News Roundup: Liquidity Crisis Continues to Haunt Nepal's economy

Roundup of Nepali Economic and Business News for Jan 10-11
By NepaliEconomy.com

Nepali economy continues to roil from liquidity crisis. Deputy Governor of Nepal Rastra Bank Bir Bikram Rayamajhi blamed the country's political instability. The other culprits included (a) ATM machines (b) over-investment. That is an interesting theory. I thought the cause was the mis-management of liquidity needs by financial players. Whatever the reason, NRB is aggressively trying to address the problem by injecting another Rs 10 billion through repos; seems to have worked since it brought down inter-bank rate to high single digit from mid-teens.

Looks like Kalimati Fruits and Vegetables Market Development Board, which controls 80% of vegetable trade in the capital is expanding into Chobhar in Kathmandu and Naubise in Dhading to manage its growth. Nepal's cabinet decided to form Sugarcane and Sugar Development Board to support that sector. Looks like another petroleum crisis is in offing. According to the NOC petroleum imports jumped 50% to 88ML (Rs 4.12 billion) and that also when the country is facing problems with its Balance of Payment.

Janakpur Cigarette Factory continues to have financial problems. Real estate speculation has spread to Dadeldhura. The blame game for the deteriorating economy continues with NC leader Deuba blaming the the Maoists. Adventure tourists continue to pour into the country in 2009 with 130,000 trekkers (+5,000 from 2008) and 7,500 mountaineers (+1,000 2008) visiting the country.

Chinese company Gezhouba Water and Power Group signed a contract to develop 61MW Upper Trishuli 3. The project is slated to start in mid-June and the service would commence in 2011. Bombay Stock Exchange wants to take 10 percent stake in Nepal Stock Exchange but my question is why?