BoP deficit eases to Rs 15.07 billion, remittance Rs 211.17 billion

The Balance of Payment (BoP) deficit recorded after 25 years eased to Rs 15.07 billion in the first 11 months of 2009-10 from 10 months' Rs 17.36 billion, according to the central bank. "It was at a surplus of Rs 39.06 billion in the same period last year," it said.

"The current account also posted a deficit of Rs 34.59 billion against a surplus of Rs 39.58 billion in the same period a fiscal year ago," the central bank's report said adding that "Despite a huge current account deficit, a rise in the capital account surplus coupled with an inflow of huge trade credit liabilities largely contributed to bring down the BoP deficit."

The workers' remittances grew by 11.8 per cent to Rs 211.17 billion compared with a significant growth of 51 per cent in the sme period of the 2008-09.

Similarly, the exports plunged to less than seven times to Rs 55.37 billion as the imports posted a whopping growth to Rs 342.99 billion. "Nepal had exported worth Rs 61.40 billion and imported worth Rs 253.60 billion in the same period a fiscal ago.

However, the gross foreign exchange reserve improved a little to Rs 247.42 billion in mid-June 2010 from a level of Rs 235.75 billion in mid-April, according to the NRB that saw its reserves improving gradually to Rs 196.84 billion in mid-June 2010 from the level of Rs 182.84 billion in mid-April 2010.

The gross foreign exchange reserves in dollar terms however dropped further to $3.32 billion in mid-June from a level of $3.33 billion in mid-April. NRB attributed the fall to depreciation of Nepali currency against the US dollar. "Based on the trend of import in the eleven months of the current fiscal year, the current level of reserves is sufficient for financing merchandise imports of 8.1 months and merchandise and service imports of 6.8 months," it said.

Similarly, the government budget deficit on cash basis stood at Rs 6.69 billion compared with a surplus of Rs 1.67 billion in the same period of 2008-09. "The total government spending has however increased by 29.1 per cent to Rs 188.65 billion compared with an increase of 24.6 per cent in the same period of the previous year due to a high growth in recurrent as well as capital expenditure."

Though the price index of food and beverages group increased by 11.3 per cent and non-food and services group rose only by 7.3 per cent, the year on year inflation as measured by the consumer price index moderated to 9.6 per cent in mid-June compared with 12.3 per cent increase in the same period a year ago.

Similarly, the liquid assets of the commercial banks stood at Rs 178.5 billion in mid-June. "Of the components of liquid assets, liquid fund declined by 8.2 per cent due to a decline in commercial banks' balance with NRB as well as balance held abroad," the report said.

On account of the higher credit disbursement relative to deposit mobilisation, the credit-deposit ratio increased to 89 per cent in mid-June 2010 from 81.2 per cent in mid-July 2009. "Similarly, the liquidity-deposit ratio declined to 30.6 per cent in mid-June from 34.2 per cent in mid-July 2009," the central bank said adding that deposits mobilisation of commercial banks increased by 6.3 per cent (Rs 34.6 billion) amounting to Rs 584.4 billion in mid-June.