Exports plunge over six times to imports, BoP still deficit

Country receives Rs 231.72 billion remittance in fiscal year 2009-10

The country witnessed over six times plunge in exports to imports in the last fiscal year.

According to the central banks' annual report, the merchandise exports declined by 9.7 per cent to Rs 61.13 billion in 2009-10, whereas the imports grew by 33.2 per cent to Rs 378.80 billion.

"Such exports had grown by 14.2 per cent to Rs 67.70 billion a fiscal ago," said the Nepal Rastra bank. "In terms of destination, exports to India declined by 2.2 per cent against a growth of 6.4 per cent a fiscal ago," it sai adding that exports to other countries declined by 21.3 per cent against a growth of 28.9 per cent.

Growing imports and decreasing exports has expanded trade deficit by 46.5 per cent to Rs 317.67 billion. "Trade deficit had risen by 33.3 per cent to Rs 216.77 billion a fiscal ago," the NRB said. "Trade deficit with India alone rose by 46.5 per cent and trade deficit with other countries expanded by 46.7 per cent pulling the ratio of export to import to 16.1 per cent in 2009-10 from 23.8 per cent a year ago."

The large deficit in goods and services trade led to a huge current account deficit of Rs 32.35 billion against a surplus of Rs 41.44 billion a fiscal ago. "Despite a huge current account deficit, a rise in the capital account surplus coupled with a rise in trade credit liabilities largely contributed in bringing down the Balance of Payment (BoP) deficit that posted a loss of Rs 2.62 billion against a surplus of Rs 44.76 billion in 2008-09," according to the central bank.

Similarly, the remittance growth has also slowed down by 10.5 per cent to Rs 231.73 billion compared to a significant growth of 47 per cent a fiscal ago.

The government budget deficit, on cash basis, increased by 13.8 per cent to Rs 39.1 billion, such deficit was Rs 34.4 billion in 2008-09,

However, deposits mobilisation of commercial banks has increased by 12.6 per cent (Rs 69 billion) amounting to Rs 618.9 billion as at mid-July 2010. The total deposits had increased by 30.4 per cent (Rs 128.3 billion) in the previous fiscal.

The liquid assets of the commercial banks stood at Rs 211.7 billion as at mid-July 2010. "Of the components of liquid assets, liquid fund increased by 4.9 per cent," it said.

However, the annual average consumer price inflation moderated to 10.5 per cent compared to an increase of 13.2 per cent in 2008-09, the report said atributing the non-food and services group that witnessed a low increment by 4.7 per cent. "Despite a substantial rise of 15.4 per cent in the prices of food and beverages group, the annual average consumer price inflation moderated on account of a low increment in the prices of non-food and services group," the report said.