--By TC Correspondent

 

The budget deficit figure has put the country’s economy in the red with the overall deficit figure crossing five percent of Gross Domestic Product (GDP), according to the preliminary estimation of Nepal Rastra Bank (NRB).

 

The estimated budget deficit for the current fiscal year 2013-14 is at Rs 87.70 billion which is equal to 5.15 percent of GDP. 

 

The budget deficit of FY 2000-01 was at 5.9 percent which declined to 1.5 percent in FY 2001-02. The country’s economic situation is considered bad if the budget deficit goes above 5 percent.

 

Previously in the FY 2008-09, the budget deficit was 5.04 per cent of GDP. 

 

Experts opine that the rise in budget deficit will hamper the effort to achieve targeted 5.5 percent economic growth and fuel inflation. 

 

According to economist Prof Dr Bishwambher Pyakuryal, increasing devaluation of local currency and unstable political situation have been constantly hampering the productivity of the country which has fuelled the budget deficit. 

 

The deficit will increase further as there is no good prospect of employment opportunities and rise in industrial productivity, he added. Prof Dr Madan Kumar Dahal also holds similar opinions. The increasing fiscal deficit is difficult to manage for Nepal’s economy which is based on external loans, he said. 

 

Nepal Rastra bank has reduced Cash Reserve Ratio (CRR) but not increased the Credit-Deposit Ratio (CD Ratio) which might ultimately slacken an investment environment, said Dr Dahal who is also the Chairman of Mega Bank Ltd.