Nepal Development Update, October 2013

Nepal's political developments continue to overshadow and impede its economic development. Over the short term, whether the scheduled elections are held and, if so, whether they achieve a modicum of consensus will be a major test. Political instability clouded the outlook in FY2013 and remains the principal source of vulnerability going forward. While Nepal's macroeconomic fundamentals remain stable, sources of vulnerability have not disappeared. Although the financial sector has rebuilt strength, it remains an important source of weakness. Important initiatives to improve the governance environment have been taken, but these initiatives can be amplified further. For FY2014, the baseline scenario is a gradual return to trend, with higher growth and sustainable fiscal expansion. While important psychologically and for some sectors of the economy, the recent depreciation of the Nepal rupee is not expected to hold back growth or to threaten macroeconomic stability. While a revision of the peg with India may eventually be warranted, the report agrees with Nepali policy makers that this is not the time when markets are unstable to move impulsively. Instead, such a major policy shift should be based on clear policy objectives and in-depth analysis of likely economic outcomes, including the long-term impact on Nepal's trade competitiveness. The report is structured as follows: chapter one gives summary; chapter two gives recent economic developments; chapter three gives policies and short- to medium-term development challenges; chapter four presents short and medium-term economic projections; chapter five focuses on bank support and activities; and chapter six presents special focus.

Bibliographic Details

Main Authors:	Kruse, Aurélien, Bajracharya, Roshan Darshan, Mahato, Deb Narayan
Language:	English en_US
Published:	World Bank, Kathmandu 2013-10
Subjects:	ACCOUNTING, AGGREGATE DEMAND, AMORTIZATION, ARBITRAGE, ARREARS, ASSET, ASSET QUALITY, BALANCE OF PAYMENT, BALANCE SHEETS, BANK LENDING, BANKING INDUSTRY, BANKING SECTOR, BILL, BROAD MONEY, BUDGET, BUDGET DEFICIT, BUFFER, BUFFERS, CAPITAL ADEQUACY, CAPITAL FLOW, CAPITAL FLOWS, CAPITAL FORMATION, CAPITAL MARKETS, CAPITAL OUTFLOWS, CAPITAL OUTLAYS, CD, COMMERCIAL BANKING, COMMERCIAL BANKS, CONSOLIDATION, CONSUMER GOODS, CONSUMPTION, CONSUMPTION BASKET, CREDIT EXPOSURE, CREDIT GROWTH, CREDIT GUARANTEE, CURRENCIES, CURRENCY, CURRENCY DEPRECIATION, CURRENCY PEG, CURRENCY PEGS, CURRENCY RISK, CURRENCY VALUE, CURRENT ACCOUNT, CURRENT ACCOUNT BALANCE, CURRENT ACCOUNT BALANCES, CURRENT ACCOUNT DEFICITS, CURRENT ACCOUNT POSITION, CURRENT ACCOUNT SURPLUS, DEBT LEVELS, DEBT SERVICE, DEBT SERVICE PAYMENTS, DEBT SERVICES, DEBT SUSTAINABILITY, DEPOSIT, DEPOSITOR, DEPOSITS, DEPRECIATION, DEPRESSED INVESTMENT, DIRECTION OF TRADE, DOLLAR VALUE, DOMESTIC BORROWING, DOMESTIC CONSUMPTION, DOMESTIC CURRENCY, DOMESTIC DEMAND, DOMESTIC GOODS, DOMESTIC PRICE, DOMESTIC PRICES, ECONOMIC DEVELOPMENT, ECONOMIC DEVELOPMENTS, ECONOMIC GROWTH, ECONOMY, ELASTICITY OF DEMAND, EMERGING MARKET ECONOMIES, EQUILIBRIUM, EQUILIBRIUM LEVELS, EQUITY, EXCHANGE RATE FLUCTUATIONS, EXCHANGE RATE MISALIGNMENT, EXCHANGE RATE PEG, EXCHANGE RATE POLICY, EXCHANGE RATES, EXPORT GROWTH, EXPORTER, EXPORTERS, EXPOSURE, EXTERNAL COMPETITIVENESS, EXTERNAL DEBT, FINANCE, FINANCIAL HEALTH, FINANCIAL INSTITUTIONS, FINANCIAL INTERMEDIATION, FINANCIAL MANAGEMENT, FISCAL BALANCES, FISCAL DEFICIT, FISCAL POLICIES, FISCAL POLICY, FISCAL POSITION, FIXED CAPITAL, FOOD PRICES, FOREIGN ASSETS, FOREIGN CURRENCIES, FOREIGN CURRENCY, FOREIGN CURRENCY RESERVES, FOREIGN DEBT, FOREIGN EXCHANGE, FOREIGN EXCHANGE EARNINGS, FOREIGN EXCHANGE RESERVES, FUTURE, GOLD, GOOD, GOVERNMENT SPENDING, GROWTH RATE, HARD CURRENCY, IMBALANCE, IMBALANCES, IMPORT, IMPORT CONTENT, IMPORT COSTS, IMPORT DEMAND, IMPORT GROWTH, IMPORT PRICES, IMPORTS, INCOME TAX, INDEBTEDNESS, INDEPENDENT MONETARY POLICY, INFLATION, INFLATION EXPECTATIONS, INFLATIONARY PRESSURE, INFLATIONARY PRESSURES, INTEREST, INTEREST INCOME, INTEREST RATES, INVENTORIES, INVESTMENT CLIMATE, INVESTOR, LIABILITIES, LIABILITY, LIQUIDITY, LIQUIDITY CONSTRAINTS, LIQUIDITY MANAGEMENT, LIQUIDITY POSITION, LOAN, LOAN PORTFOLIO, LOAN RECOVERY, LOCAL CURRENCY, MACROECONOMIC STABILITY, MAJOR CURRENCIES, MARKET, MARKET SHARE, MISALIGNMENT, MONETARY AGGREGATES, MONETARY AUTHORITIES, MONETARY POLICY, MONETARY UNIONS, MONEY, NOMINAL DEPRECIATION, NOMINAL EXCHANGE RATE, NON PERFORMING LOAN, NON-PERFORMING LOANS, NPL, OIL PRICES, OTHER CURRENCIES, OUTSTANDING DEBT, OVERVALUATION, PEG, PENSION, PERSONAL INCOME, POLITICAL INSTABILITY, POLITICAL STABILITY, POLITICAL UNCERTAINTY, POLITICAL VOLATILITY, POVERTY, POVERTY REDUCTION, PRICE INCREASES, PRICE MOVEMENTS, PRICE STABILITY, PRIVATE INVESTMENT, PRIVATE INVESTMENTS, PRIVATE SECTOR BANK, PROFIT, PROFITS, PUBLIC DEBT, PUBLIC EXPENDITURE, PUBLIC EXPENDITURES, PUBLIC INVESTMENT, PUBLIC SPENDING, PURCHASING POWER, PURCHASING POWER PARITY, REAL APPRECIATION, REAL DEPRECIATION, REAL EXCHANGE RATE, RECURRENT EXPENDITURES, REGISTRATION FEE, RELATIVE PRICES, REMITTANCE, REMITTANCES, RESERVE, RETAIL PRICE, RETAIL PRICES, RETURN, REVENUE, RISK, RISKS, SAFETY NETS, SECTOR REFORM, SECTOR REFORMS, SHORT-TERM TRADE, SHORTFALLS, SLOWDOWN, STABLE EXCHANGE RATE, STOCK, STRUCTURAL PROBLEMS, STRUCTURAL REFORMS, SUPPLIES, SUPPLY, SUPPLY-SIDE, SURPLUS, T-BILLS, TAX, TAXES, TOTAL CREDIT, TOTAL DEBT, TOTAL EXPORTS, TOTAL IMPORT, TOTAL IMPORTS, TRADABLE GOODS, TRADE BALANCE, TRADE DEFICIT, TRADE STATISTICS, TRANSPORTATION COSTS, TREASURY, UNCERTAINTIES, UNCERTAINTY, UNDERLYING ASSET, UPWARD PRESSURE, WEIGHT, WORLD PRICES,
Online Access:	http://documents.worldbank.org/curated/en/2013/10/18481147/nepal-development-update https://hdl.handle.net/10986/16633
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