Trade deficit surged by 25% during seven months: NRB

KATHMANDU, March 14:

Total trade deficit during the first seven months of Fiscal Year (FY) 2013/14 rose by 25.3 percent to Rs 339.81 billion, according to data released by Nepal Rastra Bank (NRB) on Thursday.

Trade deficit had increased by 27.7 percent in the corresponding period of the last Fiscal Year 2012/13. Trade deficit with India increased by 26 percent during the review period compared to a growth of 30.8 percent in the same period of the previous year while such deficit with other countries rose by 23.9 percent compared to the seven-month period of the current fiscal year.

The interest rate spread of commercial banks stood at 6.76 percent in mid-February 2014, slightly down from the 6.85 percent in the previous month. Net interest rate spread refers to the difference in borrowing and lending rates of financial institutions. The central bank has directed commercial banks to limit the spread rate to 5 percent by the end of the current fiscal year.

According to NRB, year-on-year inflation as measured by the consumer price index increased by 8.8 percent in mid-February 2014, as compared to 10.1 percent in the corresponding period of the previous year.

Overall balance of payment (BOP) recorded a surplus of Rs 95.78 billion during the seven months of FY 2013/14 compared to a surplus of Rs 1.59 billion during the same period in FY 2012/13.

Likewise, the current account posted a surplus of Rs 67.24 billion in the review period compared to a deficit of Rs 1.70 billion in the same period of the previous year.
NRB has attributed the increase in surplus in the current account to a substantial rise in net services, net income and grants as well as high growth in workers´ remittances in the review period.

NRB´s data shows that workers´ remittances surged by 38.6 percent to Rs 311.91 billion compared to an increase of 19.6 percent in the same period of the previous year.

In US dollar terms, remittance inflow increased by 21.5 percent to US$ 3.14 billion during the review period compared to an increase of 8.0 percent in same period of the previous year. On a monthly basis, remittance inflow increased by 4.1 percent in January/February compared to the value of the previous month of the current fiscal year.

Source: Republica