Oil import bill down 5.95pc in first six months

KATHMANDU:

The country’s oil import bill fell by 5.95 per cent in the first half of the current fiscal year, helping country to bridge bulging trade deficit.

The country footed a bill of Rs 57.58 billion to import petroleum products from India and other nations in the six-month period from mid-July to mid-January, as against Rs 61.22 billion in the same period last fiscal, shows latest Macroeconomic Report of Nepal Rastra Bank.

Country’s oil import bill fell despite hike in volume of oil imports because of huge drop in petroleum prices in the international market.

Brent crude, the oil that Nepal uses, was trading at as high as $108.60 per barrel in the international market at the beginning of this fiscal year. This price has now come down to $57.39 per barrel.

This fall in oil price has not only helped country contain inflation but reduced import growth rate and narrowed down trade deficit. (Imports of petroleum products contribute to over 15 per cent of country’s total merchandise imports.)

The country’s total merchandise imports went up by 13.3 per cent to Rs 378.22 billion in the six-month period. In the same period last fiscal, imports had gone up by 23.1 per cent to Rs 333.91 billion.

This level of import growth rate could have helped the country drastically bridge the trade gap had exports growth rate stood at last year’s level. But total merchandise exports took a 3.9 per cent dip to

Rs 43.39 billion in first six months of the current fiscal year. In the same period last year, exports had gone up by 15 per cent to Rs 45.14 billion.

Total exports fell in the first half because of 8.1 per cent drop in shipment of goods to India.

“Exports to India decreased mainly due to the decrease in the exports of cardamom, zinc sheet, copper wire rod and jute goods, among others,” says the Macroeconomic Report.

Because of this drop, the country’s trade deficit expanded by 16 per cent to Rs 334.83 billion in the six-month period.

The pace at which trade deficit widened in the six-month period, however, was slower than 24.4 per cent in the same period last fiscal.

Despite recording a trade deficit of over Rs 300 billion, the country managed to post a current account surplus of Rs 13.65 billion in the first half of this fiscal. Current account is difference between exports and imports of goods and services plus net income from abroad and net current transfers.

The current account surplus recorded in the six-month period, however, is lower than Rs 55.02 billion registered in the same period last fiscal.

“The low level of surplus in the current account was primarily due to a high growth of merchandise and services imports, decrease in grants and slow growth of workers’ remittances in the review period,” says the Macroeconomic Report.

In the first half, Nepalis working abroad sent home Rs 275.96 billion, up 3.9 per cent than in the same period last fiscal. In the six-month period last fiscal, remittance income had gone up by 34.4 per cent.

Similarly, country received foreign cash grants of only Rs 15.01 billion in first six months of the current fiscal year, as against Rs 21.56 billion in the same period last year.

Despite slower growth in remittance income and fall in grants, the country managed to post a balance of payments (BoP) surplus of Rs 34.26 billion in the first six months of 2014-15. BoP reflects total financial transaction conducted by a country with other nations. BoP surplus indicates that flow of money into the country is greater than outflow of money.

Source: THT