Trade deficit swells 24.5pc to Rs 887.88b as imports surgeNepal’s trade deficit swelled 24.5 percent to Rs887.88 billion in the first eight months of the current fiscal year due to increased imports of petroleum products, readymade garments, aircraft spare parts and electrical goods.
Nepal’s trade deficit swelled 24.5 percent to Rs887.88 billion in the first eight months of the current fiscal year due to increased imports of petroleum products, readymade garments, aircraft spare parts and electrical goods.
Nepal Rastra Bank’s report shows that imports jumped 23.8 percent to Rs.949.11 billion in the first eight months of the current fiscal year, up from 22 percent in the same period during the last fiscal year. Imports from India, China and other countries increased 22.0 percent, 37.8 percent and 20.8 percent respectively.
The report said that exports increased 14.6 percent to Rs61.22 billion during the review period against an increase of 10.8 percent a year ago. Exports to India and
other countries increased 26.3 percent and 1.3 percent respectively.
However, exports to China dropped 27.6 percent. Exports of polyester yarn, zinc sheet, jute goods, woollen carpet and pulses have increased. However, exports of cardamom, shoes and sandals, tanned skin and readymade garments dropped in the review period.
The surge in the trade deficit has hit the country’s foreign exchange reserves. According to central bank records, foreign currency reserves dropped to $9.57 billion as of mid-March from $10.08 billion in mid-July. The amount is expected to cover the country’s merchandise imports of 9.1 months while it will be sufficient for 7.9 months for the import of goods and services.
Over the review period, remittance inflows went up 23.4 percent to Rs582.19 billion. Remittance is one of the major sources of finance for the country’s ballooning import bills.
The slow growth of remittance has hit the current account situation and overall balance of payments. The current account deficit plunged to Rs191.13 billion, down Rs24.89 billion during the one-month period from mid-February to mid-March.
The balance of payments account also dropped 23.4 percent to 58.99 billion. It shows that the overall financial outflow of the country heavily outweighed the inflow.
Remittance inflows up 23.4 percent
KATHMANDU: Remittance inflows have increased 23.4 percent to Rs582.19 billion in the first nine months of the current fiscal year, even though the number of workers going abroad for foreign employment decreased sharply.
According to Nepal Rastra Bank, the central monetary authority of the country, the number of Nepali workers (institutional and individual-new and legalised) leaving for foreign employment decreased 38.3 percent.
One of the major reasons behind the surge in remittance despite the fall in the number of people going abroad for employment, according to experts, is the appreciation of the US dollar against the domestic currency. A weak domestic currency means more rupees for the dollar. Nepali migrant workers sent home $8.1 billion in 2018, making it the 19th biggest beneficiary of funds sent by migrants around the world, according to a report recently released by the World Bank.
Remittances were up 16.39 percent year-on-year despite a drop in the number of departures. As a share of the gross domestic product for 2018, Nepal is among the top five recipient smaller economies, along with Tonga, Kyrgyz Republic, Tajikistan and Haiti. A sharp decline in the number of people leaving for Malaysia, one of the most important labour destinations for Nepalis, dragged down departure figures. Nepal has signed a labour agreement with Malaysia, but lack of a mechanism to resume labour migration has stymied departures to this Southeast Asian country. The World Bank said that migrant workers continue to be afflicted by recruitment malpractices. (PR)