Trade deficit narrows by 12.5 per cent to Rs 362.29bn

KATHMANDU, DECEMBER 21

Increase in export and decrease in import caused the country’s trade deficit to narrow down by 12.5 per cent to Rs 362.29 billion in the four months (mid-July to mid-November) of fiscal year 2020-21, the latest macroeconomic update report of Nepal Rastra Bank has revealed.

Such deficit had contracted by 8.9 per cent in the same period of the previous fiscal year.

As per the central bank’s report unveiled today, merchandise exports increased 10.8 per cent to Rs 40.20 billion in the four months of this fiscal, compared to an increase of 23.9 per cent in the same period of the previous year.

At the same time, merchandise imports decreased 10.6 per cent to Rs 402.49 billion compared to a decrease of 6.9 per cent a year ago.

The export-import ratio increased to 10 per cent in the review period from 8.1 per cent in the same period of the previous year, as per the NRB report.

In the US dollar terms, the gross foreign exchange reserves increased 8.6 per cent to Rs 12.65 billion in mid-November from Rs 11.65 billion in mid-July.

Based on the imports of four months of 2020-21, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 15.4 months, and merchandise and services imports of 14 months.

Meanwhile, net services income remained at a deficit of Rs 15.64 billion in the review period against a deficit of Rs 2.49 billion in the same period of the previous year.

Under the service account, travel income decreased 93.1 per cent to Rs 1.88 billion in the review period, which was Rs 27.14 billion in the same period of the previous year. Also, travel payments decreased 68.6 per cent to Rs 8.03 billion, including Rs 6.80 billion for education. Such payments were Rs 25.59 billion and Rs 12.11 billion, respectively, in the corresponding period of the previous year.

Remittance inflows increased 11.2 per cent to Rs 337.72 billion in the review period against a decrease of 2.8 per cent in the same period of last fiscal.

The balance of payments (BoP) registered a surplus of Rs 110.65 billion in the review period. Such surplus was Rs 27.29 billion in the same period of the previous year.

The current account remained at a surplus of Rs 20.46 billion in the review period against a deficit of Rs 34.12 billion in the same period of the previous year.

In the review period, capital transfer decreased 9.3 per cent to Rs 4.15 billion and net foreign direct investment decreased 23.9 per cent to Rs 3.75 billion. In the same period of the previous year, capital transfer and net FDI amounted to Rs 4.57 billion and Rs 4.92 billion, respectively.

Fiscal position of the government, based on banking transactions, remained at a deficit of Rs 10.23 billion in the review period compared to a surplus of Rs 65.92 billion in the corresponding period of the previous year, the NRB report shows.