Trade deficit tops Rs 500-billion mark

- POST REPORT, Kathmandu
Trade deficit tops Rs 500-billion mark

Jun 12, 2014-

Nepal’s trade deficit broke the Rs 500 billion barrier during the first 10 months of the fiscal year on surging imports and relatively slow exports.

Nepal Rastra Bank (NRB) said in its latest report on the country’s macro-economy that the trade deficit jumped 28 percent to hit Rs 505.81 billion. The trade deficit recorded a rise of Rs 110 billion over the figure of the same period in the last fiscal year. The deficit then amounted to Rs 395 billion. During the whole of the last fiscal year, the trade deficit was recorded at Rs 480 billion.

The deficit took off skyward due to a massive surge in imports from both India and third countries. According to the NRB report, Nepal’s exports rose 18.6 percent to Rs 75.12 billion while imports leapt 26.7 percent to Rs 580.93 billion.  

India accounts for 67 percent of the country’s total external trade. Due to a massive rise in imports compared to exports, the export-to-import ratio also declined to 12.9 percent from 13.8 percent a year ago.

However, the balance of payments (BoP) surplus has continued to remain on the higher side thanks to increased inflow of remittance.

According to the report, the BoP surplus stood at Rs 115.26 billion during the first 10 months compared to Rs 38.6 billion during the same period last year. Increased service income such as tourism earnings and foreign grants also kept the BoP surplus at a high level. Remittance inflow swelled 29.7 percent to Rs 444.48 billion during the review period.

Meanwhile, foreign exchange reserves rose 22.5 percent to Rs 653.09 billion. The current reserves are sufficient to sustain merchandise and service imports of 9.9 months, according to NRB.

Inflation remained close to the double digits. It was recorded at 9.7 percent in the 10th month compared to 8.7 percent during the corresponding period last year.

Higher price rises in the food and beverage segment contributed to the higher level of inflation this year. According to the report, the price rise in food and beverage stood at 12.9 percent while it was 7 percent for non-food items.

A 31.6 percent jump in vegetable prices contributed massively to the price rise in food items. Prices of tobacco and hard drinks also soared by 25.3 percent and 22.5 percent respectively.

Meanwhile, the government’s capital expenditure during the review period reached Rs 30.66 billion against the annual allocation of Rs 85 billion. The government’s failure to spend resulted in a budget surplus of Rs 47.33 billion.

According to the NRB report, deposit mobilization of banks and financial institutions during the review period grew 11.6 percent (Rs 137.47 billion) while credit grew by 11.9 percent (Rs 136.66 billion).

Loan issue to the private sector during the first 10 months amounted to Rs 134 billion, the same as last year.

Published: 13-06-2014 10:41

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