Nepal Economic Update, April 2014

The enabling environment for the development of Nepal has improved, but opportunities need to be effectively leveraged through focused policy action. Nepal has significant resources in the form of remittances from abroad, but the economy cannot use...

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Bibliographic Details
Main Author:	World Bank
Format:	Economic Updates and Modeling
Language:	English en_US
Published:	Washington, DC 2014
Subjects:	ACCESS TO CREDIT ACCESS TO FINANCE ACCESS TO FINANCING ACCOUNTABILITY ACCOUNTING AUCTION AUDITING BALANCE OF PAYMENT BALANCE SHEET BANK BALANCE SHEETS BANK LENDING BANK LIQUIDITY BANK RATE BANK RATES BANKING INDUSTRY BANKING SECTOR BANKING SYSTEM BID BONDS BORROWER BROAD MONEY BUDGET SURPLUS BUDGETING CAPITAL ADEQUACY CAPITAL CONSTRAINTS CAPITAL INVESTMENT CAPITAL INVESTMENTS CAPITAL MARKET CAPITAL MARKETS CAPITAL PROJECTS CENTRAL BANK CIVIL SERVICE COMMERCIAL BANKING COMMERCIAL BANKS CONTRACTUAL OBLIGATIONS COUNTRY RISKS CREDIBILITY CREDIT AVAILABILITY CREDIT CRUNCH CREDIT EXPANSION CREDIT GROWTH CREDIT MARKET CREDIT MARKETS CREDIT QUALITY CREDIT RATIONING CREDIT SOURCE CREDIT WORTHINESS CURRENCY CURRENT ACCOUNT SURPLUS DEBT DEBT SOURCE DEFAULT RISK DEMAND FOR CREDIT DEPOSIT DEPOSIT MOBILIZATION DEPOSITS DEVELOPING COUNTRY DEVELOPMENT BONDS DISBURSEMENTS DISINTERMEDIATION DOMESTIC CAPITAL DOMESTIC CREDIT DOMESTIC DEBT ECONOMIC DEVELOPMENTS ECONOMIC GROWTH ECONOMIC POLICY ENABLING ENVIRONMENT EXCESS LIQUIDITY EXCHANGE RATES EXPENDITURE FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL INSTITUTIONS FINANCIAL MANAGEMENT FINANCIAL PERFORMANCE FINANCIAL STABILITY FINANCIAL SYSTEM FISCAL DISCIPLINE FOREIGN ASSETS FOREIGN CAPITAL FOREIGN CURRENCIES FOREIGN EXCHANGE FOREIGN EXCHANGE RESERVES FOREIGN EXCHANGE RISK FORM OF COLLATERAL GOVERNMENT BORROWING GOVERNMENT BUDGET HOLDING HOME LOANS HOUSEHOLD SAVINGS INCOME TAX INDEBTEDNESS INFLATION INFLATIONARY EXPECTATIONS INFLATIONARY PRESSURE INFLATIONARY PRESSURES INFORMATION ASYMMETRIES INFORMATION SYSTEM INFRASTRUCTURE DEVELOPMENT INTEREST RATE INTEREST RATE CAPS INTEREST RATE SPREAD INTEREST RATE VOLATILITY INTEREST RATES INTERNAL AUDIT INTERNATIONAL STANDARDS INVESTMENT ACTIVITIES INVESTMENT CLIMATE INVESTMENT DECISIONS INVESTMENT OPPORTUNITIES INVESTMENT SPENDING INVESTOR CONFIDENCE LACK OF COMPETITION LAND LOCATION LAND USE LAND VALUE LAWS LEGAL FRAMEWORK LEGISLATION LENDER LENDER OF LAST RESORT LENDERS LETTERS OF CREDIT LEVEL OF INTEREST RATE LIQUID ASSETS LIQUIDITY CONSTRAINTS LIQUIDITY MANAGEMENT LOAN LOAN PORTFOLIO LOANABLE FUNDS LOCAL GOVERNMENT MACROECONOMIC RISK MANDATES MARKET FAILURES MARKET LIQUIDITY MARKET SHARE MARKET STRUCTURE MIDDLEMEN MIGRANT WORKERS MONETARY AUTHORITIES MONETARY FUND MONETARY POLICY MONEY SUPPLY MORTGAGES NET LOSSES NET PROFIT NON PERFORMING LOANS OPEN MARKET OPEN MARKET OPERATIONS OPERATING LOSSES PAYMENT DEFAULT PERSONAL INCOME POLICY RESPONSE POLITICAL STABILITY POLITICAL UNCERTAINTY PRICE STABILITY PRIVATE COMMERCIAL BANKS PRIVATE FINANCE PRIVATE FUNDS PRIVATE INVESTMENT PRIVATE INVESTMENTS PRIVATE PARTY PRIVATE SECTOR CREDIT PRODUCTIVE INVESTMENT PUBLIC DEBT PUBLIC ENTERPRISES PUBLIC FINANCES PUBLIC INVESTMENT PUBLIC INVESTMENTS PUBLIC SPENDING PUBLIC TRANSPORT PUBLIC TRANSPORTATION PUSH FACTORS REAL ESTATE RECAPITALIZATION RECURRENT EXPENDITURE RECURRENT EXPENDITURES REGISTRATION FEE REGULATORY FORBEARANCE REMITTANCE REMITTANCES REPO REPOS RESERVE RESERVE ASSETS RESERVE REQUIREMENTS RESERVES RETAINED EARNINGS RETURN RETURN ON EQUITY RETURNS REVENUE MOBILIZATION RISK MANAGEMENT RISK MANAGEMENT SYSTEMS RISK PROFILE RISK WEIGHTED ASSETS RISKY ASSETS SAFETY NETS SAVINGS BEHAVIOR SAVINGS DEPOSITS SECURITIES SECURITIES MARKET SHAREHOLDERS SOCIAL SERVICES SOLVENCY STATUTORY REQUIREMENTS STOCK MARKET STRUCTURAL PROBLEMS SUPPLY OF CREDIT T-BILL T-BILL RATE T-BILLS TAX ADMINISTRATION TAX CODE TRADE BALANCE TRADING TRAFFIC MANAGEMENT TRANSPORT TREASURY TREASURY BILLS TRUST FUND URBANIZATION VALUATION WAGES WATER SUPPLY
Online Access:	http://documents.worldbank.org/curated/en/2014/04/19405489/nepal-economic-update-special-focus-dealing-excess-liquidity http://hdl.handle.net/10986/18653

Description
Summary:	The enabling environment for the development of Nepal has improved, but opportunities need to be effectively leveraged through focused policy action. Nepal has significant resources in the form of remittances from abroad, but the economy cannot use these resources in a productive manner to enhance the overall welfare of all citizens. Specific priorities for development include: (1) creating a growth promotion vision and agenda; (2) resolution of Nepal's "fiscal paradox"; (3) boosting investments; and (4) tackling enduring financial sector risks and managing excess. After a difficult year in FY13, the economy is poised to recover, albeit modestly. In FY13, Nepal achieved only modest growth of 3.6 percent. This was due largely to poor performance of the agricultural sector as well as very modest levels of industrial activity. Nepal s internal and external balances are sound but not for the right reasons. Low expenditure and robust revenue growth accounted for a large budget surplus and declining debt. Nepal s external position is comfortable because of large remittance inflows. On the external side, Nepal has benefited from the depreciation of the rupee but also - and much more significantly - from a sharp further increase in inward remittances which are expected to amount to over 30 percent of GDP in FY14. Monetary policy has sought to achieve a delicate equilibrium between controlling inflation and supporting economic activity but the optimal balance may evolve and call for corrections. For FY14, the outlook is cautiously optimistic. As remittances have become a defining feature of the Nepali economy the country must learn to manage excess liquidity.

Nepal Economic Update, April 2014

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