Kathmandu, July 11:

Fiscal year 2005-06 has turned out to be a dismal year in terms of economic performance, due to discouraging growth of agriculture and non-agriculture sector. Agriculture sector was affected by bad weather and non-agricultural sector was hit hard by transport blockades and poor security situation.

Economic Survey presented in the parliament today states that the share of agricultural sector to gross domestic product (GDP) has decreased to three per cent in 2004-05 compared to 3.9 per cent in 2003-04. The survey forecasts that agriculture sector will grow only by 1.7 per cent in the current year. Fiscal deficit in 2004-05 stood at 3.4 per cent of the GDP compared to 3.2 per cent in 2003-04. The government resorted to foreign debt, domestic debt and cash reserves to meet Rs 18.06 billion fiscal deficit in 2004-05 which may go up in 2005-06.

However, the share of non-agriculture sector is expected to grow by 2.8 per cent in 2005-06 compared to 2.1 per cent in 2004-05. The reasons for low contribution is attributed to bad weather, internal conflict and weak law and order situation. The performance of production sectors like trade, restaurant and hotel sub-sectors witnessed a negative gro-wth of two per cent in the fiscal year 2004-05, which is estimated to go up by 3.9 per cent in 2005-06 hoping for increased foreign trade and sound growth in tourism sector.

Per capita income, which has increased by 0.46 per cent in 2004-05 is going to decline by 0.25 per cent in 2005-06, according to the economic survey. However, consumption of resources is going up despite slow economic performance. The total consumption of resources in 2004-05 was 87.57 per cent of GDP while in 2005-06 it is expected to increase to 88.9 per cent of GDP.

Gross investment in 2005-06 has increased only by 14.5 per cent compared to an increme-nt by 17.7 per cent in 2004-05 along with the downward revision of gross domestic savings by 12.43 per cent of the total GDP. During the fiscal year 2004-05, the government has spent Rs 102.56 billion. The go-vernment’s expenditure was met 68.4 per cent from revenue mobilisation, 14 per cent from foreign grants, nine per cent from foreign debt and 8.7 per cent from domestic debt. Foreign debt has raised by 21.5 per cent and domestic debt by 59.4 per cent resulting a marginal surplus in the cash balance.

Despite a lack of working environment in social sector due to conflict, the government has spent Rs 23.21 billion in the fiscal 2004-05. On the principal repayment in 2004-05, the sha-re of domestic debt principal repayment remained at 56 per cent, whereas the share of foreign debt principal repayment remained at 44 per cent that shows the government is in ‘debt trap’, which is increasing.

The outstanding foreign de-bt to GDP stands at 41.2 per ce-nt in 2004-05. The total foreign debt stands at 219.64 billion.

It is interesting to note that despite the government’s focus on hydropower development for generating energy, people are increasingly dependent on the use of traditional energy sources. The share of fuel wood was 89 per cent in 2004-05 while agriculture residue sta-nds at 4.34 per cent and cattle residue at 6.57 per cent. The situation seems similar in current fiscal year also. The share of petroleum products was 69.6 per cent, coal 15 per cent and electricity 15.4 per cent.

During 2005-06, the government could not build more than 18 km of road of which only seven km is blacktopped. However, the number of vehicle registration has gone up by 6.2 per cent during the period.