Kathmandu, May 16
The slow pace of government expenditure relative to resource mobilisation in the first nine months of fiscal 2016-17 has resulted in nearly Rs 235 billion remaining idle in the state coffers.
The macroeconomic update of the nine months of this fiscal unveiled by the central bank today shows that the total government expenditure on cash basis increased by 46.6 per cent to Rs 419.93 billion. While a significant improvement from the corresponding period of the previous year when such expenditure had gone up by just eight per cent to Rs 286.54 billion, the government revenue collection surged by 44.4 per cent to Rs 418.95 billion in the review period.
Consequently, the government has accumulated cash balance of Rs 234.66 billion at Nepal Rastra Bank, according to the central bank report. Also, in the first nine months of 2016-17, the government had a budget surplus of Rs 63.59 billion against a surplus of Rs 47.69 billion in the corresponding period of the previous year.
Moreover, the current account slipped into deficit by Rs 10.34 billion in the review period on account of sharp increase in imports. The current account was in surplus at a significant level of Rs 133.19 billion in same period of previous year.
The overall balance of payments recorded a surplus of Rs 50.64 billion in the first nine months till mid-April compared to a surplus of Rs 163.81 billion in the same period of the previous year.
The macroeconomic update shows that merchandise exports increased 12.1 per cent to Rs 55.22 billion as against a drop of 23.4 per cent in the same period of the previous year. Merchandise imports, meanwhile, surged by 39.7 per cent to Rs 726.41 billion in the review period in contrast to a drop of 9.9 per cent in the same period of the previous year.
Owing to the imbalance in export and import, the total trade deficit in the review period widened by 42.6 per cent to Rs 671.20 billion as against a contraction of 8.2 per cent in the same period of the previous year. The export-import ratio fell to 7.6 per cent in the review period from 9.5 per cent in the corresponding period of the previous year.
Based on the imports of the first nine months of the current fiscal year, the foreign exchange holdings of the banking sector is sufficient to cover prospective merchandise imports of 13.3 months, and merchandise and services imports of 11.5 months, as per the central bank.
The update also revealed that growth in workers’ remittances slowed to 6.3 per cent to Rs 511.93 billion in the review period compared to a growth of 13 per cent in the corresponding period of the previous year.
The macroeconomic update has come on the heels of the recent release of national accounts statistics by Central Bureau of Statistics (CBS), which estimated gross domestic product (GDP) at basic prices to grow by 6.9 per cent in 2016-17. The better than expected rainfall, ongoing reconstruction works and improved energy situation have underpinned the growth estimates exceeding the initial targets.
According to CBS, the growth in agriculture sector is estimated to accelerate to 5.3 per cent in 2016-17 from the revised estimate of 0.03 per cent in 2015-16. It has also projected a growth of 10.9 per cent in the industrial sector in the current fiscal year owing to ease in supply of fuel and raw materials and improvement in power supply. The industrial sector had witnessed a negative growth of 6.3 per cent in the previous year. The services sector is estimated to witness a growth of 6.9 per cent in the current fiscal year. The revised growth rate of this sector had been 2.06 per cent in the preceding year.
The ratio of consumption to GDP, which was 96.2 per cent in the previous year, is estimated at 89.7 per cent in the current fiscal. While gross domestic savings-to-GDP ratio is estimated to stand at 10.3 per cent, the ratio of gross national savings-to-GDP is slated to rise 43.8 per cent in 2016-17 from 40 per cent in the previous year.
A version of this article appears in print on May 17, 2017 of The Himalayan Times.