Trade deficit jumps to Rs 170 billion; BOP situation improves

KATHMANDU, Nov 18:

Country´s trade deficit continued to widen in the first quarter of the current fiscal year with import growing by leap and bounds and exports reporting negative growth.

Data unveiled by Nepal Rastra Bank (NRB) on Monday shows trade deficit grew by 29.5 percent to Rs 169.72 billion over the first three months of the current fiscal year. In the same period last year, trade deficit had increased by 13.2 percent.

According to NRB, merchandise imports climbed by 24.7 percent to Rs 192.25 billion in the three-month period, while merchandise exports dropped by 2.3 percent to Rs 22.53 billion. Merchandise import and export had increased by 12.9 percent and 11.3 percent, respectively, in the first quarter of 2013/14. The country had imported merchandise goods worth Rs 154.12 billion and exported goods worth Rs 23.07 billion in the corresponding period of 2013/14.

As usual, India became the largest trading partner of the country in the review quarter, followed by China and other countries. Trade deficit with India and China increased by 28.4 and 37.8 percent, respectively, during the review period. Such deficit had increased by 15.7 percent in case of India and decreased by 10.9 percent in case of China in the same period of the previous fiscal year. Trade deficit with other countries grew by 28.1 percent in the review period.

Country´s balance of payment (BoP) situation, however, has improved. BoP recorded a surplus of Rs 2.96 billion in the review quarter, according to the report.

Though this is a marked improvement in the BoP situation, which was in the deficit of Rs 10.5 billion in the first two months, the surplus amount is still low in comparison to the corresponding period of the last fiscal year 2013/14. The BoP surplus at the end of first quarter of 2013/14 had stood at Rs 52.74 billion.

Balance of payments refers to an accounting record of all monetary transactions between a country and the rest of the world which include payments for the country´s exports and imports of goods, services, financial capital, and financial transfers.

Likewise, the gross foreign exchange reserves has also increased by 2.1 percent to Rs. 679.40 billion as at mid-October 2014 from Rs 665.41 billion as at mid-July 2014. Such reserves had increased by 13.8 percent to Rs 606.82 billion in the same period of the previous fiscal year.

In what might be termed good news for the government, inflation increased only by 7.5 percent in the quarter ending mid-October, compared to a rise of 8.4 percent in the corresponding period of the last fiscal year.

Source: Republica