KATHMANDU; The Balance of Payment (BoP) registered a deficit of Rs 21.83 billion in the first seven months of the current fiscal year. According to Nepal Rastra Bank (NRB), the central authority, in the first seven months of 2009-10, the overall BoP recorded a deficit of Rs 21.83 billion against a surplus of Rs 25.68 billion in same period last year. “The current account also registered a deficit of Rs 30.76 billion against a surplus of Rs 20.32 billion in the same period last year,” revealed Nepal Rastra Bank ‘current macroeconomic situation based on the first seven months’ data of 2009-10. The central bank attributed the huge current account deficit to the increase in trade deficit and the slowdown in the growth of remittance inflows in recent months. FOB-based merchandise trade deficit also grew by 62 per cent to Rs 180.20 billion compared with a growth of 27.8 per cent in the same period last year. Gross foreign exchange reserves have also been continuously depleting. “Reserves dropped by 13.5 per cent — Rs 37.77 billion — to Rs 242.22 billion in mid-February 2010 from a level of Rs 279.99 billion as in mid-July 2009 against a growth of 18.4 per cent — Rs 39.17 billion — in the same period last year,” said NRB. “NRB’s reserves declined by 14.8 per cent to Rs 190.96 billion from a level of Rs 224.19 billion a year earlier. Gross foreign exchange reserves in dollar terms declined by 8.7 per cent to $3.27 billion in mid- February 2010 against a growth of 4.4 per cent in the same period last year,” it said attributing it to widening of the current account deficit. “The current level of reserves is sufficient for financing merchandise imports for 7.8 months and merchandise and service imports for 6.7 months.” Commercial banks also are facing liquidity crunch. “The liquid assets of commercial banks declined substantially by 10.4 per cent to Rs 168.5 billion in contrast to a growth of 3.4 per cent in the same period of last year. Of the components of liquid assets, liquid fund declined by 11.6 per cent against an increase of 11.8 per cent in the same period last year,” the central bank added. “A decline in commercial banks’ balance with NRB and balance held abroad accounted for such a contraction of their liquid funds.” Meanwhile, merchandise exports also declined by 9.8 per cent to Rs 35.80 billion against a growth of 18.3 per cent in the same period last year. “Exports to India dropped by 4.6 per cent against a growth of 2.4 per cent in the same period last year and exports to other countries plummeted by 17.7 per cent against a growth of 54.4 per cent in the same period last year,” said the central bank. However, imports, on the other hand, grew by 42.2 per cent to Rs 222.07 billion compared with a growth of 25.8 per cent in the same period of last year. “Imports from India grew by 36.1 per cent compared with a growth of 11.4 per cent in the same period last year and imports from other countries witnessed a growth of 50 per cent compared with a growth of 50.7 per cent in the same period last year. Growing imports and decreasing exports has widened the trade deficit as it is expanded by 59.9 per cent to Rs 186.27 billion. Trade deficit had risen by 28.6 per cent in the same period last year. Trade deficit with India rose by 51.3 per cent compared with a growth of 15.2 per cent in the same period last year. Similarly, trade deficit with other countries expanded by 70.4 per cent compared with a growth of 49.6 per cent in the same period last year. “The export-import ratio dropped to 16.1 per cent from 25.4 per cent a year earlier,” NRB added. Though, the government budget posted a surplus of Rs 8.42 billion compared with a surplus of Rs 8.79 billion in the same period last year, total spending increased by 31.9 per cent to Rs 103.38 billion compared with an increase of only 15.1 per cent in the same period last year.