economy in recent years and its subsequent repercussion on the nepalese economy coupled with prevailing political instability, nepal is grappling with the challenges of low economic growth, inflationary pressure and vulnerable external sector. however, on the basis of recent improvements in the domestic political and economic environment along with improvements in world financial market and prospective outlook of the global economy in the year 2014, a positive impact is expected in some major areas of the economy specially tourism, foreign employment, foreign investments and exports. the outlook for 2014 is a higher growth of around 5. 5 percent, compared with less than 4 per cent in 2013, contributed mainly by sound performance of agriculture sector. the consumer price inflation is expected to remain at around 9 percent in 2014. on the external front, exports have increased slower than imports thus further widening the trade deficit to nearly 30 percent of gdp. however, improvements in the service incomes, grants and remittance inflows exceeding 31 per cent of gdp have bis central bankers ’ speeches contributed to a surplus in the current account amounting to 4 per cent of gdp estimated for 2014. the overall balance of payments has registered a surplus for the last several years and is estimated to remain at usd 1. 05 billion in 2014. as a result of the balance of payments surplus, gross foreign exchange reserves of the banking system have reached to us $ 6. 7 billion at april 2014 ; and the reserves of the banking system are sufficient for financing merchandise imports of more than 11 months and merchandise and service imports of more than 10 months. fellow governors and distinguished delegates, in the fiscal sector, a higher rate of growth in resource mobilization relative to government expenditure has resulted in budget surplus. fiscal prudence over the last several years has helped to confine outstanding domestic debt at 12. 9 percent of the gdp. the country remains lowly indebted, as outstanding total public debt, both domestic and foreign together, accounts for little over 31 percent of gdp. due to strong balance of payments situation mostly contributed by high remittance inflows, liquidity in the banking system has remained high for some time now. monetary growth has remained at 18 per cent in april 2014 on point to point basis while most interest rates have come down to single digit. despite high monetary liquidity, growth of credit to the private sector remains within targeted band. further, the degree of financialization is still low and total credit of banks and financial institutions stands at just 63 per cent of gdp. the financial sector

imbalances remain largely in place. a risk that unsustainable global imbalances might re - emerge in the period ahead can therefore not be ruled out. ruling it out would require rigorous policy adjustments in key deficit and surplus economies. the g20 ’ s decision to create a process of mutual assessment of its members ’ macroeconomic and structural policies is fundamental in this respect. to be successful, this process requires that peer surveillance is executed fairly and without complacency, and that the countries and economies concerned have the will and the operational capacity to change their domestic policies accordingly. these are necessary conditions to pave the way for a better functioning of the global economy. the euro area can enter this process from a positive standing, given its medium - term orientation in monetary, fiscal and macroeconomic policies. let me conclude by recalling that macroeconomic imbalances are not only confined to the global level but also appear within the euro area. these imbalances remain a challenge, largely reflecting a lack of adjustment in a number of member states. it remains indispensable that the countries concerned bring their monitoring of cost competitiveness indicators, their structural reforms, and their fiscal consolidation efforts more into line with the principles and rules underlying the functioning of monetary union. this would allow euro area economies to reap fully the macroeconomic benefits of emu.