Nepal | January 25, 2021

BoP under pressure as trade deficit widens

Himalayan News Service
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Kathmandu, June 19

Owing to rising imports amid slower exports, country’s trade deficit widened by 19.7 per cent to Rs 1,099.6 billion in the first 10 months of the current fiscal year (mid-July to mid-May), according to statistics of Nepal Rastra Bank (NRB).

The macroeconomic report of the first 10 months of the current fiscal published by the central bank today showed that merchandise imports increased by 19.6 per cent to Rs 1,178.14 billion in the first 10 months of 2018-19 compared to an increase of 21.8 per cent in the same period of the previous year. However, country could export goods worth only Rs 78.53 billion in the same period of this fiscal.

The widening export-import gap has also added pressure to the balance of payments (BoP) situation, as it remained at a deficit of Rs 68.2 billion in the review period compared to a deficit of Rs 18.93 billion in the same period of the previous fiscal year.

Likewise, rising trade imbalance has also affected the current account, as it registered a deficit of Rs 221.4 billion in the review period. Such deficit was Rs 192.05 billion in the same period of the previous year.

In the review period, capital transfer and foreign direct investment (FDI) in Nepal amounted to Rs 13.48 billion and Rs 9.47 billion, respectively.

In the same period of the previous year, capital transfer and FDI amounted to Rs 14.15 billion and Rs 15.51 billion, respectively.
As per NRB’s statistics, workers’ remittance increased by 19.6 per cent to Rs 725.3 billion in the review period compared to an increase of seven per cent in the corresponding period of the previous year. In the US dollar terms, remittances increased 9.3 per cent in the review period compared to 10.3 per cent in the same period of the previous fiscal year.

Meanwhile, the consumer price inflation stood at 5.3 per cent in mid-May 2019 compared to 4.1 per cent a year ago. While the food and beverage inflation stood at 4.7 per cent in mid-May 2019 compared to 3.2 per cent a year ago, the non-food and service inflation stood at 5.8 per cent in mid-May 2019 compared to 4.8 per cent a year ago.


A version of this article appears in print on June 20, 2019 of The Himalayan Times.


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