.
The bottom line is that NEMs represent a highly significant “middle way” between FDI and trade which, among others, shapes patterns of international trade and trajectories of development. For instance, in 2010 cross-border NEM related activities generated over $2 trillion in sales; NEM enterprises employed 14-16 million workers in developing countries; and in some industries they accounted for 70 per cent to 80 per cent of global exports.
It also examined the drivers behind the rise of NEMs, their scale and scope and development impact, and the policy implications which arise.
Investment promotion and facilitation have remained the dominant element in recent national investment policies. Nonetheless, the risk of investment protectionism has increased as restrictive investment measures and administrative procedures have accumulated over the past few years. The international investment regime has been growing rapidly, with three international investment treaties signed per week, which poses challenges for both countries and business.
Nepal stands at 134th position
Nepal ranks at the 134th position in the United Nation’s body on trade, investment and development issues, UNCTAD’s latest World Investment Report. Nepal is not only at the bottom among the least developed countries (LDCs) but also lies at the bottom with Afghanistan, North Korea and Bhutan when it comes to attracting foreign direct investment (FDI). There has been no change in Nepal’s ranking in UNCTAD’s FDI Performance Index in 2010. UNCTAD’s World Investment Report 2011 has placed Nepal at 134th position in the Inward FDI Performance Index. According to World Investment Report, FDI inflow to the country in 2010 and in 2009 has no change. “Nepal received $39 million in FDI in 2010,” the report said.With FDI inflow to India and Pakistan declining by 31 per cent and 14 per cent, respectively, in 2010, it was understandable that Nepal would not witness an increase in foreign investment.
More than half of global FDI inflows were into developing countries and transition economies. The report says FDI inflows to Bangladesh increased by nearly 30 percent to $913 million with the country becoming a major low-cost production location in South Asia.Accroding to UNCTAD report, global FDI flows recovered from the post-meltdown $1.19 trillion to $1.24 trillion in 2010, with the United States being the largest recipient ($228 billion), followed by mainland China ($106 billion) and Hong Kong ($69 billion).
Similarly, Global foreign direct investment (FDI) also rose modestly by five per cent in 2010, though still 37 per cent below the 2007 peak, according to the World Investment Report 2011 by UNCTAD.
However, FDI flows at the end of the year were still below their pre-crisis average and far below their peak in 2007. The report predicted that the recovery in FDI will continue in 2011, thus returning to the pre-crisis average.
Overall, investment continues to lag behind recoveries in global industrial output and world trade, which are already back to their pre-crisis levels.
Similarly, the report revealed that non-FDI modes of international production are increasingly shaping global value chains, global investment crisis and political unrest weigh on recovery of foreign direct investment in West Asia, investments in Latin America and the Caribbean are driven by developing Asian firms in the oil and gas sector, investment links between developing and transition economies are gaining momentum, UNCTAD report says; overall flows to South-East Europe declined in 2010; those to CIS region rose slightly, new records set for FDI in and out of developing Asia , and FDI to the US recovered in 2010, but that to Europe and Japan continued to decline.
The report also warned that the recent rise in investment restrictions and review procedures have increased risk of protectionism.
With the theme ‘Non-equity Modes of International Production and Development’, this year’s report presented original, ahead-of-curve analyses on why and how non-equity modes (NEMs) like contract manufacturing, services outsourcing, contract farming, franchising and licensing are increasingly used by TNCs in managing their global value chains.
The bottom line is that NEMs represent a highly significant “middle way” between FDI and trade which, among others, shapes patterns of international trade and trajectories of development. For instance, in 2010 cross-border NEM related activities generated over $2 trillion in sales; NEM enterprises employed 14-16 million workers in developing countries; and in some industries they accounted for 70 per cent to 80 per cent of global exports.
It also examined the drivers behind the rise of NEMs, their scale and scope and development impact, and the policy implications which arise.
Investment promotion and facilitation have remained the dominant element in recent national investment policies. Nonetheless, the risk of investment protectionism has increased as restrictive investment measures and administrative procedures have accumulated over the past few years. The international investment regime has been growing rapidly, with three international investment treaties signed per week, which poses challenges for both countries and business.
Nepal stands at 134th position
Nepal ranks at the 134th position in the United Nation’s body on trade, investment and development issues, UNCTAD’s latest World Investment Report. Nepal is not only at the bottom among the least developed countries (LDCs) but also lies at the bottom with Afghanistan, North Korea and Bhutan when it comes to attracting foreign direct investment (FDI). There has been no change in Nepal’s ranking in UNCTAD’s FDI Performance Index in 2010. UNCTAD’s World Investment Report 2011 has placed Nepal at 134th position in the Inward FDI Performance Index. According to World Investment Report, FDI inflow to the country in 2010 and in 2009 has no change. “Nepal received $39 million in FDI in 2010,” the report said.With FDI inflow to India and Pakistan declining by 31 per cent and 14 per cent, respectively, in 2010, it was understandable that Nepal would not witness an increase in foreign investment.
More than half of global FDI inflows were into developing countries and transition economies. The report says FDI inflows to Bangladesh increased by nearly 30 percent to $913 million with the country becoming a major low-cost production location in South Asia.Accroding to UNCTAD report, global FDI flows recovered from the post-meltdown $1.19 trillion to $1.24 trillion in 2010, with the United States being the largest recipient ($228 billion), followed by mainland China ($106 billion) and Hong Kong ($69 billion).
Tuesday, July 19, 2011
Splinter trade unions threaten to go on strike
The splinter trade unions affiliated to ruling UCPN-Maoist and Tarai-based parties today threatened to go on indefinite strike from July 31 to pressurise the government in implementing of minimum wage.
At a time, when the country's manufacturing sector has been looking down and investors are slowly turning into traders, some 10 trade unions today jointly gave the government an ultimatum starting their protest from July 21.
"We will continue our protest programmes in peaceful manner from July 21 to July 30," said splinter-ANTUF president Badri Bajgain, who is said to be nead to UCPN-Maoist vice president Mohan Vaidya 'Kiran'.
"If we do not get the raised salary according to April 16 agreement, we will go on indefinite strike from July 31," he said, claiming that the April 16 agreement among government, the employers and trade unions was authentic.
However, Federation of Nepalese Chambers of Commerce and Industry president Suraj Vaidya said that the employers body recognise only the agreement of March 24. "The April 16 agreement was unilateral decision of the government," Vaidya added.He asked the government to immediately call the meeting of Labour Coordination Committee and settle the issue at the earliest. "We have no issues with the trade unions," he said, asking the government to settle the dispute through the committee as soon as possible.Frequent labour unrest coupled with energy crisis have already caused much loss to the industrial sector increasing the cost of production and loosing competitiveness of domestic product," Vaidya added.
According to the Central Bureau of Statics, the contribution of manufacturing sector has dropped and it has posted a growth of only 1.5 per cent in the fiscal year 2010-11.
Sensing that the county is fast losing competitiveness in manufacturing, the employers and employee came together on March 24 -- after a series of discussions -- to the agreement to hike the minimum wage of employees.The three largest trade unions -- All Nepal Trade Union Federation (ANTUF), General Federation of Nepalese Trade Unions (GEFONT) and Nepal Trade Union Congress (NTUC) -- and the FNCCI had signed an 11-point agreement to hike salary to Rs 6,100 from the earlier Rs 4,600 on March 24.
Apart from the salary hike on March 24, they had agreed on 'hire and fire', 'No work, No Pay', social security for the employees and declaring next four years as industrial peace years barring strikes in the industrial sector.
However, the 10 splinter trade unions did not accept the agreement blaming the largest trade unions for siding with employers.They pressurised the government and on April 16 entered into another agreement with Ministry of Labour and Transport Management that hiked the minimum wage to Rs 6,200, sans 'hire and fire', 'No work, No Pay' and social security.
The government also authenticated the April 16 deal by publishing it in the national gazette on May 23. The new deal has only endorsed five of 11-point agreement reached on March 24 between the three major trade unions and the umbrella organisation of Nepali private sector. Claiming that the 11-point agreement of March 24 is in favour of workers, the FNCCI moved to the Court for stay order against the government Gazette. The Court also granted stay order in favour of the employers.
"The government and 10 trade unions have also moved to Court to vacate the Stay order," Bajgain said, adding that the Court has fixed hearing for July 31.
The 10 splinter trade unions that claim to have support of majority of the workers also seem to pressurise the Court as they have declared to go on indefinite strike from the same day, when they have hearing.
However, the three major trade unions are still in favour of March 24 agreement, though the minor trade unions seem to be up in arms.
At a time, when the country's manufacturing sector has been looking down and investors are slowly turning into traders, some 10 trade unions today jointly gave the government an ultimatum starting their protest from July 21.
"We will continue our protest programmes in peaceful manner from July 21 to July 30," said splinter-ANTUF president Badri Bajgain, who is said to be nead to UCPN-Maoist vice president Mohan Vaidya 'Kiran'.
"If we do not get the raised salary according to April 16 agreement, we will go on indefinite strike from July 31," he said, claiming that the April 16 agreement among government, the employers and trade unions was authentic.
However, Federation of Nepalese Chambers of Commerce and Industry president Suraj Vaidya said that the employers body recognise only the agreement of March 24. "The April 16 agreement was unilateral decision of the government," Vaidya added.He asked the government to immediately call the meeting of Labour Coordination Committee and settle the issue at the earliest. "We have no issues with the trade unions," he said, asking the government to settle the dispute through the committee as soon as possible.Frequent labour unrest coupled with energy crisis have already caused much loss to the industrial sector increasing the cost of production and loosing competitiveness of domestic product," Vaidya added.
According to the Central Bureau of Statics, the contribution of manufacturing sector has dropped and it has posted a growth of only 1.5 per cent in the fiscal year 2010-11.
Sensing that the county is fast losing competitiveness in manufacturing, the employers and employee came together on March 24 -- after a series of discussions -- to the agreement to hike the minimum wage of employees.The three largest trade unions -- All Nepal Trade Union Federation (ANTUF), General Federation of Nepalese Trade Unions (GEFONT) and Nepal Trade Union Congress (NTUC) -- and the FNCCI had signed an 11-point agreement to hike salary to Rs 6,100 from the earlier Rs 4,600 on March 24.
Apart from the salary hike on March 24, they had agreed on 'hire and fire', 'No work, No Pay', social security for the employees and declaring next four years as industrial peace years barring strikes in the industrial sector.
However, the 10 splinter trade unions did not accept the agreement blaming the largest trade unions for siding with employers.They pressurised the government and on April 16 entered into another agreement with Ministry of Labour and Transport Management that hiked the minimum wage to Rs 6,200, sans 'hire and fire', 'No work, No Pay' and social security.
The government also authenticated the April 16 deal by publishing it in the national gazette on May 23. The new deal has only endorsed five of 11-point agreement reached on March 24 between the three major trade unions and the umbrella organisation of Nepali private sector. Claiming that the 11-point agreement of March 24 is in favour of workers, the FNCCI moved to the Court for stay order against the government Gazette. The Court also granted stay order in favour of the employers.
"The government and 10 trade unions have also moved to Court to vacate the Stay order," Bajgain said, adding that the Court has fixed hearing for July 31.
The 10 splinter trade unions that claim to have support of majority of the workers also seem to pressurise the Court as they have declared to go on indefinite strike from the same day, when they have hearing.
However, the three major trade unions are still in favour of March 24 agreement, though the minor trade unions seem to be up in arms.
Multilateral initiative to provide free Access to trade related data
The African Development Bank (AfDB), the International Trade Centre (ITC), the UN Conference on Trade and Development (UNCTAD) and the World Bank, and in cooperation with the UN Statistics Division (UNSD), today launched the Transparency in Trade Initiative (TNT), a global program aiming to give more access to influential trade data.
The TNT Initiative is a joint project aiming to eliminate the transparency gap resulting from the lack of access to data on country-specific trade policies. Once fully developed, it will give free and easy access to information on trade policy instruments like tariffs, non-tariff measures (NTMs) and services regulations. In addition, the initiative will generate new and more accurate data on NTMs and policies affecting trade in services and investment. All data will be freely accessible on a web portal serving as a platform for users in both developed and developing countries.
“We need a revolution in Open Information for trade, to support Open Trade,” said Robert B. Zoellick, President of the World Bank Group. “This important initiative will make information on trade flows, tariffs and non-tariff barriers – including those policies that affect trade in services – publicly and freely available and easily accessible to all users.” Free access to data will make it easier for exporters and policy-makers to meet relevant standards and requirements and therefore prevent rejection of their exports at destination. The data will also allow for better monitoring and analysis of trade-related projects. Such analysis is essential to provide a basis for assessment of current projects and inform the development of new initiatives. In addition, access to trade information will allow governments to identify policy constraints and prioritize areas for reform and trade negotiations.
“The TNT initiative will allow all collaborating organisations and client countries to utilize existing resources to a mutual advantage. It will substantially improve the capacities for informed policy making in the area of trade policy and negotiations to the benefit of developing countries, economies in transition and LDCs,” emphasised Petko Draganov, Deputy Secretary-General of UNCTAD.
“Increasing transparency in trade will improve the trading environment in Africa and in Africa ’s export markets; it will facilitate the continent’s exports to both regional and international markets,” said Donald Kaberuka, President of the African Development Bank. “The launching of the TNT initiative is thus a most welcome development.”
“The TNT project provides coherence to trade data not seen before. Its development is due to a strong cooperation among agencies,” said Patricia R Francis, Executive Director of ITC. “With access to this platform, exporters and policymakers will be able to make more informed decisions on where their comparative advantages lie and which markets have the greatest potential for their exports.”
The parties signed an agreement to collaborate on the initiative of Transparency in Trade, which signified the closer coordination and partnership that will evolve around this multi-year initiative.
The TNT Initiative is a joint project aiming to eliminate the transparency gap resulting from the lack of access to data on country-specific trade policies. Once fully developed, it will give free and easy access to information on trade policy instruments like tariffs, non-tariff measures (NTMs) and services regulations. In addition, the initiative will generate new and more accurate data on NTMs and policies affecting trade in services and investment. All data will be freely accessible on a web portal serving as a platform for users in both developed and developing countries.
“We need a revolution in Open Information for trade, to support Open Trade,” said Robert B. Zoellick, President of the World Bank Group. “This important initiative will make information on trade flows, tariffs and non-tariff barriers – including those policies that affect trade in services – publicly and freely available and easily accessible to all users.” Free access to data will make it easier for exporters and policy-makers to meet relevant standards and requirements and therefore prevent rejection of their exports at destination. The data will also allow for better monitoring and analysis of trade-related projects. Such analysis is essential to provide a basis for assessment of current projects and inform the development of new initiatives. In addition, access to trade information will allow governments to identify policy constraints and prioritize areas for reform and trade negotiations.
“The TNT initiative will allow all collaborating organisations and client countries to utilize existing resources to a mutual advantage. It will substantially improve the capacities for informed policy making in the area of trade policy and negotiations to the benefit of developing countries, economies in transition and LDCs,” emphasised Petko Draganov, Deputy Secretary-General of UNCTAD.
“Increasing transparency in trade will improve the trading environment in Africa and in Africa ’s export markets; it will facilitate the continent’s exports to both regional and international markets,” said Donald Kaberuka, President of the African Development Bank. “The launching of the TNT initiative is thus a most welcome development.”
“The TNT project provides coherence to trade data not seen before. Its development is due to a strong cooperation among agencies,” said Patricia R Francis, Executive Director of ITC. “With access to this platform, exporters and policymakers will be able to make more informed decisions on where their comparative advantages lie and which markets have the greatest potential for their exports.”
The parties signed an agreement to collaborate on the initiative of Transparency in Trade, which signified the closer coordination and partnership that will evolve around this multi-year initiative.
Monday, July 18, 2011
Trade crucial for inclusive, sustainable growth in Asia-Pacific
Trade has been a key tool for driving growth and poverty reduction in Asia and should be expanded and improved so the benefits are shared by all economies in the region, Asian Development Bank (ADB) President Haruhiko Kuroda said today.
"We must close the gap between Asia's surging economies and those mired in poverty by isolation, limited resources, miniscule trade and inadequate finance," Kuroda said at the 2011 Third Global Review Meeting of Aid for Trade in Geneva, Switzerland. "Better strategies are called for along with more aid for trade.
”The World Trade Organisation's (WTO) Aid for Trade Initiative, launched in 2005, helps developing countries build the infrastructure and trade-related skills needed to benefit from existing WTO agreements. ADB has been a key participant since 2006, co-hosting three regional review meetings, as well as acting as secretariat for the Regional Technical Group on Aid for Trade for the Asia-Pacific.Asia has bounced back impressively from the global economic crisis but it is still home to the majority of the world's extreme poor.
Policymakers are now moving to rebalance sources of growth by putting more emphasis on domestic and regional demand, while trade within Asia has stepped up as countries benefit from liberalization and improved supply chains and production networks. "The challenge is to make Asia's development more equitable and inclusive," Kuroda said.
ADB's experience suggests there are large returns where there is political commitment and effective donor coordination. This approach has been used successfully in the Greater Mekong Subregion program and is providing a model for the ramping up of ADB's trade and connectivity projects in Central Asia and South Asia, among others.
Kuroda said ADB is also keen to pass on its aid for trade experiences to other regions, and last June reached an agreement to share trade finance documentation and know-how with the African Development Bank. "ADB's 45 years of development experience have revealed what works and where we should be heading," he said.
WTO Director-General Pascal Lamy, along with the heads of the World Bank, the Inter-American Development Bank and the African Development Bank also attended the event.
"We must close the gap between Asia's surging economies and those mired in poverty by isolation, limited resources, miniscule trade and inadequate finance," Kuroda said at the 2011 Third Global Review Meeting of Aid for Trade in Geneva, Switzerland. "Better strategies are called for along with more aid for trade.
”The World Trade Organisation's (WTO) Aid for Trade Initiative, launched in 2005, helps developing countries build the infrastructure and trade-related skills needed to benefit from existing WTO agreements. ADB has been a key participant since 2006, co-hosting three regional review meetings, as well as acting as secretariat for the Regional Technical Group on Aid for Trade for the Asia-Pacific.Asia has bounced back impressively from the global economic crisis but it is still home to the majority of the world's extreme poor.
Policymakers are now moving to rebalance sources of growth by putting more emphasis on domestic and regional demand, while trade within Asia has stepped up as countries benefit from liberalization and improved supply chains and production networks. "The challenge is to make Asia's development more equitable and inclusive," Kuroda said.
ADB's experience suggests there are large returns where there is political commitment and effective donor coordination. This approach has been used successfully in the Greater Mekong Subregion program and is providing a model for the ramping up of ADB's trade and connectivity projects in Central Asia and South Asia, among others.
Kuroda said ADB is also keen to pass on its aid for trade experiences to other regions, and last June reached an agreement to share trade finance documentation and know-how with the African Development Bank. "ADB's 45 years of development experience have revealed what works and where we should be heading," he said.
WTO Director-General Pascal Lamy, along with the heads of the World Bank, the Inter-American Development Bank and the African Development Bank also attended the event.
Resource-rich Pacific economies thrive while others lag
The Pacific’s resource-rich economies of Papua New Guinea (PNG) and Timor-Leste will continue to expand strongly this year as commodity prices remain firm but growth in the rest of the region is set to remain subdued, says the new issue of the Asian Development Bank’s (ADB’s) Pacific Economic Monitor.
The report, released today, projects growth in the Pacific region will reach 6.4 per cent in 2011 before moderating to 5.5 per cent in 2012. The petroleum exporting economies of PNG and Timor-Leste are expected to grow by 8.5 per cent and 10 per cent respectively, boosted by the high international price of petroleum, and increased investment and employment associated with the construction phase of resource extraction. ADB predicts growth of 7.5 per cent in 2011 in Solomon Islands, driven by increased logging and the resumption of gold mining in the country.
The 11 other Pacific economies – Cook Islands, Fiji Islands, Federated States of Micronesia, Kiribati, Nauru, Marshall Islands, Palau, Samoa, Tonga, Tuvalu, and Vanuatu – are expected to experience much lower GDP growth, at 1.5 per cent in 2011 and 1.9 per cent in 2012.
“The long term growth outlook for the Pacific region as a whole is very modest. If this trend continues, the region risks falling further behind the dynamic economies of developing Asia, resulting in a widening gap in incomes in the two regions,” said Robert Wihtol, director general of ADB’s Pacific Department. “To avoid this scenario, Pacific governments need to focus on the core functions of good government—investing in infrastructure, improving education and providing an enabling business environment that will encourage investment.”
The July issue of the report raises inflation projections for 2011, due to the sharp rise in commodity prices. It warns that high inflation rates in Fiji, PNG, and Timor-Leste are of particular concern. For the region as a whole, inflation is expected at 8.4 per cent in 2011, but will ease to 5.9 per cent in 2012 as commodity prices stabilise.
The report notes that the smaller, more remote and heavily import dependent Pacific economies, such as those in the northern Pacific, are particularly sensitive to rising international food and fuel prices and are expected to be hit hard by inflation. The depreciation of most regional currencies against the US dollar adds to inflationary pressure across the region.
The ADB report assesses long-term growth prospects in the Pacific region. This assessment shows that Pacific economies can achieve modest growth in incomes in the long term assuming reasonable improvements in the efficiency of their resource use. Two groups of Pacific economies are emerging—those benefiting from their natural resources and those who are not.
To manage price volatility, the ADB report recommends developing safety nets to ensure that the poor in Pacific countries have access to food when prices become unaffordable, diversifying the agricultural base, and exploring alternative energy sources.
The report also presents an analysis of fiscal adjustment in Samoa and Tonga during the recent economic crisis. ADB helped these countries weather the crisis by providing budget support grants that ensured the continuation of essential public services amidst sharp declines in government revenues.
The report, released today, projects growth in the Pacific region will reach 6.4 per cent in 2011 before moderating to 5.5 per cent in 2012. The petroleum exporting economies of PNG and Timor-Leste are expected to grow by 8.5 per cent and 10 per cent respectively, boosted by the high international price of petroleum, and increased investment and employment associated with the construction phase of resource extraction. ADB predicts growth of 7.5 per cent in 2011 in Solomon Islands, driven by increased logging and the resumption of gold mining in the country.
The 11 other Pacific economies – Cook Islands, Fiji Islands, Federated States of Micronesia, Kiribati, Nauru, Marshall Islands, Palau, Samoa, Tonga, Tuvalu, and Vanuatu – are expected to experience much lower GDP growth, at 1.5 per cent in 2011 and 1.9 per cent in 2012.
“The long term growth outlook for the Pacific region as a whole is very modest. If this trend continues, the region risks falling further behind the dynamic economies of developing Asia, resulting in a widening gap in incomes in the two regions,” said Robert Wihtol, director general of ADB’s Pacific Department. “To avoid this scenario, Pacific governments need to focus on the core functions of good government—investing in infrastructure, improving education and providing an enabling business environment that will encourage investment.”
The July issue of the report raises inflation projections for 2011, due to the sharp rise in commodity prices. It warns that high inflation rates in Fiji, PNG, and Timor-Leste are of particular concern. For the region as a whole, inflation is expected at 8.4 per cent in 2011, but will ease to 5.9 per cent in 2012 as commodity prices stabilise.
The report notes that the smaller, more remote and heavily import dependent Pacific economies, such as those in the northern Pacific, are particularly sensitive to rising international food and fuel prices and are expected to be hit hard by inflation. The depreciation of most regional currencies against the US dollar adds to inflationary pressure across the region.
The ADB report assesses long-term growth prospects in the Pacific region. This assessment shows that Pacific economies can achieve modest growth in incomes in the long term assuming reasonable improvements in the efficiency of their resource use. Two groups of Pacific economies are emerging—those benefiting from their natural resources and those who are not.
To manage price volatility, the ADB report recommends developing safety nets to ensure that the poor in Pacific countries have access to food when prices become unaffordable, diversifying the agricultural base, and exploring alternative energy sources.
The report also presents an analysis of fiscal adjustment in Samoa and Tonga during the recent economic crisis. ADB helped these countries weather the crisis by providing budget support grants that ensured the continuation of essential public services amidst sharp declines in government revenues.
Sunday, July 17, 2011
Budget was leaked on July 12
In a surprising revelation, it is found that the budget has been leaked two days ago the planned announcement, not only 25 hours ago as the Parliament has stated.
The budget was planned to announce on July 14 but due to last hour political tug of war between a Madhesh-based party UMDF and government it was halted and was presented on July 15. "But the budget was already leaked on July 12 — two days ago the earlier planned announcement,” said a source at the Finance Ministry.
Normally, the government’s annual budget is a highly guarded secret also due to change in tax rates and policies that in case of leakage would not only hurt the consumers but also the government coffer. “The Finance Ministry has failed to mobilise revenue according to its target in the fiscal year 2010-11 and this fiscal year too, it will not meet the target,” the source said, adding that Last fiscal year the budget had targetted to mobilise Rs 216.67 billion revenue but Finance Minister Bharat Mohan Adhikari, himself revised to be over Rs 10 billion shortfall to Rs 206 billion only. This fiscal year the budget has targetted Rs 246 billion revenue mobilisation. But the leakage of budget will hurt the revenue mobilisation, the source added.
The government’s failure in maintaining secrecy has drawn flak from former finance secretaries too. “It has brought a shame to the Finance Ministry,” they said.
The movement in the Finance Ministry is blocked and special security is deployed for the state secrecy. “Though, the copy of the budget was leaked on July 12, the Finance Minister tried to cover his ‘immoral act’ by requesting the journalists on July 14 not to publish it and maintain secrecy,” the source said, adding that it is the first time in the history of Finance Ministry that the budget has been leaked that is an example of weak leadership and a policy corruption as the budget has only added burden on people, whereas the businesmen have benefitted.
The House has formed a seven-member special inquiry committee to probe leakage of the fiscal budget estimation after the opposition Nepali Congress asked resignation of Finance Minister Adhikari. “He has to take moral responsibility and resign as it is a financial crime and policy corruption,” former finance ministry Dr Ram Sharan Mahat said.
However, Adhikari today claimed that he is not responsible for the leakage. He blamed UMDF and Prime Minister for the leakage.
The panel headed by Nepali Congress Chief Whip Laxman Ghimire will grill Adhikari and Finance Secretary Krishnahari Baskota over the leakage of budget 25 hours before its presentation in the House tomorrow.
The budget was planned to announce on July 14 but due to last hour political tug of war between a Madhesh-based party UMDF and government it was halted and was presented on July 15. "But the budget was already leaked on July 12 — two days ago the earlier planned announcement,” said a source at the Finance Ministry.
Normally, the government’s annual budget is a highly guarded secret also due to change in tax rates and policies that in case of leakage would not only hurt the consumers but also the government coffer. “The Finance Ministry has failed to mobilise revenue according to its target in the fiscal year 2010-11 and this fiscal year too, it will not meet the target,” the source said, adding that Last fiscal year the budget had targetted to mobilise Rs 216.67 billion revenue but Finance Minister Bharat Mohan Adhikari, himself revised to be over Rs 10 billion shortfall to Rs 206 billion only. This fiscal year the budget has targetted Rs 246 billion revenue mobilisation. But the leakage of budget will hurt the revenue mobilisation, the source added.
The government’s failure in maintaining secrecy has drawn flak from former finance secretaries too. “It has brought a shame to the Finance Ministry,” they said.
The movement in the Finance Ministry is blocked and special security is deployed for the state secrecy. “Though, the copy of the budget was leaked on July 12, the Finance Minister tried to cover his ‘immoral act’ by requesting the journalists on July 14 not to publish it and maintain secrecy,” the source said, adding that it is the first time in the history of Finance Ministry that the budget has been leaked that is an example of weak leadership and a policy corruption as the budget has only added burden on people, whereas the businesmen have benefitted.
The House has formed a seven-member special inquiry committee to probe leakage of the fiscal budget estimation after the opposition Nepali Congress asked resignation of Finance Minister Adhikari. “He has to take moral responsibility and resign as it is a financial crime and policy corruption,” former finance ministry Dr Ram Sharan Mahat said.
However, Adhikari today claimed that he is not responsible for the leakage. He blamed UMDF and Prime Minister for the leakage.
The panel headed by Nepali Congress Chief Whip Laxman Ghimire will grill Adhikari and Finance Secretary Krishnahari Baskota over the leakage of budget 25 hours before its presentation in the House tomorrow.
Informal trade hurts intra regional trade
The level of informal trade in South Asia is 72 per cent of formal trade, according to World Bank study.
To help formalise the intra region trade, Nepal Business Forum (NBF) and International Finance Corporation (IFC) organised a workshop 'Public Private Dialogue for Enhancing Trade Facilitation in South Asia' here in the Valley today.
"Customs harmonisations and reducing customs related documents will help increase formal trade within the South Asia," said secretary at the Prime Minister Economic Affairs Division Purushottam Ojha.
"Two major needs to be addressed," he said, adding that inside the borders and outside the borders to increase trade.
Increasing connectivity within the country from market to production centres and simplifying the transit issues to boost intra regional trade apart from diversification of transit are keys to trade facilitation, according to Ojha.
The NBF has prepared a draft of Public Private Dialogue for Enhancing Trade Facilitation in South Asia that will be developed as a phase-wise work plan -- short term ,medium term and long term.
The draft has focused on three specific components like simplification and harmonisation of procedures and documentation; integrating risk management systems into border inspections and clearance; and Implementing electronic processing / automation and single window systems. South Asia -- one of the less integrated regions has a mere seven per cent Intra-regional trade of total regional exports. "There is a good potential for the north-east sub-region of South Asia to integrate and reap the benefits of enhanced trade," said Regional head of Advisory Services IFC South Asia Anil Sinha.
"Improved trade relations in this region would well pave the way for trade integration with larger blocs like ASEAN opening newer opportunities for the people," he said, adding that the South Asia region, despite its recent progress, still houses most of the poor in the world.
One region of special concern is the north-east sub-region of South Asia comprising of the Eastern and North-Eastern states of India, Bhutan, Nepal, Bangladesh and Sri Lanka. Much of the sub-region with about 400 million people can be classified as a low income area with heavy dependence on volatile agriculture, limited industrialisation, high poverty, low social indicators and high vulnerability to natural disasters.
Consequently, improving trade facilitation and access to markets across the region is critical to create the economic foundation for development.
The intra regional trade has not picked up also due to lack of regional trade implies opportunities forgone.
The World Bank study revealed that increased regional cooperation helps increase access to resources. Despite varying levels of endowment, trade in energy is very low in South Asia with only India, Bhutan and Nepal currently trading in electricity.
A careful look at South Asia’s geography shows that significant pockets of poverty and underdevelopment tend to be located either in land-locked countries or border areas. In most cases, economic activities in the areas are constrained by poor connectivity with the regional growth centres and by lack of access to international trade outlets such as a sea port.
However, in many cases the barriers are artificial in the sense that these facilities are available in nearby bordering towns of other countries but access is prevented by border restrictions.
Efficient and accountable trade logistics services and systems are also fundamental to facilitating growth in trade and investment.
Faster, leaner and more responsive supply chains are essential for businesses to survive in a competitive globalised world.
Examining the indicators data for a number of countries it is apparent that over 50 per cent of the total time to export or import is explained by documentation and trade transactions. The Trade Logistics product includes a connection to the DB Trading Across Borders indicator catalysing reform momentum for governments wishing to increase the potential for investment.
IFC -- a member of the World Bank Group -- and the UK's Department for International Development are supporting Nepal Business Forum, an independent body that facilitates dialogue between the government of Nepal and private sector to build consensus toward improving trade facilitation in South Asian countries, including Nepal.
The programme will help implement measures to reduce costs and promote trade through simplified documentation and procedures, electronic processing, and risk management approaches for border inspections and clearances.
"The government seeks IFC's support to implement trade facilitation measures, which will help achieve trade liberalisation and create value," Ojha said, adding that there is a need to enhance competitiveness of local goods and services by reducing transaction costs.
"It is heartening to see Nepal making a strategic move toward improving trade in South Asia," said Nepal Chamber of Commerce (NCC) president Suresh Kumar Basnet reiterating its support. Trade facilitation involves reforms in border operations, including the reliability and efficiency of transportation infrasturcture, logistics operations, and customs and border management regulations and procedures.
"IFC works with both private sector and government in identifying areas where reform efforts can help maximise improvements for cross-border private sector activity," said IFC head of Advisory Services in South Asia Anil Sinha.
To help formalise the intra region trade, Nepal Business Forum (NBF) and International Finance Corporation (IFC) organised a workshop 'Public Private Dialogue for Enhancing Trade Facilitation in South Asia' here in the Valley today.
"Customs harmonisations and reducing customs related documents will help increase formal trade within the South Asia," said secretary at the Prime Minister Economic Affairs Division Purushottam Ojha.
"Two major needs to be addressed," he said, adding that inside the borders and outside the borders to increase trade.
Increasing connectivity within the country from market to production centres and simplifying the transit issues to boost intra regional trade apart from diversification of transit are keys to trade facilitation, according to Ojha.
The NBF has prepared a draft of Public Private Dialogue for Enhancing Trade Facilitation in South Asia that will be developed as a phase-wise work plan -- short term ,medium term and long term.
The draft has focused on three specific components like simplification and harmonisation of procedures and documentation; integrating risk management systems into border inspections and clearance; and Implementing electronic processing / automation and single window systems. South Asia -- one of the less integrated regions has a mere seven per cent Intra-regional trade of total regional exports. "There is a good potential for the north-east sub-region of South Asia to integrate and reap the benefits of enhanced trade," said Regional head of Advisory Services IFC South Asia Anil Sinha.
"Improved trade relations in this region would well pave the way for trade integration with larger blocs like ASEAN opening newer opportunities for the people," he said, adding that the South Asia region, despite its recent progress, still houses most of the poor in the world.
One region of special concern is the north-east sub-region of South Asia comprising of the Eastern and North-Eastern states of India, Bhutan, Nepal, Bangladesh and Sri Lanka. Much of the sub-region with about 400 million people can be classified as a low income area with heavy dependence on volatile agriculture, limited industrialisation, high poverty, low social indicators and high vulnerability to natural disasters.
Consequently, improving trade facilitation and access to markets across the region is critical to create the economic foundation for development.
The intra regional trade has not picked up also due to lack of regional trade implies opportunities forgone.
The World Bank study revealed that increased regional cooperation helps increase access to resources. Despite varying levels of endowment, trade in energy is very low in South Asia with only India, Bhutan and Nepal currently trading in electricity.
A careful look at South Asia’s geography shows that significant pockets of poverty and underdevelopment tend to be located either in land-locked countries or border areas. In most cases, economic activities in the areas are constrained by poor connectivity with the regional growth centres and by lack of access to international trade outlets such as a sea port.
However, in many cases the barriers are artificial in the sense that these facilities are available in nearby bordering towns of other countries but access is prevented by border restrictions.
Efficient and accountable trade logistics services and systems are also fundamental to facilitating growth in trade and investment.
Faster, leaner and more responsive supply chains are essential for businesses to survive in a competitive globalised world.
Examining the indicators data for a number of countries it is apparent that over 50 per cent of the total time to export or import is explained by documentation and trade transactions. The Trade Logistics product includes a connection to the DB Trading Across Borders indicator catalysing reform momentum for governments wishing to increase the potential for investment.
IFC -- a member of the World Bank Group -- and the UK's Department for International Development are supporting Nepal Business Forum, an independent body that facilitates dialogue between the government of Nepal and private sector to build consensus toward improving trade facilitation in South Asian countries, including Nepal.
The programme will help implement measures to reduce costs and promote trade through simplified documentation and procedures, electronic processing, and risk management approaches for border inspections and clearances.
"The government seeks IFC's support to implement trade facilitation measures, which will help achieve trade liberalisation and create value," Ojha said, adding that there is a need to enhance competitiveness of local goods and services by reducing transaction costs.
"It is heartening to see Nepal making a strategic move toward improving trade in South Asia," said Nepal Chamber of Commerce (NCC) president Suresh Kumar Basnet reiterating its support. Trade facilitation involves reforms in border operations, including the reliability and efficiency of transportation infrasturcture, logistics operations, and customs and border management regulations and procedures.
"IFC works with both private sector and government in identifying areas where reform efforts can help maximise improvements for cross-border private sector activity," said IFC head of Advisory Services in South Asia Anil Sinha.
Saturday, July 16, 2011
World Bank to finance $99 million Indo-Nepal cross border transmission project
The World Bank and government signed an agreement here today towards financing the implementation of the Nepal India Electricity Transmission and Trade Project.
Joint secretary and chief of the Foreign Aid Coordination Division at Ministry of Finance Lal Shanker Ghimire and World Bank acting country manager for Nepal Andras Horvai signed the agreement on behalf of their respective institutions here yesterday.
"Removing infrastructure barriers to growth is among the key development challenges facing Nepal today,” said World Bank country director for Nepal and Bangladesh Ellen Goldstein, during the signing ceremony. "The landmark project is one of several joint efforts that Nepal and the World Bank are making to help relieve the chronic shortage of electricity."
The assistance package is part of a $202 million project, which is also supported by the private sector and development partners, as well as the governments of Nepal and India.
The Bank’s contribution comprises $84 million in credit from the International Development Association, the concessionary lending arm of the World Bank Group and an International Development Association grant of $15 million. The credit portion carries a 0.75 per cent service charge, 10 years of grace period and a maturity of 40 years.
In response to the worsening electricity situation, the government declared a 'National energy crisis' in December 2008 and approved an Electricity Crisis Management Action Plan which is currently under implementation, with support from the World Bank.
The Action Plan includes development of the Dhalkebar-Muzaffarpur transmission link, a key component of the Nepal India Electricity Transmission and Trade Project and the first major cross-border transmission line between India and Nepal developed on a commercial basis.
Upon completion, Nepal could significantly reduce load shedding, and with the potential of increased trade, end electricity rationing by 2015. "The project will provide Nepal with at least 100 MW of additional electricity imported from India to meet its power needs,” Goldstein, said, adding that it will also develop key segments of the backbone high voltage system to help expand access to electricity across Nepal.
According to a recent investment climate survey, businesses cite inadequate power as a key constraint to their growth. The 1,000 MW capacity cross border transmission link will help meet a significant part of this deficit in the quickest, economical manner.
Once Nepal develops its hydropower potential and meets all of its domestic needs, the transmission infrastructure could also be used to carry surplus hydropower to India.
The project is a continuation of the World Bank Group’s deepening engagement in Nepal's power sector. The World Bank Group’s assistance spans a wide spectrum: developing Nepal's energy resources and institutions to better serve Nepal's electricity needs, for example, through micro hydro and other renewable energy; rehabilitation of larger existing power plants under the on-going Power Development Project; supporting grid extension under the Kabeli transmission project; developing small hydropower generation with private sector participation like proposed Kabeli ‘A’ hydropower Project; and promoting renewable energy through the future Scaling up Renewable Energy Programme.
Joint secretary and chief of the Foreign Aid Coordination Division at Ministry of Finance Lal Shanker Ghimire and World Bank acting country manager for Nepal Andras Horvai signed the agreement on behalf of their respective institutions here yesterday.
"Removing infrastructure barriers to growth is among the key development challenges facing Nepal today,” said World Bank country director for Nepal and Bangladesh Ellen Goldstein, during the signing ceremony. "The landmark project is one of several joint efforts that Nepal and the World Bank are making to help relieve the chronic shortage of electricity."
The assistance package is part of a $202 million project, which is also supported by the private sector and development partners, as well as the governments of Nepal and India.
The Bank’s contribution comprises $84 million in credit from the International Development Association, the concessionary lending arm of the World Bank Group and an International Development Association grant of $15 million. The credit portion carries a 0.75 per cent service charge, 10 years of grace period and a maturity of 40 years.
In response to the worsening electricity situation, the government declared a 'National energy crisis' in December 2008 and approved an Electricity Crisis Management Action Plan which is currently under implementation, with support from the World Bank.
The Action Plan includes development of the Dhalkebar-Muzaffarpur transmission link, a key component of the Nepal India Electricity Transmission and Trade Project and the first major cross-border transmission line between India and Nepal developed on a commercial basis.
Upon completion, Nepal could significantly reduce load shedding, and with the potential of increased trade, end electricity rationing by 2015. "The project will provide Nepal with at least 100 MW of additional electricity imported from India to meet its power needs,” Goldstein, said, adding that it will also develop key segments of the backbone high voltage system to help expand access to electricity across Nepal.
According to a recent investment climate survey, businesses cite inadequate power as a key constraint to their growth. The 1,000 MW capacity cross border transmission link will help meet a significant part of this deficit in the quickest, economical manner.
Once Nepal develops its hydropower potential and meets all of its domestic needs, the transmission infrastructure could also be used to carry surplus hydropower to India.
The project is a continuation of the World Bank Group’s deepening engagement in Nepal's power sector. The World Bank Group’s assistance spans a wide spectrum: developing Nepal's energy resources and institutions to better serve Nepal's electricity needs, for example, through micro hydro and other renewable energy; rehabilitation of larger existing power plants under the on-going Power Development Project; supporting grid extension under the Kabeli transmission project; developing small hydropower generation with private sector participation like proposed Kabeli ‘A’ hydropower Project; and promoting renewable energy through the future Scaling up Renewable Energy Programme.
Friday, July 15, 2011
Focus less budget to fuel inflation further
Deputy Prime Minister and Finance Minister Bharat Mohan Adhikari today presented an expansionary budget of Rs 384.90 billion promising to contain the price hike at seven per cent.
However, economists believe that the focus less and populist budget is going to fuel inflation more. "The expansionary budget could not contain the rising inflation," said Prof Dr Bishwambher Pyakurel.
Though the budget -- that was presented amid high drama -- has pumped more money into social sector, subsidies and grant, the please-all budget could also not achieve its growth target that according to Adhikari will be five per cent. "The distributive budget could not achieve its growth target, "said former finance Minister Dr Prakash Chandra Lohani.
But the good thing is that the budget has raised salaries of civil servants between 30.39 per cent and 42.86 per cent considering the current inflation rate to boost the morale of government employees including civil servants, army, police, and teachers. Existing dearness allowance has been adjusted to the new pay scale.
The government has also promised to start Health Insurance Programme for the civil servants. The socialist budget has however, ignored the private sector and promoted cooperatives. "The private sector -- the largest employment providers -- could not support the government," Federation of Nepalese Chambers of Commerce and Industry senior vice president Bhaskarraj Raj Karnikar said, adding that the focus on energy -- engine of growth -- and commercial agriculture is however, welcome steps.
Similarly, Confederation of Nepalese Industries (CNI) president Binod Chaudhary hailed the government for bringing the budget in time. "But it has no encouraging news for the export sector," he said, adding that the government should not have dropped outer ringroad project.
Another entrepreneur Rajendra Khetan also agreed that the budget could not boost manufacturing and the balloning trade deficit could not bridge. The budget is a cocktail of Dr Babu Ram Bhattarai, Surendra Pandey and Dr Ram Saran Mahat, said former finance minister Madhukar Rana.
The government has brought the budget in a new format, to make it compatible with the international accounting systems and presented according to the accrual accounting system and has changes in the headings.
The budget has three major headings -- income, expenditure and financing -- contrary to earlier division in the budgetary headings. Financing is a new heading that has been included in the budget.
According to the new classification of Finance Statistics, the total appropriation for recurrent expenditure -- for salaries and other expenses -- is proposed to be Rs 266.61 billion which is 69.27 per cent of the total outlay.
Similarly, Adhikari has allocated Rs 72.61 billion for capital expenditure which is 18.86 per cent of the total budget.
Under the Financing head, Rs 25.38 billion (6.6 per cent) has been allocated for loan and share investment, and Rs 20.3 billion (5.27 per cent) for repayment of principals. The total allocation is 25.67 per cent higher compared to revised estimate of the current fiscal year. "Under the existing arrangement, recurrent and capital expenditure will amount to 56.08 per cent and 38.64 per cent, respectively, whereas the repayment of principal amount will be 5.28 per cent of the total expenditure," he said, projecting that he could mobilise Rs 241.77 billion from revenue, Rs 5.93 billion from repayment of principal amount and Rs 70.13 billion from foreign grants.
The budget will have a deficit of Rs 67.06 billion that he planned to meet through Rs 29.65 billion foreign loan and Rs 37.41 billion domestic borrowing.
The ambitious budget that has been already leaked to the businessmen, however, is suspected to be able to mobilise the revenue target as the government failed to meet current fiscal year's target.
Likewise, the budget that balance of payments will be positive, liquidity of the financial sector will come to normalcy, capital market will pick up and the investment climate will improve remarkably.
"The finance minister has tried to save VAT evaders," former finance minister Dr Ram Sharan Mahat said, adding that the budget has come after series of economic scams and it will invite more scams in the future.
Total Outlay: Rs 384.90 billion
Recurrent Expenditure : Rs 266.61 billion
Capital Expenditure : Rs 72.61 billion
Loan and share investment: Rs 25.38 billion
Principal Repayment: Rs 20.3 billion
Resources
Revenue: Rs 241.77 billion
Repayment of Principal: Rs 5.93 billion
Foreign grant: Rs 70.13 billion
Foreign loan: Rs 29.65 billion
Internal borrowing: Rs 37.41 billion
Major Highlights
* Growth rate target at five per cent.
*Inflation at seven per cent
* Pay scale of Civil Servants up from 30.39 per cent to 42.86 per cent.
* Income tax will be fully exempted for the first ten years for the hydro-power projects commencing their construction within August 24, 2014 and starting commercial production by mid-April 2018.
* Property Tax Act in offing for voluntary disclosure of all the fixed and movable properties including the land, ornaments, cash, deposits in banks/financial institutions, lending, investment in share/debentures and vehicles.
* Permanent Account Number (PAN) necessary for registration of land and house transactions
* A policy of disinvesting the share of the public enterprises to the public will be implemented.
* A High Level Public Enterprises Management Board will be formed
* Legal arrangements will be made and implemented to penalize those found to be indulged in cartelling, and intimidation. They will also be fined and licenses of their business entity will be
Dearer
Liquor including alcohol and beer -- up to 14 per cent
Tobacco products and cigarettes -- up by 8 per cent
Fruits Juice -- Increased to Rs 3.50 on a litre
Playing card -- 20 per cent per bundle
Clinker and Cement -- Rs 400 per metric
Cheaper
Sewing machine -- reduced to one per cent from five per cent
Tomato Ketchup industries' equipments -- reduced to one per cent from five per cent
Sanitary towel and baby dry pad -- reduced to 10 per cent from 15 per cent
Plastic Gas Cylinder -- reduced to 15 per cent from 30 per cent
LCD, Plasma or LED brought by Nepali passengers returning from foreign employment -- tax reduced
Plastic bag -- tax free from earlier five per cent
However, economists believe that the focus less and populist budget is going to fuel inflation more. "The expansionary budget could not contain the rising inflation," said Prof Dr Bishwambher Pyakurel.
Though the budget -- that was presented amid high drama -- has pumped more money into social sector, subsidies and grant, the please-all budget could also not achieve its growth target that according to Adhikari will be five per cent. "The distributive budget could not achieve its growth target, "said former finance Minister Dr Prakash Chandra Lohani.
But the good thing is that the budget has raised salaries of civil servants between 30.39 per cent and 42.86 per cent considering the current inflation rate to boost the morale of government employees including civil servants, army, police, and teachers. Existing dearness allowance has been adjusted to the new pay scale.
The government has also promised to start Health Insurance Programme for the civil servants. The socialist budget has however, ignored the private sector and promoted cooperatives. "The private sector -- the largest employment providers -- could not support the government," Federation of Nepalese Chambers of Commerce and Industry senior vice president Bhaskarraj Raj Karnikar said, adding that the focus on energy -- engine of growth -- and commercial agriculture is however, welcome steps.
Similarly, Confederation of Nepalese Industries (CNI) president Binod Chaudhary hailed the government for bringing the budget in time. "But it has no encouraging news for the export sector," he said, adding that the government should not have dropped outer ringroad project.
Another entrepreneur Rajendra Khetan also agreed that the budget could not boost manufacturing and the balloning trade deficit could not bridge. The budget is a cocktail of Dr Babu Ram Bhattarai, Surendra Pandey and Dr Ram Saran Mahat, said former finance minister Madhukar Rana.
The government has brought the budget in a new format, to make it compatible with the international accounting systems and presented according to the accrual accounting system and has changes in the headings.
The budget has three major headings -- income, expenditure and financing -- contrary to earlier division in the budgetary headings. Financing is a new heading that has been included in the budget.
According to the new classification of Finance Statistics, the total appropriation for recurrent expenditure -- for salaries and other expenses -- is proposed to be Rs 266.61 billion which is 69.27 per cent of the total outlay.
Similarly, Adhikari has allocated Rs 72.61 billion for capital expenditure which is 18.86 per cent of the total budget.
Under the Financing head, Rs 25.38 billion (6.6 per cent) has been allocated for loan and share investment, and Rs 20.3 billion (5.27 per cent) for repayment of principals. The total allocation is 25.67 per cent higher compared to revised estimate of the current fiscal year. "Under the existing arrangement, recurrent and capital expenditure will amount to 56.08 per cent and 38.64 per cent, respectively, whereas the repayment of principal amount will be 5.28 per cent of the total expenditure," he said, projecting that he could mobilise Rs 241.77 billion from revenue, Rs 5.93 billion from repayment of principal amount and Rs 70.13 billion from foreign grants.
The budget will have a deficit of Rs 67.06 billion that he planned to meet through Rs 29.65 billion foreign loan and Rs 37.41 billion domestic borrowing.
The ambitious budget that has been already leaked to the businessmen, however, is suspected to be able to mobilise the revenue target as the government failed to meet current fiscal year's target.
Likewise, the budget that balance of payments will be positive, liquidity of the financial sector will come to normalcy, capital market will pick up and the investment climate will improve remarkably.
"The finance minister has tried to save VAT evaders," former finance minister Dr Ram Sharan Mahat said, adding that the budget has come after series of economic scams and it will invite more scams in the future.
Total Outlay: Rs 384.90 billion
Recurrent Expenditure : Rs 266.61 billion
Capital Expenditure : Rs 72.61 billion
Loan and share investment: Rs 25.38 billion
Principal Repayment: Rs 20.3 billion
Resources
Revenue: Rs 241.77 billion
Repayment of Principal: Rs 5.93 billion
Foreign grant: Rs 70.13 billion
Foreign loan: Rs 29.65 billion
Internal borrowing: Rs 37.41 billion
Major Highlights
* Growth rate target at five per cent.
*Inflation at seven per cent
* Pay scale of Civil Servants up from 30.39 per cent to 42.86 per cent.
* Income tax will be fully exempted for the first ten years for the hydro-power projects commencing their construction within August 24, 2014 and starting commercial production by mid-April 2018.
* Property Tax Act in offing for voluntary disclosure of all the fixed and movable properties including the land, ornaments, cash, deposits in banks/financial institutions, lending, investment in share/debentures and vehicles.
* Permanent Account Number (PAN) necessary for registration of land and house transactions
* A policy of disinvesting the share of the public enterprises to the public will be implemented.
* A High Level Public Enterprises Management Board will be formed
* Legal arrangements will be made and implemented to penalize those found to be indulged in cartelling, and intimidation. They will also be fined and licenses of their business entity will be
Dearer
Liquor including alcohol and beer -- up to 14 per cent
Tobacco products and cigarettes -- up by 8 per cent
Fruits Juice -- Increased to Rs 3.50 on a litre
Playing card -- 20 per cent per bundle
Clinker and Cement -- Rs 400 per metric
Cheaper
Sewing machine -- reduced to one per cent from five per cent
Tomato Ketchup industries' equipments -- reduced to one per cent from five per cent
Sanitary towel and baby dry pad -- reduced to 10 per cent from 15 per cent
Plastic Gas Cylinder -- reduced to 15 per cent from 30 per cent
LCD, Plasma or LED brought by Nepali passengers returning from foreign employment -- tax reduced
Plastic bag -- tax free from earlier five per cent
Thursday, July 14, 2011
Politics rules over economy, once again !
The country has not yet come out of the shocks from last three years' delayed budgets that has literally shaken the foundation of economy, it seemed to happen this year again.
The country has been witnessing lower growth rate since last three years because of regular delayed budgets due to political tug-of war and eroding confidence of private sector. "If the 'unpopular tradition' of bringing budget for the regular expenses -- of one-quarter of the fiscal year -- like last three fiscal years continue this year, the country will plunge into deep economic crisis," said senior economist Dr Bhola Chalise.
The unholy politics-driven economic crisis has already seen slower economic growth, low revenue mobilisation coupled with drop in growth of engine of the economy manufacturing sector and service sector, he said, adding that the current poor economic indicators are the reflections of political instability.
This fiscal year, the country has seen the lowest growth rate in last three years. The Central Bureau of Statics (CBS) has projected the growth rate at 3.47 per cent -- due to lower growth of manufacturing sector and service sector -- for this fiscal year, though the government has expected it to be 3.5 per cent.
Another senior bureaucrat Rameshwor Prasad Khanal also agreed that the overall confidence will seriously erode leading to slackening of economic activities, in case of such repeated delayed fiscal policy.
Chalise opined that economics is also the study of human behaviour. "No one wants to take risk," he said, adding that investors are smart; they keep taking stock of situation before investing as they seek political security above all. Lack of new investment has left fewer jobs opportunities and delayed budget has made it difficult for the government to spend on the development activities that could boost economic growth in the long run.
As it has become a ritual for political parties to block budget every year, since last four years, to bargain for their petty interests at the cost of country's economy, no one seems to be giving a second thought for their own future.
The 'irresponsible act' neither helps build confidence nor helps the political parties in the long run."It will damage political parties in the long run as the political party that obstruct budget will lose popular base," said former finance secretary Khanal.
Private Sector concern
KATHMANDU: The private sector has shown its serious concern over the postponement of budget announcement on Thursday. "The political parties are not serious on deteriorating economic condition of the country," said the umbrella organisation of private sector Federation of Nepalese Chambers of Commerce and Industry. The government's fiscal policy should be announced before the end of the fiscal year, it said.
The country has been witnessing lower growth rate since last three years because of regular delayed budgets due to political tug-of war and eroding confidence of private sector. "If the 'unpopular tradition' of bringing budget for the regular expenses -- of one-quarter of the fiscal year -- like last three fiscal years continue this year, the country will plunge into deep economic crisis," said senior economist Dr Bhola Chalise.
The unholy politics-driven economic crisis has already seen slower economic growth, low revenue mobilisation coupled with drop in growth of engine of the economy manufacturing sector and service sector, he said, adding that the current poor economic indicators are the reflections of political instability.
This fiscal year, the country has seen the lowest growth rate in last three years. The Central Bureau of Statics (CBS) has projected the growth rate at 3.47 per cent -- due to lower growth of manufacturing sector and service sector -- for this fiscal year, though the government has expected it to be 3.5 per cent.
Another senior bureaucrat Rameshwor Prasad Khanal also agreed that the overall confidence will seriously erode leading to slackening of economic activities, in case of such repeated delayed fiscal policy.
Chalise opined that economics is also the study of human behaviour. "No one wants to take risk," he said, adding that investors are smart; they keep taking stock of situation before investing as they seek political security above all. Lack of new investment has left fewer jobs opportunities and delayed budget has made it difficult for the government to spend on the development activities that could boost economic growth in the long run.
As it has become a ritual for political parties to block budget every year, since last four years, to bargain for their petty interests at the cost of country's economy, no one seems to be giving a second thought for their own future.
The 'irresponsible act' neither helps build confidence nor helps the political parties in the long run."It will damage political parties in the long run as the political party that obstruct budget will lose popular base," said former finance secretary Khanal.
Private Sector concern
KATHMANDU: The private sector has shown its serious concern over the postponement of budget announcement on Thursday. "The political parties are not serious on deteriorating economic condition of the country," said the umbrella organisation of private sector Federation of Nepalese Chambers of Commerce and Industry. The government's fiscal policy should be announced before the end of the fiscal year, it said.
Wednesday, July 13, 2011
Fiscal policy to focus on infrastructure, cooperatives, agriculture
The government is focusing its fiscal policy on developing large infrastructure, cooperatives and agriculture.
According to National Planning Commission (NPC) vice chairman Dr Dinesh Chandra Devkota, the government is forming a separate body to look after big infrastructure projects. "The budget will would announce a plan to implement the big projects through a separate special committee," he said, here today.
As the development works have been slowed down due to lack of enough capital expenditure and lack of government’s mechanism, the national think tank vice chair said that a separate committee will look after the big projects to ensure proper capital expenditures and timely completion of the projects that could boost the economic growth.
The government is earmarking sufficient budget -- from its proposed total outlay of Rs 387 billion -- for the large infrastructure projects like Sikta irrigation project and Kankai multipurpose high dam projects apart from Intra-river basin construction and river diversion for electricity generation, water transport and irrigation.
The budget for the fiscal year 2011-12 will introduce programmes for the expansion and restructuring of government mechanism also, he said, adding that the budget will be aimed at completion of peace process and social transformation.
Dismissing the rumours of budget being distributive, he said that the government will bring the budget according to the government policy. "When the budget focuses on big infrastructures, there will be little possibility of budget being distributive," he argued.
He however, defended the move to promote cooperatives claiming that it is also a private sector.
However, the economists and private sector is against the government move to treat cooperatives at par with private sector.
"How could the government compare the private sector that has above 70 per cent contribution in the GDP," asked senior economist Prof Dr Biswambhar Pyakurel.
He also warned the government of economic crisis, if it continues to ignore economic indicators that have been not encouraging in recent years.
Since last three years, the economic growth rate has seen downward movement coupled with higher inflation.
However, the government is bringing a huge budget that will further accelerate price hike, said chairman of Poverty Alleviation Fund (PAF) Bidhyadhar Malik.
He claimed that the government projection of revenue that is at Rs 250 billion is not realistic. "As the government has failed in mobilising Rs 216.67 billion revenue this fiscal year, how could it achieve Rs 250 billion in the next fiscal year," he added.
According to National Planning Commission (NPC) vice chairman Dr Dinesh Chandra Devkota, the government is forming a separate body to look after big infrastructure projects. "The budget will would announce a plan to implement the big projects through a separate special committee," he said, here today.
As the development works have been slowed down due to lack of enough capital expenditure and lack of government’s mechanism, the national think tank vice chair said that a separate committee will look after the big projects to ensure proper capital expenditures and timely completion of the projects that could boost the economic growth.
The government is earmarking sufficient budget -- from its proposed total outlay of Rs 387 billion -- for the large infrastructure projects like Sikta irrigation project and Kankai multipurpose high dam projects apart from Intra-river basin construction and river diversion for electricity generation, water transport and irrigation.
The budget for the fiscal year 2011-12 will introduce programmes for the expansion and restructuring of government mechanism also, he said, adding that the budget will be aimed at completion of peace process and social transformation.
Dismissing the rumours of budget being distributive, he said that the government will bring the budget according to the government policy. "When the budget focuses on big infrastructures, there will be little possibility of budget being distributive," he argued.
He however, defended the move to promote cooperatives claiming that it is also a private sector.
However, the economists and private sector is against the government move to treat cooperatives at par with private sector.
"How could the government compare the private sector that has above 70 per cent contribution in the GDP," asked senior economist Prof Dr Biswambhar Pyakurel.
He also warned the government of economic crisis, if it continues to ignore economic indicators that have been not encouraging in recent years.
Since last three years, the economic growth rate has seen downward movement coupled with higher inflation.
However, the government is bringing a huge budget that will further accelerate price hike, said chairman of Poverty Alleviation Fund (PAF) Bidhyadhar Malik.
He claimed that the government projection of revenue that is at Rs 250 billion is not realistic. "As the government has failed in mobilising Rs 216.67 billion revenue this fiscal year, how could it achieve Rs 250 billion in the next fiscal year," he added.
Marginal contribution of non-tax revenue
At a time when revenue mobilisation has seen shortfall, a study revealed that the government has never focused on non-tax revenue.
The study ‘Trend and Structure of Non-Tax Revenue,’ conducted by Revenue Administration Training Centre stated that the government’s lack of focus and strategy has discouraged growth rate of non-tax revenue, which, if properly focused could contribute more to the government coffer.
In the last one decade non-tax revenue’s contribution to the total gross domestic product (GDP) stands between 2.14 per cent to 2.69 per cent, whereas the contribution of total revenue to the total GDP stands at 15 per cent.
However, non-tax revenue’s average contribution to the total revenue comes between 16 per cent and 22 per cent contributing to less than a quarter.
For a strong revenue administration it’s a challenge as contribution of non-tax revenue should be more in the total revenue.
“Going through the last 10 years revenue trend, some years it has been observed that non-tax revenue’s growth rate was registered negative as well,” said senior instructor at the Revenue Administration Training Centre Basu Sharma.
The study that took three months to complete also revealed that the contribution of non-tax revenue to the total revenue has seen fluctuation due to lack of revenue administration’s lack of focus and over concentration on tax revenue.
“The government has to focus more on non-tax revenue,” he said, adding that a long-term strategy has to be developed for the growth of non-tax revenue.
Fines, penalties, service fees, judicial fees, registration fee comes under non-tax revenue as the revenue is categorised into tax and non-tax revenue.
Value Added Tax (VAT), customs, excise and income tax come under tax revenue.
The VAT is the largest contributor in the revenue followed by income tax in the current fiscal year, according to the Finance Ministry.
Contribution of non-tax revenue in total revenue
2006-07 – 17.6 per cent
2007-08 – 19.8 per cent
2008-09 – 17 per cent
2009-10 – 14 per cent
The study ‘Trend and Structure of Non-Tax Revenue,’ conducted by Revenue Administration Training Centre stated that the government’s lack of focus and strategy has discouraged growth rate of non-tax revenue, which, if properly focused could contribute more to the government coffer.
In the last one decade non-tax revenue’s contribution to the total gross domestic product (GDP) stands between 2.14 per cent to 2.69 per cent, whereas the contribution of total revenue to the total GDP stands at 15 per cent.
However, non-tax revenue’s average contribution to the total revenue comes between 16 per cent and 22 per cent contributing to less than a quarter.
For a strong revenue administration it’s a challenge as contribution of non-tax revenue should be more in the total revenue.
“Going through the last 10 years revenue trend, some years it has been observed that non-tax revenue’s growth rate was registered negative as well,” said senior instructor at the Revenue Administration Training Centre Basu Sharma.
The study that took three months to complete also revealed that the contribution of non-tax revenue to the total revenue has seen fluctuation due to lack of revenue administration’s lack of focus and over concentration on tax revenue.
“The government has to focus more on non-tax revenue,” he said, adding that a long-term strategy has to be developed for the growth of non-tax revenue.
Fines, penalties, service fees, judicial fees, registration fee comes under non-tax revenue as the revenue is categorised into tax and non-tax revenue.
Value Added Tax (VAT), customs, excise and income tax come under tax revenue.
The VAT is the largest contributor in the revenue followed by income tax in the current fiscal year, according to the Finance Ministry.
Contribution of non-tax revenue in total revenue
2006-07 – 17.6 per cent
2007-08 – 19.8 per cent
2008-09 – 17 per cent
2009-10 – 14 per cent
Tuesday, July 12, 2011
Central bank breather for banks, real estate, housing and loan against shares
Central bank today provided much needed breather to banks and financial institutions by relaxing residential housing and real estate loan, and loan against shares to give a breather to the cash-strapped banks and financial institutions.
"If a borrower pays all the outstanding interests, one can renew real estate loan for a year, said central bank spokesperson Bhaskar Mani Gyawali.
Similarly, the personal home loan limit has also been increased to Rs 8 million from current Rs 6 million.
The financial institutions have lent around Rs 6 billion against shares and Rs 99 billion to real estate and Rs 38 billion to housing sector.
Earlier in March, the central bank had created a separate category for the residential home loans of up to Rs 6 million as residential home loans that would not be dealt as the part of real estate and housing loans to encourage first home buyers and give some relief to the banks and financial institutions.
However, bankers said that it will only post pone the problem.
"The borrowers will be encouraged to pay interest but other economic indicators must also support," said CEO of NMB Bank Upendra Poudel.
The renewal provision is expected to give the banks and financial institutions' a chance to clean their balance sheet and give boost to their profits as the stagnation in ballooning real estate prices has freezed their loan recovery limiting their lending capacity.
The central bank’s breather will definitely benefit financial institutions and construction sector too, that both were under pressure.
As the financial institutions real estate and housing portfolios swelled dangerously posing a high concentration risk the central bank had caped their flow credit to 25 per cent of the total lending fearing over flow on unproductive sector could lead to systemic risk in financial institutions.
As a result the real estate, rent and professional service sector that has posted 3.6 per cent growth in the fiscal year 2009-10 is expected to grow by only 2.6 per cent this year, according to the Economic Survey.
The sector has recorded an average of 6.1 per cent growth in the last five years and its contribution to gross domestic product (GDP) stood at 8.2 per cent.
The freezing prices of real estate and housing has tightened the banks and financial institutions’ liquidity situation and they started struggling for loan recovery.
"The central bank has provided respite to the real estate and housing sector that will eventually help the banks and financial institutions,” he said.
Similarly, the central bank today completely relaxed loan against share. Earlier, one could get only 60 per cent loan of the share value. "But not the financial institutions will use their intelligent judgment while lending against share as they are free to lend, Gyawali said, hoping that it will boost the secondary market that has been performing poorly recently.
Ever since the central bank lowered the loan of 80 per cent to 60 per cent against share due to overheating of share market, it had been looking down.
The real estate and housing entrepreneurs, share investors and bankers have been lobbying to relax central bank cap recently.
"If a borrower pays all the outstanding interests, one can renew real estate loan for a year, said central bank spokesperson Bhaskar Mani Gyawali.
Similarly, the personal home loan limit has also been increased to Rs 8 million from current Rs 6 million.
The financial institutions have lent around Rs 6 billion against shares and Rs 99 billion to real estate and Rs 38 billion to housing sector.
Earlier in March, the central bank had created a separate category for the residential home loans of up to Rs 6 million as residential home loans that would not be dealt as the part of real estate and housing loans to encourage first home buyers and give some relief to the banks and financial institutions.
However, bankers said that it will only post pone the problem.
"The borrowers will be encouraged to pay interest but other economic indicators must also support," said CEO of NMB Bank Upendra Poudel.
The renewal provision is expected to give the banks and financial institutions' a chance to clean their balance sheet and give boost to their profits as the stagnation in ballooning real estate prices has freezed their loan recovery limiting their lending capacity.
The central bank’s breather will definitely benefit financial institutions and construction sector too, that both were under pressure.
As the financial institutions real estate and housing portfolios swelled dangerously posing a high concentration risk the central bank had caped their flow credit to 25 per cent of the total lending fearing over flow on unproductive sector could lead to systemic risk in financial institutions.
As a result the real estate, rent and professional service sector that has posted 3.6 per cent growth in the fiscal year 2009-10 is expected to grow by only 2.6 per cent this year, according to the Economic Survey.
The sector has recorded an average of 6.1 per cent growth in the last five years and its contribution to gross domestic product (GDP) stood at 8.2 per cent.
The freezing prices of real estate and housing has tightened the banks and financial institutions’ liquidity situation and they started struggling for loan recovery.
"The central bank has provided respite to the real estate and housing sector that will eventually help the banks and financial institutions,” he said.
Similarly, the central bank today completely relaxed loan against share. Earlier, one could get only 60 per cent loan of the share value. "But not the financial institutions will use their intelligent judgment while lending against share as they are free to lend, Gyawali said, hoping that it will boost the secondary market that has been performing poorly recently.
Ever since the central bank lowered the loan of 80 per cent to 60 per cent against share due to overheating of share market, it had been looking down.
The real estate and housing entrepreneurs, share investors and bankers have been lobbying to relax central bank cap recently.
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