NRB helpless before price hike

Kathmandu, March 30:

The price hike remains uncontrolled, with the latest level recorded at 13.7 per cent in the first seven months of the current fiscal year, according to Nepal Rastra Bank (NRB), the central authority.

“Driven by both the significant rise in price of food and beverages as well as rise in price of non-food and services group, inflation rose to 13.7 per cent in mid-February from 6.4 per cent in the corresponding period the previous fiscal year,” said the central bank’s current macroeconomic situation report based on the first seven months’ data of 2008-09.

The year-on-year inflation is still above the central bank’s revised target of 11 per cent. Unable to crack the whip at the growing price hike, NRB governor Dipendra Bahadur Chhetri has urged the government to intervene in the market.

“In the first seven months of 2008-09, the price rise in Kathmandu valley, the Terai and Hills remained above 13 per cent — double than that in the correspomnding period the last fiscal,” the NRB report said.

However, revenue mobilisation grew by 32.5 per cent to Rs 72.3 billion compared to an increase of 29 per cent in the corresponding period the previous year. “The government’s commitment to revenue leakage control, administrative reforms and implementation of Voluntary Declaration of Income Source programme contributed to such impressive growth,” said the central bank.

Similarly, the budget also remained at a surplus of Rs 8.8 billion in contrast to a deficit of Rs 6.2 billion in the corresponding period the previous fiscal year. In the first seven months of this fiscal year, the overall Balance of Payment recorded a significant surplus of Rs 25.68 billion in comparison to a surplus of Rs 251.1 million in the corresponding period last fiscal year.

The huge surplus is due to government’s failure in spending on development works that will ultimately hit the economy hard. Remittance has came down by six per cent though the report says that it soared by 58.6 per cent in comparison to a growth of 23.2 per cent in the same period last fiscal year. This fiscal, it had increased by 65.3 per cent in the first six months.