BoP deficit drops
Nepal’s balance of payments (BoP) situation has improved a bit with the deficit coming down to Rs 11.67 billion in the 10th month of the fiscal year from Rs 14.79 billion in the previous month. Despite the deceleration in the growth of the trade deficit, the overall BoP position has not improved as expected, said a report of Nepal Rastra Bank (NRB).
The NRB report shows that an imbalance between deposit mobilization and lending by commercial banks has continued.
Deposit mobilization of commercial banks has increased Rs 23.72 billion while loans and advances swelled Rs 63.62 billion during the review period. Deposits had climbed Rs 39.14 billion and loans and advances had increased Rs 69.53 billion in the corresponding period last year.
Inflation that remained in the double digits in the last four months has fallen to a single digit, according to NRB. The year-to-year inflation stood at 9.5 percent in the 10th month.
According to NRB, prices of the food and beverage group surged 16.0 percent while the non-food and services group increased 4.2 percent. Among food items, prices of vegetables registered the highest increment of 48.3 percent while prices of fruits and spices increased 28.3 percent and 18.7 percent respectively. According to the NRB report, prices of clothing and footwear increased 15.4 percent during the period, the highest in the non-food and services group.
The government’s capital expenditure has remained low with only Rs 44.36 billion being spent in the first 10 months. Delays in the announcement of the annual budget and approval of programmes and the procurement process besides slow processing of tenders for infrastructure development are the major factors behind the low growth rate of capital expenditure.
The government’s revenue collection has remained on the slow side with revenue growing 14.7 percent in the period against a growth of 25.4 percent last year. According to NRB, the impact of the delayed budget, slow growth in capital expenditure and a decline in the import growth rate hit the overall revenue collection. Among the various revenue headings, growths in value added tax (VAT), excise duty and customs revenue have remained slow this year.
Of the total revenue, value added tax (VAT) grew 17.8 percent to Rs 50.48 billion as of mid-May. Revenue from VAT had increased 37.5 percent in the corresponding period last year. Lack of expansion of industrial products, ineffective billing system, rampant use of fake VAT bills and under-invoicing practices have been blamed for the low growth rate in VAT.
The status of customs revenue is much worse. Customs revenue rose by only 4.2 percent against an increment of 33.8 percent last year.
Collections from income tax and non-tax revenue registered a growth in the first 10 months compared to last year. Income tax revenue increased 28.6 percent while non-tax revenue increased 22.1 percent. A decline in imports of high excise tax yielding vehicles hit the growth rate of excise revenue, according to NRB.
According to the NRB report, foreign direct investment (FDI) has increased to Rs 5.74 billion against Rs 2.41 billion last year.
Thanks to a growth in exports and a decline in import growth, the trade deficit has widened by only 4.6 percent against 49 percent last year. The NRB report shows that exports increased 5.5 percent while import growth was recorded at 4.8 percent in the first 10 months.
Posted on: 2011-06-22 09:28
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