KATHMANDU, JUNE 10
The country's foreign exchange continues to be under pressure amid widening trade deficit, although there was a slight improvement in remittance inflow in the first 10 months of the current fiscal, as per the latest macroeconomic update unveiled by the Nepal Rastra Bank today.
During the first 10 months of the current fiscal year (mid-July to mid-May), merchandise exports surged by 59.8 per cent to Rs 173.35 billion compared to an increase of 32.2 per cent in the same period of the previous year. The export growth, however, failed to narrow the trade deficit owing to the increase in imports during the same time, even as the government has restricted the imports of certain non-essential goods.
Imports growth was recorded at 28 per cent to Rs 1,604.65 billion against an increase of 22.3 per cent during the 10 months of the fiscal a year ago. While the export-import ratio rose to 10.8 per cent in review period from 8.6 per cent in corresponding period of previous year, the total trade gap widened by 24.9 per cent to Rs 1,431.30 billion.
As per the broad economic categories, the intermediate and final consumption goods accounted for 47.1 per cent and 52.9 per cent of the total exports respectively, whereas the ratio of capital goods in total exports remained negligible at 0.02 per cent in the review period. In the same period of the previous year, the ratio of intermediate, capital and final consumption goods had stood at 30.6 per cent, 0.4 per cent and 69 per cent of total exports, respectively.
On the imports side, the share of intermediate goods was 52.8 per cent, capital goods 10.4 per cent and final consumption goods at 36.8 per cent in the review period. Such ratios were 53.5 per cent, 11.6 per cent and 34.9 per cent, respectively, in the same period of previous year.
Consequently, the current account remained at a deficit of Rs.547.36 billion in the review period compared to a deficit of Rs 251.29 billion in the same period of the previous year. Likewise, balance of payments (BoP) remained at a deficit of Rs 288.50 billion in the review period against a surplus of Rs 7.75 billion in the same period of the previous year.
The gross foreign exchange reserves slumped 21.1 per cent to $9.28 billion in mid-May 2022 from $11.75 billion at the start of the fiscal. Based on imports of 10 months of the current fiscal, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 7.34 months, and merchandise and services imports of just 6.57 months.
Meanwhile, remittance inflow, which had slowed down since the beginning of current fiscal, saw a slight uptick of 0.2 per cent to Rs 811.79 billion in the review period, compared to a jump of 19.2 per cent in the same period of previous year.
A version of this article appears in the print on June 11, 2022, of The Himalayan Times.
