Imports exert pressure on current account
Kathmandu, November 25
The significant rise in imports has been exerting pressure on the country’s current account as imports in the first three months of the ongoing fiscal year have gone up by 43.6 per cent to Rs.373.59 billion as compared to a rise of 17.9 per cent in the same period of the previous fiscal year, as per Nepal Rastra Bank (NRB).
The current account registered a deficit of Rs 81.96 billion in the review period against a deficit of Rs 25.52 billion recorded during the same period in the previous year. As a result, the overall balance of payments (BoP) remained at a deficit of Rs 35.42 billion in the review period in contrast to a surplus of Rs 4.27 billion in the same period of the previous year.
Primarily, the import of commodities like petroleum products, aircraft and spare parts, MS billet, vehicles and spare parts and other machinery items, among others has increased significantly in the review period resulting in the widening trade deficit, as per the NRB’s Macroeconomic Report for the first three months of the current fiscal.
However, foreign exchange reserves increased by 1.7 per cent to Rs 1,120.92 billion as at mid-October, from Rs 1,102.59 billion as at mid-July.
On the other hand, the consumer price inflation increased by 4.7 per cent in mid-October this fiscal year from 3.1 per cent during the corresponding period of last fiscal year. “Increase in the price of food, vegetables, meat, fish, alcoholic drinks, as well as housing and utilities contributed to the rise in overall inflation in the review period,” states the report.
While inflation of food and beverages group rose to 3.4 per cent in mid-October this year from a level of 0.5 per cent a year ago, non-food and service inflation increased to 5.7 per cent in mid-October this year from 5.2 per cent a year ago.
Meanwhile, the workers’ remittances have increased by 37.3 per cent to Rs 242.17 billion in the review period compared to a growth of 2.6 per cent in the same period of last fiscal year.
In the review period, Nepal received capital transfer of Rs 3.55 billion and foreign direct investment (FDI) of Rs 1.54
billion. During the same period last year, capital transfer and FDI inflows amounted to Rs 4.96 billion and Rs 6.07 billion, respectively.