Kathmandu Post

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Balance of Payments surplus reaches Rs 34 billion

KATHMANDU, NOV 30 -


With an impressive growth in remittance inflow and income from tourism, the country’s balance of payments (BoP) has recorded a surplus of almost Rs 34 billion.

The Nepal Rastra Bank (NRB)’s latest macro-economic report shows a surplus of Rs 33.89 billion in the country’s BoP. Top NRB officials attribute this surplus to healthy growth in remittance, tourism income and improvement in reimbursement of foreign aid.

BoP refers to Nepal’s monetary balance between the amount that goes out of the country and the amount that comes in. The BoP situation headed towards a positive direction in the 11th month of the last fiscal year after being in deficit for two straight years.

According to NRB, the current account, which witnessed a deficit for the last two years, also registered a surplus of Rs. 13.82 billion. The acceleration in the growth of remittance along with the improvement in the service account has been attributed to the surplus in the current account. After experiencing a deficit for a long, the service account also turned positive mainly due to a significant rise in tourism income.

As per the NRB report, remittance inflow surged by a healthy 28.3 percent to Rs 75.88 billion in first three

months. Banks have been reporting

a massive growth in remittance flow, lately, due to weak Nepali rupee against US dollar. NRB Deputy Governor Maha Prasad Adhikari termed the improvement in BoP situation ‘very good for

the economy’.

According to Finance Ministry officials, rise in reimbursement by donors and increased transactions by national and international NGOs also contributed to the surplus in BoP. Sluggish import growth and modest growth in export also led to a comfortable BoP

situation.

With a huge surplus in BoP and healthy growth in remittance inflow, the country’s gross foreign exchange reserves increased by 19.5 percent to Rs 325.03 billion in mid-October 2011 from Rs 272.10 billion as of mid-July 2011. The forex reserves had gone down by 4.4 percent to Rs. 257.06 billion in the same period last year.

Likewise, the gross foreign exchange reserves in US dollar terms increased by 8.5 percent to $4.16 billion as of  mid-October 2011. The reserves had increased by 0.6 percent in the same period last year. The current level of the reserves, according to the central bank, is sufficient for financing merchandise import for 9.9 months and merchandise and service import for 8.6 months.

According to the NRB report, the country’s export increased by 6.9 percent to Rs 18.04 billion in the first quarter of the current fiscal year, against 6.2 percent in the same period last year.

The report says exports to India went up by 12.1 percent, while that to other countries declined by 1.3 percent in the first three months of 2011-12. The increase in exports to India, according to NRB, was mainly due to the increment in exports of jute goods, zinc sheet, textiles, copper wire rod, wire and cardamom. Decline in exports of pulses, handicraft goods, herbs and readymade leather goods hit third-country exports.

According to the NRB report, Nepal’s import increased by 7.8 percent in the first quarter to Rs 100.26 billion, thanks to the rise in import from third countries. Interestingly, import from India, the country’s largest trading partner, rose by only 0.6 percent against the last year’s 32.7 percent.

According to NRB, import from other countries increased by 23.4 percent in contrast 27.4 percent drop in the same period last year. The first quarter saw increase in import of petroleum products, medicine, agricultural equipments and parts, readymade garments and coal, among others, from India, while the import of gold, crude soybean oil, chemical fertilizers, electrical goods, and other machinery and parts from other countries decreased.

The country’s total trade deficit in the first three months of FY 2011-12 went up by 8.0 percent to Rs 82.23 billion. The trade deficit had gone up by 4.9 percent in the same period last year. According to NRB, the trade deficit with India declined by 1.6 percent during over the period compared to a growth of 37.7 percent in the same period last year. However, the trade deficit with other countries increased by 30.5 percent in contrast to a decline of 32.4 percent in the same period a year ago.

 


Posted on: 2011-12-01 10:47

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