Money inflation in Nepal
Money inflation in Nepal
Highest money inflation and unbeatable price increasing of basic goods and services in the history of Nepal hit the daily lives of Nepalese people recently. A country might not have a dream of sound economy if the political stability remains changed. Every single steps of economy growth and development of a nation, the political stability and its policies both open market or socialism impact on the country economy and people daily life. The prices of basic items which have been consumed for daily purpose are gone up drastically. People cannot afford as per their daily income the basic goods which are inevitable. A profound study of reasons why the money inflation maintains highest record and prices go up have been discovered at the degree of current situation. The short time span of Nepal, we are obliged to face such a critical economic condition inside the country. Here, I am analyzing couples of point of views which have been played a significant role to bring in this economic condition at present.Obviously,Nepal Rastra bank and commercial banks are responsible to welcome such a critical economic condition lack of their proper and long term policies and control over investments. I would not like to pile up the charges against them but they all are part of such problems which they invited.
Secondly, the political instability and lack of security in public investment spoil the economy of Nepal. All the political parties of Nepal are responsible for spoiling economy with their stupidity and their dirty political game.
On the other hand, the policies of banks on investing unproductive fields such as land and gold, lack of providing security and safety to public deposits, disobeying & breaching of central bank rules and regulation, depending upon the remittance, raising of public expenditure in luxurious items in comparison of productive items, unmanaged migration from villages to cities, lacking of investment in modern agricultures, stiff social culture and traditions, brain drain of most of youths to abroad to finding out good opportunity and better life standard, lack of control over price and investment by government, insurgency period and insufficiency of knowledge of investment on productivity fields, the big difference in export and import, totally dependency in remittance are considered major factors to collapse the sound economic condition of Nepal.
In fact, the reason of money inflation and price increased in basic items are associated with the investment of banks in unproductive fields such as lands and housings, the highest degree of imports in luxurious items than exports from the nation, unemployment, follow up tradition agricultures. If government does not step a strictly in imports and investing real estate business, we pay more cost in near future. The tradition and cultures of Nepalese more center in expenditure of religious days,celebration, wedding and ceremonies etc. as result we are obliged to put on such an economy disaster at the moment.
The country has been challenging up such a dilemma at the moment with economy inflations, even it takes to recover couple of years in previous stage.
According to the latest macroeconomic report from Nepal Rastra Bank (NRB), the
year-on-year (y-o-y) Consumer Price Inflation (CPI) moderated to 11.8% in mid
January 2010. Though still high compared to international standards, after reaching
the highs of above 14% on mid Jan 2009, inflation growth moderated gradually
during the last few months (see figure 1). The annual budget of the Ministry of
Finance (MOF) of Nepal for 2009/10 and the monetary policy of the NRB has
projected an inflation target of 7% for Fiscal Year (FY) 2009/10.
The annual average inflation in FY 2008/09 was 13.2% which was higher than the
target of 7%. In its annual monetary policy report, the NRB has indentified supply
side constraints as the primary cause of the high inflation. The implication of the
high inflation rate for the financial sector is that it deters savings and encourages
consumption. Inflation constantly erodes the value of wealth. It makes economic
sense for the consumer to consume rather than to save.
Economy - overview:
Nepal is among the poorest and least developed countries in the world, with almost one-third of its population living below the poverty line. Agriculture is the mainstay of the economy, providing a livelihood for three-fourths of the population and accounting for about one-third of GDP. Industrial activity mainly involves the processing of agricultural products, including pulses, jute, sugarcane, tobacco, and grain. During the global recession of 2009, remittances from foreign workers abroad increased 47% to $2.8 billion while tourist arrivals only decreased 1% compared to the previous year. Nepal has considerable scope for exploiting its potential in hydropower, with an estimated 42,000 MW of feasible capacity, but political instability hampers foreign investment. Additional challenges to Nepal's growth include its technological backwardness, landlocked geographic location, civil strife and labor unrest, and its susceptibility to natural disaster.
GDP (purchasing power parity):
$33.26 billion (2009 est.)
$31.77 billion (2008 est.)
$30.17 billion (2007 est.)
note: data are in 2009 US dollars
[see also: GDP (purchasing power parity) country ranks ]
GDP (official exchange rate):
$12.47 billion (2009 est.)
[see also: GDP (official exchange rate) country ranks ]
GDP - real growth rate:
4.7% (2009 est.)
5.3% (2008 est.)
3.3% (2007 est.)
[see also: GDP - real growth rate country ranks ]
GDP - per capita:
$1,200 (2009 est.)
$1,100 (2008 est.)
$1,100 (2007 est.)
note: data are in 2009 US dollars
[see also: GDP - per capita country ranks ]
GDP - composition by sector:
agriculture: 35%
[see also: GDP - composition by sector - agriculture country ranks ]
industry: 16%
[see also: GDP - composition by sector - industry country ranks ]
services: 49% (FY07 est.)
[see also: GDP - composition by sector - services country ranks ]
Labor force:
18 million
note: severe lack of skilled labor (2008 est.)
[see also: Labor force country ranks ]
Labor force - by occupation:
agriculture: 76%
[see also: Labor force - by occupation - agriculture country ranks ]
industry: 6%
[see also: Labor force - by occupation - industry country ranks ]
services: 18% (2004 est.)
[see also: Labor force - by occupation - services country ranks ]
Unemployment rate:
46% (2008 est.)
42% (2004 est.)
[see also: Unemployment rate country ranks ]
Population below poverty line:
24.7% (2004)
[see also: Population below poverty line country ranks ]
Household income or consumption by percentage share:
lowest 10%: 6%
[see also: Household income or consumption by percentage share - lowest 10% country ranks ]
highest 10%: 40.6% (2006)
[see also: Household income or consumption by percentage share - highest 10% country ranks ]
Distribution of family income - Gini index:
47.2 (2008)
36.7 (1996)
[see also: Distribution of family income - Gini index country ranks ]
Budget:
revenues: $2.3 billion
[see also: Budget - revenues country ranks ]
expenditures: $3.7 billion (FY08)
[see also: Budget - expenditures country ranks ]
Inflation rate (consumer prices):
13.2% (September 2009 est.)
7.7% (2007 est.)
[see also: Inflation rate (consumer prices) country ranks ]
Central bank discount rate:
6.5% (31 December 2008)
6.25% (31 December 2007)
[see also: Central bank discount rate country ranks ]
Commercial bank prime lending rate:
NA% (31 December 2008)
[see also: Commercial bank prime lending rate country ranks ]
Stock of money:
$2.106 billion (31 December 2008)
$2.184 billion (31 December 2007)
[see also: Stock of money country ranks ]
Stock of quasi money:
$6.99 billion (31 December 2008)
$4.745 billion (31 December 2007)
[see also: Stock of quasi money country ranks ]
Stock of domestic credit:
$5.556 billion (31 December 2008)
$5.636 billion (31 December 2007)
[see also: Stock of domestic credit country ranks ]
Market value of publicly traded shares:
$5.5 billion (31 December 2008)
$4.909 billion (31 December 2007)
$1.805 billion (31 December 2006)
[see also: Market value of publicly traded shares country ranks ]
Agriculture - products:
pulses, rice, corn, wheat, sugarcane, jute, root crops; milk, water buffalo meat
Industries:
tourism, carpets, textiles; small rice, jute, sugar, and oilseed mills; cigarettes, cement and brick production
Industrial production growth rate:
1.8% (FY08)
[see also: Industrial production growth rate country ranks ]
Electricity - production:
2.6 billion kWh (2007 est.)
[see also: Electricity - production country ranks ]
Electricity - consumption:
2.243 billion kWh (2007 est.)
[see also: Electricity - consumption country ranks ]
Electricity - exports:
0 kWh (2007 est.)
[see also: Electricity - exports country ranks ]
Electricity - imports:
213 million kWh (2008 est.)
[see also: Electricity - imports country ranks ]
Oil - production:
0 bbl/day (2008 est.)
[see also: Oil - production country ranks ]
Oil - consumption:
18,000 bbl/day (2008 est.)
[see also: Oil - consumption country ranks ]
Oil - exports:
0 bbl/day (2007 est.)
[see also: Oil - exports country ranks ]
Oil - imports:
16,920 bbl/day (2007 est.)
[see also: Oil - imports country ranks ]
Oil - proved reserves:
0 bbl (1 January 2009 est.)
[see also: Oil - proved reserves country ranks ]
Natural gas - production:
0 cu m (2008 est.)
[see also: Natural gas - production country ranks ]
Natural gas - consumption:
0 cu m (2008 est.)
[see also: Natural gas - consumption country ranks ]
Natural gas - exports:
0 cu m (2008 est.)
[see also: Natural gas - exports country ranks ]
Natural gas - imports:
0 cu m (2008 est.)
[see also: Natural gas - imports country ranks ]
Natural gas - proved reserves:
0 cu m (1 January 2009 est.)
[see also: Natural gas - proved reserves country ranks ]
Current account balance:
$537 million (2009 est.)
$241 million (2007)
[see also: Current account balance country ranks ]
Exports:
$907 million (2008 est.)
$868 million (2006)
[see also: Exports country ranks ]
Exports - commodities:
clothing, pulses, carpets, textiles, juice, pashima, jute goods
Exports - partners:
India 59.2%, US 8.7%, Bangladesh 8.3%, Germany 4.3% (2008)
Imports:
$3.626 billion (2009 est.)
$3.229 billion (2006)
[see also: Imports country ranks ]
Imports - commodities:
petroleum products, machinery and equipment, gold, electrical goods, medicine
Imports - partners:
India 55.4%, China 13.3%, Singapore 2% (2008)
Debt - external:
$4.5 billion (2009 est.)
$3.285 billion (March 2006 est.)
[see also: Debt - external country ranks ]
Stock of direct foreign investment - at home:
$NA
[see also: Stock of direct foreign investment - at home country ranks ]
Stock of direct foreign investment - abroad:
$NA
[see also: Stock of direct foreign investment - abroad country ranks ]
Exchange rates:
Nepalese rupees (NPR) per US dollar - 77.44 (2009), 65.21 (2008), 70.35 (2007), 72.446 (2006), 72.16 (2005)
A study of recent crisis shows that there is no option to reduce the inflation without elimination of political instability.Only the political stability and strong monetary policies of National bank could foster the economy with in couple of years if we believe ourselves strongly.
all the statistic have been copied from the national bank site.
Highest money inflation and unbeatable price increasing of basic goods and services in the history of Nepal hit the daily lives of Nepalese people recently. A country might not have a dream of sound economy if the political stability remains changed. Every single steps of economy growth and development of a nation, the political stability and its policies both open market or socialism impact on the country economy and people daily life. The prices of basic items which have been consumed for daily purpose are gone up drastically. People cannot afford as per their daily income the basic goods which are inevitable. A profound study of reasons why the money inflation maintains highest record and prices go up have been discovered at the degree of current situation. The short time span of Nepal, we are obliged to face such a critical economic condition inside the country. Here, I am analyzing couples of point of views which have been played a significant role to bring in this economic condition at present.Obviously,Nepal Rastra bank and commercial banks are responsible to welcome such a critical economic condition lack of their proper and long term policies and control over investments. I would not like to pile up the charges against them but they all are part of such problems which they invited.
Secondly, the political instability and lack of security in public investment spoil the economy of Nepal. All the political parties of Nepal are responsible for spoiling economy with their stupidity and their dirty political game.
On the other hand, the policies of banks on investing unproductive fields such as land and gold, lack of providing security and safety to public deposits, disobeying & breaching of central bank rules and regulation, depending upon the remittance, raising of public expenditure in luxurious items in comparison of productive items, unmanaged migration from villages to cities, lacking of investment in modern agricultures, stiff social culture and traditions, brain drain of most of youths to abroad to finding out good opportunity and better life standard, lack of control over price and investment by government, insurgency period and insufficiency of knowledge of investment on productivity fields, the big difference in export and import, totally dependency in remittance are considered major factors to collapse the sound economic condition of Nepal.
In fact, the reason of money inflation and price increased in basic items are associated with the investment of banks in unproductive fields such as lands and housings, the highest degree of imports in luxurious items than exports from the nation, unemployment, follow up tradition agricultures. If government does not step a strictly in imports and investing real estate business, we pay more cost in near future. The tradition and cultures of Nepalese more center in expenditure of religious days,celebration, wedding and ceremonies etc. as result we are obliged to put on such an economy disaster at the moment.
The country has been challenging up such a dilemma at the moment with economy inflations, even it takes to recover couple of years in previous stage.
According to the latest macroeconomic report from Nepal Rastra Bank (NRB), the
year-on-year (y-o-y) Consumer Price Inflation (CPI) moderated to 11.8% in mid
January 2010. Though still high compared to international standards, after reaching
the highs of above 14% on mid Jan 2009, inflation growth moderated gradually
during the last few months (see figure 1). The annual budget of the Ministry of
Finance (MOF) of Nepal for 2009/10 and the monetary policy of the NRB has
projected an inflation target of 7% for Fiscal Year (FY) 2009/10.
The annual average inflation in FY 2008/09 was 13.2% which was higher than the
target of 7%. In its annual monetary policy report, the NRB has indentified supply
side constraints as the primary cause of the high inflation. The implication of the
high inflation rate for the financial sector is that it deters savings and encourages
consumption. Inflation constantly erodes the value of wealth. It makes economic
sense for the consumer to consume rather than to save.
Economy - overview:
Nepal is among the poorest and least developed countries in the world, with almost one-third of its population living below the poverty line. Agriculture is the mainstay of the economy, providing a livelihood for three-fourths of the population and accounting for about one-third of GDP. Industrial activity mainly involves the processing of agricultural products, including pulses, jute, sugarcane, tobacco, and grain. During the global recession of 2009, remittances from foreign workers abroad increased 47% to $2.8 billion while tourist arrivals only decreased 1% compared to the previous year. Nepal has considerable scope for exploiting its potential in hydropower, with an estimated 42,000 MW of feasible capacity, but political instability hampers foreign investment. Additional challenges to Nepal's growth include its technological backwardness, landlocked geographic location, civil strife and labor unrest, and its susceptibility to natural disaster.
GDP (purchasing power parity):
$33.26 billion (2009 est.)
$31.77 billion (2008 est.)
$30.17 billion (2007 est.)
note: data are in 2009 US dollars
[see also: GDP (purchasing power parity) country ranks ]
GDP (official exchange rate):
$12.47 billion (2009 est.)
[see also: GDP (official exchange rate) country ranks ]
GDP - real growth rate:
4.7% (2009 est.)
5.3% (2008 est.)
3.3% (2007 est.)
[see also: GDP - real growth rate country ranks ]
GDP - per capita:
$1,200 (2009 est.)
$1,100 (2008 est.)
$1,100 (2007 est.)
note: data are in 2009 US dollars
[see also: GDP - per capita country ranks ]
GDP - composition by sector:
agriculture: 35%
[see also: GDP - composition by sector - agriculture country ranks ]
industry: 16%
[see also: GDP - composition by sector - industry country ranks ]
services: 49% (FY07 est.)
[see also: GDP - composition by sector - services country ranks ]
Labor force:
18 million
note: severe lack of skilled labor (2008 est.)
[see also: Labor force country ranks ]
Labor force - by occupation:
agriculture: 76%
[see also: Labor force - by occupation - agriculture country ranks ]
industry: 6%
[see also: Labor force - by occupation - industry country ranks ]
services: 18% (2004 est.)
[see also: Labor force - by occupation - services country ranks ]
Unemployment rate:
46% (2008 est.)
42% (2004 est.)
[see also: Unemployment rate country ranks ]
Population below poverty line:
24.7% (2004)
[see also: Population below poverty line country ranks ]
Household income or consumption by percentage share:
lowest 10%: 6%
[see also: Household income or consumption by percentage share - lowest 10% country ranks ]
highest 10%: 40.6% (2006)
[see also: Household income or consumption by percentage share - highest 10% country ranks ]
Distribution of family income - Gini index:
47.2 (2008)
36.7 (1996)
[see also: Distribution of family income - Gini index country ranks ]
Budget:
revenues: $2.3 billion
[see also: Budget - revenues country ranks ]
expenditures: $3.7 billion (FY08)
[see also: Budget - expenditures country ranks ]
Inflation rate (consumer prices):
13.2% (September 2009 est.)
7.7% (2007 est.)
[see also: Inflation rate (consumer prices) country ranks ]
Central bank discount rate:
6.5% (31 December 2008)
6.25% (31 December 2007)
[see also: Central bank discount rate country ranks ]
Commercial bank prime lending rate:
NA% (31 December 2008)
[see also: Commercial bank prime lending rate country ranks ]
Stock of money:
$2.106 billion (31 December 2008)
$2.184 billion (31 December 2007)
[see also: Stock of money country ranks ]
Stock of quasi money:
$6.99 billion (31 December 2008)
$4.745 billion (31 December 2007)
[see also: Stock of quasi money country ranks ]
Stock of domestic credit:
$5.556 billion (31 December 2008)
$5.636 billion (31 December 2007)
[see also: Stock of domestic credit country ranks ]
Market value of publicly traded shares:
$5.5 billion (31 December 2008)
$4.909 billion (31 December 2007)
$1.805 billion (31 December 2006)
[see also: Market value of publicly traded shares country ranks ]
Agriculture - products:
pulses, rice, corn, wheat, sugarcane, jute, root crops; milk, water buffalo meat
Industries:
tourism, carpets, textiles; small rice, jute, sugar, and oilseed mills; cigarettes, cement and brick production
Industrial production growth rate:
1.8% (FY08)
[see also: Industrial production growth rate country ranks ]
Electricity - production:
2.6 billion kWh (2007 est.)
[see also: Electricity - production country ranks ]
Electricity - consumption:
2.243 billion kWh (2007 est.)
[see also: Electricity - consumption country ranks ]
Electricity - exports:
0 kWh (2007 est.)
[see also: Electricity - exports country ranks ]
Electricity - imports:
213 million kWh (2008 est.)
[see also: Electricity - imports country ranks ]
Oil - production:
0 bbl/day (2008 est.)
[see also: Oil - production country ranks ]
Oil - consumption:
18,000 bbl/day (2008 est.)
[see also: Oil - consumption country ranks ]
Oil - exports:
0 bbl/day (2007 est.)
[see also: Oil - exports country ranks ]
Oil - imports:
16,920 bbl/day (2007 est.)
[see also: Oil - imports country ranks ]
Oil - proved reserves:
0 bbl (1 January 2009 est.)
[see also: Oil - proved reserves country ranks ]
Natural gas - production:
0 cu m (2008 est.)
[see also: Natural gas - production country ranks ]
Natural gas - consumption:
0 cu m (2008 est.)
[see also: Natural gas - consumption country ranks ]
Natural gas - exports:
0 cu m (2008 est.)
[see also: Natural gas - exports country ranks ]
Natural gas - imports:
0 cu m (2008 est.)
[see also: Natural gas - imports country ranks ]
Natural gas - proved reserves:
0 cu m (1 January 2009 est.)
[see also: Natural gas - proved reserves country ranks ]
Current account balance:
$537 million (2009 est.)
$241 million (2007)
[see also: Current account balance country ranks ]
Exports:
$907 million (2008 est.)
$868 million (2006)
[see also: Exports country ranks ]
Exports - commodities:
clothing, pulses, carpets, textiles, juice, pashima, jute goods
Exports - partners:
India 59.2%, US 8.7%, Bangladesh 8.3%, Germany 4.3% (2008)
Imports:
$3.626 billion (2009 est.)
$3.229 billion (2006)
[see also: Imports country ranks ]
Imports - commodities:
petroleum products, machinery and equipment, gold, electrical goods, medicine
Imports - partners:
India 55.4%, China 13.3%, Singapore 2% (2008)
Debt - external:
$4.5 billion (2009 est.)
$3.285 billion (March 2006 est.)
[see also: Debt - external country ranks ]
Stock of direct foreign investment - at home:
$NA
[see also: Stock of direct foreign investment - at home country ranks ]
Stock of direct foreign investment - abroad:
$NA
[see also: Stock of direct foreign investment - abroad country ranks ]
Exchange rates:
Nepalese rupees (NPR) per US dollar - 77.44 (2009), 65.21 (2008), 70.35 (2007), 72.446 (2006), 72.16 (2005)
A study of recent crisis shows that there is no option to reduce the inflation without elimination of political instability.Only the political stability and strong monetary policies of National bank could foster the economy with in couple of years if we believe ourselves strongly.
all the statistic have been copied from the national bank site.
Comments