Presently, BoP deficit hovers above Rs 12 billion, and to attain its target, the central bank needs to reverse the figure to BoP surplus of Rs 9 billion. [break]
“It will be a miracle if we achieved the target,” said Dr Khatiwada.
Even though trade deficits have narrowed down substantially, the NRB attributed dismal BoP operations to less than anticipated growth in remittances, foreign assistance and reimbursement of expenses from donors.
According to NRB, remittances growth has so far fallen short of target by 2 percentage points. The government too has mobilized just about Rs 20 billion in foreign loans, whereas the target set for the year was Rs 99 billion.
“As for other macro-economic indicators, they are sound. The overall economic outlook is satisfactory, even though, I have to admit, we could have done better on fronts like economic growth and development expenditure,” Dr Khatiwada told media persons.
Though Governor Khatiwada said overall liquidity in the financial system has improved of late, he acknowledged that some of the banks and financial institutions (BFIs) were still reeling under liquidity crisis.
He attributed the persistent liquidity crunch in financial system to growing unauthorized trade and other activities, something which has prevented return of money into the banking system. He also tagged the government´s inability to spend as other cause of the problem.
“The government still has Rs 15 billion unspent in its treasury. If it had spent the amount, it would have injected liquidity of at least Rs 10 billion in the banking system,” said Dr Khatiwada.
As for the financial health of BFIs, Governor Khatiwada said that their capital adequacy, liquidity and non-performing loans are good so far. “Problems have been seen in few institutions, but those are exceptional cases because their problems are rooted on irregularities by promoters or senior executives,” he added.
“We can confidently say that people´s deposits are safe.”
As for the problem emanating from poor corporate governance, Dr Khatiwada also appealed to the shareholders to choose their board of directors cautiously.
“Shareholders must act sensibly, for the representative they elect in board can both safeguard and hurt their investment,” he said.
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