Trade deficit higher than annual budget
KATHMANDU, JULY 12:
Even an amount equal to Nepal’s annual budget for the current fiscal year will not be enough to pay for the country’s trade deficit.
Nepal imported merchandise worth more than Rs 508 billion till the end of the 11th month of the current fiscal year, which is Rs 104 billion more than the total allocated expenditure of the government, as stated in the annual budget for fiscal year 2012-13.
The trade deficit — difference between total imports and total exports — stood at Rs 438.67 billion by mid-June, a surge of 24.5 per cent compared to the same period last year, according to the macroeconomic report of Nepal Rastra Bank. Last year it had gone up by 16.8 per cent compared to the previous year.
During the period, merchandise exports went up by four per cent to Rs 69.93 billion. A year back, exports had increased by 16.3 per cent to Rs 67.21 billion.
The excessive imports in comparison to exports have skewed the import to export ratio — for every unit of export, Nepal is importing 13.7 units.
Despite the appreciation of the dollar exchange rate, Nepali exporters have not been able to increase exports to take advantage. The appreciated dollar has made the Nepali currency cheaper so exporters can earn more than what they earned a month ago from selling their products in a foreign market.
In a month between mid-May and mid-June, the dollar exchange rate has appreciated by about 4.5 per cent against the Nepali currency. But in the same period, total merchandise exports went up by a mere Rs 6 billion, while the import bill went up by Rs 50 billion though the appreciated dollar has made imports expensive.
Despite the widened trade deficit, overall Balance of Payments recorded a surplus of Rs 52.69 billion during 11 months of the fiscal year. The surplus BoP has increased foreign exchange reserve by 16.4 percent to Rs 511.69 billion in mid-June 2013. On the basis of import trend in the 11 months of the current fiscal year, the Nepal Rastra Bank estimates that the current level of reserve is sufficient for financing merchandise imports for 11.3 months, and merchandise and service imports for 9.7 months.
Inflation 8.2 pc
The rate of rise in general price level stayed below double digits in the 11 months of the current fiscal year. According to Nepal Rastra Bank’s inflation data, the year-on-year inflation stood at 8.2 per cent by mid-June. In the corresponding period of the previous year, it stood at 9.9 per cent. The prices of food and beverages increased by 7.7 per cent, whereas non-food and services group prices went up by 8.6 per cent during the review period. Both these indices had increased by 9.9 per cent and 7.8 per cent, respectively, in the corresponding period of the previous year.
Source: THT
