Nepal Rastra Bank has confirmed the government statement that the economy grew by 6 percent last fiscal year. Agriculture was the mainstay of the growth while the contribution of the beverage, construction and export industries was also significant. Nepal Rastra Bank\'s 12-month (up to mid-July 2000) economic update also reports low inflation (3.3 percent) and a budget deficit of Rs 10.2 billion-a 13.5 percent increase compared to 1998/99. The government spent Rs 55.76 billion in 1999/00, a 1.1 percentage point increase over the previous year\'s rate of growth in government spending of 8.8 percent.

The National Urban Consumer Price Index (NUCPI) recorded a rise of 3.3. percent this July, compared to 11.3 percent in July last year. NRB says inflation was controlled mainly because of a drop in food prices. The NUCPi rose by 3.7 percent in the hills, 3.6 in Kathmandu, and 3 percent in the Tarai.

Exports continued to do well, growing by 44.7 percent to reach Rs 51.6 billion. But imports also went up, by 22.2 percent to Rs 106.9 billion. Among exports, garments recorded the highest increase, while woollen carpets remained more or less at last year\'s level. Pashmina, however, has registered moderate growth. The balance of payments (BOP) recorded a surplus of Rs 13.4 billion in the first 10 months of fiscal year 1999/00. However, due to increasing imports, the current account deficit touched Rs 4.2 billion. The BOP surplus was a result mainly of receipts of miscellaneous capital items, which is a sort of a "catch all" item in the BOP account.

BOP surplus in mid-July stood at Rs 14 billion, the Bank said, as a result of which foreign exchange holdings in the banking system increased by 22.6 percent to Rs 94 billion.