Friday, September 22, 2017

Central bank downplays flood loss

The central bank has said that losses triggered by floods and landslides in the second week of August will not hit the economy as hard as initially it was expected.
The country suffered record floods following torrential rain that continued from August 11-14 killing over 150 people and leaving 31 districts awash in water. The disaster completely destroyed over 43,000 houses and caused partial damage to thousands of other houses.
Initially the Ministry of Agricultural Development had estimated Rs 8.1 billion farm sector losses triggered by floods but later it revised the loss downwards to Rs 5.8 billion.
According to data, some 140,464 hectares of standing crops of paddy, maize, pulses, banana and spices were affected by the flood, while 37,757 hectares of standing crops suffered severe damage.
Likewise, fishes on 2,582 hectares were also swept away.
The paddy crop suffered the most damage with Rs1.72 billion, followed by fisheries (Rs1.54 billion) and vegetables (Rs1.28 billion), the data revealed, adding that the floods also killed livestock worth millions. “The torrential rains caused losses of stock and hit agricultural infrastructure in most of the districts in the Tarai,” reads central bank's latest Macroeconomic report. "However, timely onset of monsoon, normal rainfall in subsequent period, improved supply of agricultural inputs and steps taken by the government are likely to offset the output loss initially assumed."
Though, the economists have been claiming that the flood will hit the economy for next two years, the central bank forecast has raised the hopes.
Agricultural Development Ministry has decided to introduce a relief package of Rs 1.25 billion for farmers since the floods. The aid package, which will be rolled out by the District Disaster Relief Committees before Dashain, will be in the form of immediate cash grants and subsidies on agricultural inputs.
The grant and subsidy is also expected to offset losses suffered by the agricultural sector, which makes a contribution of over 30 per cent to gross domestic product (GDP).
According to the central bank, the industrial sector is also expected to perform better this fiscal year due to improved energy supply, smooth supply situation and the rise in foreign direct investment. "The successful completion of local elections has also improved the industrial climate," it reads, adding that hospitality sector is also expected to perform better in the current fiscal year, as occupancy rate of tourist hotels jumped to 75 per cent in the one-month period between mid-July and mid-August, which is considered as off-tourist season. "The government has also made fiscal transfer of Rs 225 billion – to the local bodies – that is expected to boost capital spending spurring economic activities across the country."
However, the government has not been able to meet its revenue collection target – due to slowdoqn in trading activities – merchandise exports have fallen, trade deficit has widened and both current account and overall balance of payments (BoP) are in deficit in the first month – between mid-July and mid-August – of the current fiscal year. "These developments, in case they continue, will pose policy challenges for macroeconomic management in the future,” the report adds.

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