Himalayan News Service

Kathmandu, March 3:

Gross foreign exchange reserve during the six months of fiscal year 2003-04 has reached Rs 122.2 billion, thanks to an increased inflow of remittances.

The current reserve is enough to cover merchandise imports for 11.3 months and service imports for 9.5 months, states a Nepal Rastra bank (NRB) report on current macro-economic situation of Nepal.

However, due to the higher growth of imports in comparison to exports, the trade deficit widened by 4.3 per cent to Rs 39.3 billion compared to the growth of 26.3 per cent last year. Trade deficit with India increased by 7.6 per cent compared to the substantial rise of 104.4 per cent last year, while trade gap with other countries widened by 24.3 per cent during the period.

Total exports increased by 8.6 per cent to Rs 25.5 billion in contrast to a decline of 9.4 per cent last year. Exports to India, witnessing a reversal, increasing by 13.5 per cent to Rs 14.7 billion, while exports to the other countries rose slowly at 2.5 per cent to Rs 10.8 billion.

Exports of woollen carpets, pulses, jewellery, handicraft and tanned skin to other countries increased while that of pashmina and readymade garments declined during the period.

In contrast, total imports increased by 12 per cent to Rs 64.8 billion. Imports from India increased by 9.9 per cent, while imports from the other countries went up by 14.8 per cent. Based on the cash flow data, total expenditure increased by 5.2 per cent to Rs 32 billion. Of the total expenditure, regular expenditure increased by 3.9 per cent to Rs 25.5 billion, while development expenditure went up by 7.3 per cent to Rs 4.8 billion. The freeze account also marked an increment of 22.1 per cent to Rs1.6 billion.

During the period, total non-debt resources increased by 14.7 per cent to Rs 30 billion. Revenues went up by 13.6 per cent to Rs 26.6 billion. Foreign grants also went up substantially to Rs 2.1 billion as against just Rs 747.8 million mobilised last year. However, non-budgetary receipts declined by 34.5 per cent to Rs 1 billion.

The report further states that the National Urban Consumer Price Index, on a point-to-point basis, increased by five per cent. On the point-to-point basis, the index of food and beverages group increased by 4.1 per cent, while the prices of sugar and related products declined during the period.

The report further states that the current account recorded a surplus of Rs 12.8 billion due to increased inflow of remittances. Despite a substantial deficit in the financial account, the BOP remained favourable by Rs 1 billion.

On the basis of the monetary statistics for the first six months, the BOP recorded a surplus of Rs 8.6 billion in comparison to a deficit of Rs 1.5 billion last year.