Kathmandu, May 10 :

With a continuous drop in exports, trade deficit widened further to cross Rs 74.7 billion during the first eight months of the current fiscal year 2006-07, despite a slowdown in imports.

Total exports plummeted by 6.6 per cent to Rs 39.98 billion in contrast to an increase of 13.3 per cent in the correspo-nding period of 2005-06. Of the total exports, export to India declined by 6.4 per cent during the period as against a significant increase of 20.5 per cent in the same period last year.

Likewise, exports to other countries fell by seven per cent in comparison to a decline of 0.1 per cent in preceding year. Responsible factors for poor performance of export sector were lack of industrial security, long hours of load shedding and Tarai bandh states Nepal Rastra Bank (NRB) in a current macro-economic report.

Total imports fell by 1.1 per cent in the first eight months of 2006-07 in contrast to a significant growth of 26.3 per cent in the same period last year. Nepal had imported various goods worth Rs 116.01 billion last year, while this year’s imports stood at Rs 114.69 billion. While imports from India incr-eased by 2.3 per cent in the review period compared to a hig-her growth of 31.7 per cent last year, imports from other countries posted a decline of 6.4 per cent in contrast to a growth of 18.7 per cent a year earlier.

The decline in exports to India was ascribed to the decline in the exports of polyester ya-rn, cattle-feed, plastic utensils, GI pipe and readymade garments. Likewise, the decline in exports to other countries was due to the decline in the export of readymade garments, pashmina, woollen carpets, handicrafts and tanned skin.

The first eight months of 2006-07 saw a mixed result on government’s budgetary expenditure. On cash basis, the total expenditure increased by 15 per cent to Rs 60.65 billion compared to a growth of 13.9 per cent.

Of the total government expenditure, recurrent expenditure increased by 14.6 per cent to Rs 42.87 billion compared to an increase of 12.8 per cent in the preceding year. However, total capital expenditure rose by 12.6 per cent to Rs 9.12 billion compared to a higher gro-wth of 41.2 per cent in corresponding period last year. Tarai unrest and absence of elected representatives in local bodies accounted for such a deceleration in capital expenditure, says the central bank report.

In the first eight months of 2006-07, total revenue grew by 16.4 per cent to Rs 48.04 billion compared to a growth of 4.6 per cent in the same period last year. Adjustment in customs and excise rates through this year’s budget, improvement in customs valuation, increased tax compliance, a rise in corporate income tax and VAT as well as an increase in some non-tax revenue contributed to such an acceleration in revenue in the review period.

The year-on-year consumer price inflation rose by 6.2 per cent in mid-March 2007 compared to 7.7 per cent in the corresponding month of last year. A significant increase in the prices of pulses (17.9 per cent), vegetables and fruits (18.4 per cent), spices (26.8 per cent), meat, fish and eggs (12 per cent), oil and ghee (10.9 per cent), and milk and milk products (6.9 per cent) contributed to the inflationary pressure on the food and beverage group.

The disturbed-supply system due to Terai bandh led to a rise in prices of this group further. However, the pressure was eased on the non-food and services group as the base effect of the hike in petroleum prices in March 2006 ended in the review period.

In comparison to mid-July 2006, gross foreign exchange reserves rose by 7.2 per cent.