Forex reserve, exports drop; situation grim
KATHMANDU: The first quarter of the current fiscal year saw poor export business with a fall by 16.8 per cent against an increase of 25.9 per cent in the same period last year, according to the current macroeconomic situation, based on first three month’s data of the current fiscal.
Export to India declined by 11.4 per cent against a rise of 3.2 per cent in the same period last fiscal year. Exports to other countries also plummeted by 23.2 per cent as against a rise of 70.6 per cent in the same period the preceding year.
The report attributes the decline in exports to India to the drop in exports of readymade garments, zinc sheet, footwear, thread and marble slab. “Exports to other countries fell due to decline in export of pulses, woollen carpets, readymade garments, tanned skin and readymade leather goods,” Nepal Rastra Bank (NRB) said.
However, imports increased by 30.4 per cent compared with a growth of 32.8 per cent in the corresponding period of the last year. While imports from India rose by 25.2 per cent compared to a growth of 20.9 per cent, imports from other countries rose by 37 per cent compared to a growth of 51.8 per cent in the same period last fiscal. .
Overall balance of Payment (BoP) registered a deficit of Rs 19.45 billion in contrast to a surplus of Rs 7.70 billion in the same period last fiscal. “The current account also posted a deficit of Rs 11.38 billion in the first quarter of this fiscal year against a surplus of Rs 4.31 billion in the same period of the last year,” the central bank saidt. The current account deficit is attributed to expansion in trade deficit by about 48 per cent and the decline in net income by 15.6 per cent.
Under transfers, while grants fell by 21 per cent, workers’ remittances increased by just 11.1 per cent in comparison to a whopping rise of 67.3 per cent in the same period of last year.
Gross foreign exchange reserves stood at Rs 249.10 billion in mid-October 2009, a drop by 11 per cent compared to the level as at mid-July 2009. Such reserves rose by 8.5 per cent in the corresponding period last year.
“In US dollar terms, gross foreign exchange reserves declined by 5.7 per cent to $3.38 billion in mid-October 2009. In the same period last year, such reserves had gone down by 3.9 per cent. The current level of reserves is sufficient for financing merchandise imports of 8.5 months and merchandise and service imports of 7.2 months only,” the report said.
However, the budget deficit stood at Rs 90.5 million compared with a deficit of Rs 2.9 billion in the same period last year due to a high growth of revenue collection.
The total government spending increased by a whopping 35.5 per cent to Rs 39.7 billion against a decrease of 2.4 per cent in the same period last year. “Recurrent expenditure increased by 54 per cent to Rs 28.5 billion against a decrease of 13.2 per cent in the same quarter last year. Meanwhile, capital expenditure increased by 73.3 per cent to Rs 1.93 billion in contrast to a decline of 60.8 per cent in the same period last year.