Government fails to boost exports, forex reserve drops

Trade deficit widens,
Balance of Payment deficit
Current account deficit
Remittance soar by only 11.1 per cent

The third month of the current fiscal year saw poor export business as the exports fell by 16.8 per cent against an increase of 25.9 per cent in the same period of last year, according to the caurrent macroeconomic situation, based on the first three month's data of the current fiscal year.
Of the total exports, export to India declined by 11.4 per cent against a rise of 3.2 per cent in the same period last fiscal year. Exports to other countries also plummeted by 23.2 per cent as against a rise of 70.6 per cent in the same period of the previous year.
The report attributes the decline in the exports to India to the decline in the exports of readymade garments, zinc sheet, shoes and sandals, thread and marble slab, among others. “Similarly, exports to other countries went down due to the decline in the export of pulses, woolen carpets, readymade garments, tanned skin and readymade leather goods,” the NRN said.
However, imports increased by 30.4 per cent compared with a growth of 32.8 per cent in the corresponding period of the last year. “While imports from India rose by 25.2 per cent compared with a growth of 20.9 per cent, imports from other countries soared by 37 per cent compared to a sharp growth of 51.8 per cent in the same period oi last fiscal year.
Similarly, the overall balance of Payment (BoP) registered a deficit of Rs 19.45 billion in contrast to a surplus of Rs 7.70 billion in the same period of the previous year. “The current account also posted a deficit of Rs 11.38 billion in the first quarter of this fiscal year against a surplus of Rs 4.31 billion in the same period of the last year,” the central bank said in the report. The current account deficit is attributed to the expansion in trade deficit by about 48 per cent and the decline in net income by 15.6 per cent.
Likewise, under transfers, while grants fell by 21 per cent , workers' remittances increased by just 11.1 per cent in comparison to a whopping rise of 67.3 per cent in the same period of the last year.
The gross foreign exchange reserves stood at Rs 249.10 billion in mid-October 2009, a drop by 11 per cent compared to the level as at mid-July 2009. Such reserves rose by 8.5 per cent in the corresponding period of the last year.
“In US dollar term, gross foreign exchange reserves declined by 5.7 per cent to $ 3.38 billion in mid-October 2009. In the same period last year, such reserves had gone down by 3.9 per cent. The current level of reserves is sufficient for financing merchandise imports of 8.5 months and merchandise and service imports of 7.2 months only,” the report said.
However, the budget deficit stood at Rs 90.5 million compared with a deficit of Rs 2.9 billion in the same period last year due to a high growth of revenue collection.
But the total government spending increased by whopping 35.5 per cent to Rs 39.7 billion against a decrease of 2.4 per cent in the same period last year. “Recurrent expenditure increased by 54 per cent to Rs 28.5 billion against decreased by 13.2 per cent in the same quarter last year. However, capital expenditure increased by 73.3 per cent to Rs 1.93 billion in contrast to a decline of 60.8 per cent in the same period last year.