Nepal Rastra Bank Macro-economic Report
KATHMANDU, MAR 16 -
The country’s balance of payments (BoP) surplus declined by Rs 4.51 billion in the seventh month (mid-January to mid-February) of the current fiscal year.
The BoP surplus fell to Rs 1.59 billion in the seventh month from Rs 6.1 billion in the sixth, according to the Nepal Rastra Bank ( NRB )’s latest macro-economic report.
The BoP situation has been disappointing since the beginning of the fiscal year compared to the last fiscal year, when the country had recorded a record BoP surplus of Rs 127 billion.
In the first month of this fiscal year, the surplus was at Rs 3.85 billion, which slightly decreased to Rs 3.82 billion in the second month. The figure declined by more than Rs 3 billion in the third month to reach Rs 347.3 million. The figure further came down to Rs 140.7 million in the fourth month, before rising to Rs 1.60 billion in the fifth and Rs 6.1 billion in the sixth month.
The central bank said a substantial rise in imports, slow remittance growth and decreased foreign assistance resulted in poor BoP situation. NRB Research Department Chief Min Bahadur Shrestha said the BoP situation deteriorated as a huge amount went outside the country at the end of the seventh month for the payment of import bills.
“However, the situation has recovered in the first week of the eight month,” said Shrestha, admitting, however, that the BoP situation has not been as impressive as that recorded in the last fiscal year.
A BoP surplus means the country has the ability to import goods and services as and when required.
According to the NRB report, imports surged by 24 percent to Rs 316.21 billion, while exports stood at just Rs 44.98 billion posting a slow growth of 5.6 percent, in the first seven months this fiscal year. As a result, the country’s trade deficit also surged by 27.2 percent to Rs 271.22 billion.
Inflation, once again, crossed double-digit levels at 10.1 percent in the seventh month from 9.8 percent in the sixth. Inflation has remained above 10 percent so far this year, except in the sixth month. “Although inflation has usually decreased after the first half before climbing up in the 11th and 12th months, it did not happened this year,” said Shrestha.
Inflation surged mainly due to the rise in prices in the food and beverage group, according to the NRB . Remittance increased by 19.6 percent to Rs 225.06 billion in the review month against a rise of 35.5 percent in the same period last fiscal year. Inflow of foreign aid decreased to Rs 14 billion as of mid-February — down from Rs 27 billion during the same period last fiscal.
The country’s foreign exchange reserves also decreased to Rs 437.85 billion as of the seventh month, compared to Rs 439.46 billion in the same period last fiscal. “Appreciation of the Nepali rupee against the US dollar resulted in the decrease in foreign exchange reserves in domestic currency terms,” said Shrestha.
However, the reserves increased by 3.5 percent in US dollar terms. The current foreign exchange reserves are adequate for importing goods and services for 8.5 months, according to the central bank.
Source: The Kathmandu Post
