Central bank paints bleak economic picture

KATHMANDU, Nov 2: Nepal Rastra Bank (NRB) -- the economic advisor of the government -- has painted a gloomy economic picture for Fiscal Year 2015/16.
At the start of the fiscal year, economic growth was projected at 6 percent, assuming that acceleration in reconstruction works will increase overall capital expenditure.

“However, there has neither been an acceleration in reconstruction works nor a surge in overall capital expenditure by the government in the first two months of the current fiscal year,” NRB said.

Likewise, the works in development projects has not yet resumed on account of the shortage of fuel, it said, adding that tourism, hotels, transportation and educational activities have also been affected adversely due to the Indian blockade.

Similarly, the monsoon report based on information gathered from 21 different centers of the country by the Department of Hydrology and Meteorology states that the average rainfall from August 18 through September 17 has been 81.9 percent of the last 30 year’s average rainfall. Generally, monsoon remains active in Nepal during June 10 to September 23 every year. The agricultural sector has also suffered from supply disturbances of chemical fertilizers, pesticides and impeded market access of agro-products as a result of continuous strikes and blockade in trade routes in the southern parts of the country.

“The construction of major hydropower projects, which were stalled due to devastating earthquake in April, has not yet resumed,” it added. “Likewise, the construction of infrastructure projects such as roads and irrigation has been affected due to fuel shortage. The industrial sector has also been adversely affected on account of the shortage of fuel and necessary raw materials, which has further pulled down the economic growth”

The central bank has also attributed the low growth to continued strikes and disruption in trade routes in the Tarai region that has further affected the tourism sector already hit by the devastating earthquakes. “The average occupancy rate of the tourist standard hotels is about 30 percent in the review period,” it added.

Similarly, Nepal Reconstruction Authority (NRA), which was formed through ordinance, could also not come into operation due to the failure of timely enactment of necessary law. “The process of releasing Rs 200,000 to each household of earthquake victims for reconstruction of their houses has not yet taken place,” the central bank said, adding, “Likewise, the reconstruction of historical heritage sites and private buildings has also not started yet.”