Trade deficit surpasses remittance income: Remittance up by 47pc to Rs 209.7b

Nepal´s remittance receipts soared to a record 47 percent to Rs 209.7 billion last year, but with a worrisome rise in trade deficit that upset entire remittance income. A statement issued by the Nepal Rastra Bank, highlighting overall economic activities of last year, said total trade deficit of the country reached to Rs 217.32 billion, which was 33.6 percent more than last year´s Rs 162.67 billion. Despite a healthy growth of 13.5 percent in exports, a remarkable rise of 28.2 percent rise in imports, mainly from India, propelled the trade deficit to touch 31.5 percent of the GDP. However, the share of India in Nepal´s total foreign trade came down to 58.2 percent from previous year´s 64.3 percent, according to the report.

During the period, the current account of the balance of payment (BOP) recorded a massive surplus of Rs 41.4 billion compared to a surplus of Rs 23.7 billion recorded last year. "The significant current account surplus last year was largely attributed to the rise of 36.5 percent in net transfers," stated the report. As a result, the overall BOP posted a significant surplus of Rs 37.7 billion in 2008/09, compared to a lower surplus of Rs 29.7 billion in the preceding year, while gross foreign exchange reserves stood at Rs 280 billion, a rise of 31.7 percent compared to last year´s figures. "The current level of reserves is adequate for financing merchandise imports of 11.8 months, and merchandise and service imports of 9.7 months," according to the report. The annual average consumer inflation, during the period, increased to 13.2 percent, compared to an increase of 7.7 percent recorded a year earlier. The annual average wholesale price index increased by 12.8 percent in 2008/09, as compared to a rise of 9.1 percent in the previous year.

Propelled by the increase in the salary of civil servants in mid-September last year, the annual average salary and wage rate index rose by 15.3 percent in 2008/09. It had increased by 9.7 percent in the previous year. About the last year´s fiscal situation, the report highlighted that overall budget deficit remained at Rs 26.2 billion, which was 2.7 percent of the GDP, while the domestic financing of the budget deficit through the issuance of securities amounted to Rs 18.4 billion, which accounted for 2.9 percent of GDP. Despite a low economic growth of 3.9 percent, the volume of domestic credit increased by 24.7 percent in 2008/09 compared to a growth of 21.3 percent a year ago.
Source:Republica