Trade deficit crosses Rs 104.11 billion

Kathmandu, July 4:

Due to a continuous rise in imports vis-à-vis exports, Nepal’s trade deficit continues to widen and crossed Rs 104.11 billion during the first 10 months of the current fiscal year.

However, the data shows that it has slowed down from 24.5 per cent in 2005-06 to 16.5 per cent this year. The total trade deficit had crossed Rs 89.37 billion in 2005-06.

According to the current macroeconomic report released by Nepal Rastra Bank (NRB), “total exports fell by 0.3 per cent in the first 10 months, while the imports registered a growth of 10.5 per cent. The total exports and imports in the corresponding period of the previous fiscal year had risen by 3.3 per cent and 16 per cent respectively.”

Nepal exported various goods worth over Rs 49.64 billion during the period, whereas the total imports stood at Rs 153.75 billion. The central bank has cited a number of factors including deteriorating security condition, frequent bandhs, lack of investment-friendly climate and power shortages for a continuous fall in exports.

While exports to India rose by just one per cent compared to a higher gro-wth of 8 per cent in the same period in 2005-06, exports to other countries declined by 3.1 per cent.

The rise in exports of thread, textiles, zinc sheet, MS pipe and juice was responsible for the increase in exports to India. On the other hand, the decline in exports to other countries emanated from the fall in the export of readymade garments, pashmina, woolen carpets and handicrafts.

During the period, imports from India increa-sed by 11.4 per cent compared to a higher growth of 20.2 per cent last year. Likewise, imports from other countries rose by nine per cent in comparison to a growth of 9.9 per cent a year earlier.

The overall balance of payments (BoP) recorded a surplus of Rs 6.87 billion during the period. Of this, Rs 4.72 billion is the current account surplus and Rs 2.15 billion is ascribed to the capital and financial account.

In the government budgetary operations, the total expenditure, on a cash basis, increased by 12.6 per cent to Rs 79.11 billion. Such expenditure had increased by 15.1 per cent in the corresponding period of the previous year. Lower than expected growth in capital expenditure and decline in principal repayment have accounted for the deceleration of total expenditure in the review period.

During the period, total recurrent expenditure went up by 13.6 per cent to Rs.53.15 billion compared to a growth of 8.4 per cent in the previous year. Increase in the allowance of government employees, increasing expenditure on Maoist army management, expanded parliament management, reestablishment of the police posts, compensation to the victims of conflicts are some of the mainly responsible expenses for the acceleration of recurrent expenditure in the review period.

Capital expenditure went up by 35 per cent to Rs 15.01 billion in the review period compared to an increase of 35.7 per cent in the same period last fiscal year. During the period, total revenue rose by 22.5 per cent to Rs 63.71 billion in contrast to a decline of 0.2 per cent in the same period last year.