KATHMANDU, July 24
The country’s balance of payments (BoP) surplus jumped by 16.1 per cent in the first 11 months of the last fiscal year, as the impact of a huge trade deficit was offset by foreign cash transfers.
With a Rs 127.20 billion surplus in BoP — total financial transaction conducted by a country with other nations — the country’s foreign exchange reserve expanded by 14.2 per cent to $7.92 billion (Rs 809.48 billion) in the 11-month period of fiscal 2014-15.
The current level of reserves is sufficient for financing merchandise imports of 13.1 months, says the latest Macroeconomic Report of Nepal Rastra Bank.
The country’s BoP surplus widened in the 11-month period even as the country’s trade deficit stood at an alarming level of
Rs 612.86 billion — which is a tad lower than the government’s annual budget of Rs 618.10 billion of last fiscal.
The country’s trade deficit has been continuously widening over the years because of the country’s inability to raise exports.
Merchandise exports fell by 4.8 per cent to Rs 77.83 billion in the first 11 months of last fiscal, as exports to India, China and other countries fell.
Exports to India declined by 6.3 per cent in the review period in contrast to a rise of 17.5 per cent in the same period of the previous year. Exports to China also shrunk by 0.8 per cent in the review period as against a rise of 14.2 per cent in the same period of the previous year.
Similarly, exports to other countries fell by 1.8 per cent in the review period in contrast to an increase of 15.9 per cent in the same period of the previous year.
While overall exports fell, merchandise imports in the 11-month period went up by seven per cent to Rs 690.70 billion.
Because of the mismatch in exports and imports, the country’s trade deficit widened by 8.7 per cent in the first 11 months of last fiscal year.
The widening trade deficit, however, did not have an impact on current account due to a rise in foreign cash transfers.
In the review period, inflow of money sent by Nepalis working abroad increased by 12.4 per cent to Rs 551.74 billion. Also, expenditure of foreign tourists went up 15.8 per cent to Rs 50.05 billion.
Because of these inflows, the current account — the difference between exports and imports of goods and services plus net income from abroad and net current transfers — registered a surplus of Rs 95.29 billion. In the same period in the previous fiscal, current account surplus had stood at Rs 77.84 billion.
A version of this article appears in print on July 25, 2015 of The Himalayan Times.