Exports plunge, BoP deficit eases, remittance growth slows

Government apathy has taken a toll on exports as the exports plummetted and imports continue to rise in the first month (Shrawan) of this fiscal year.

Exports declined by 17.2 per cent, compared to a rise of 15.6 per cent in the first month (Mid-August) of previous fiscal, according to the current macro economic situation of Nepal Rastra Bank (NRB).

"Of the total exports, exports to India increased by 12.1 per cent compared to a rise of 6.8 per cent in the same month last fiscal whereas exports to other countries declined by a whopping 44.8 per cent against the rise of 25.4 per cent in the same month last fiscal.

Similarly, imports increased by 19.4 per cent, compared to a growth of 19 per cent in the same month of previous fiscal. "Import from India increased by 34.3 per cent compared to a growth of 16.6 per cent in mid-August last year," the central bank said, adding that imports from other countries declined by 2.1 per cent against a significant growth of 22.5 per cent in the same month last fiscal.

The rise in trade deficit and slow growth of remittance also hurt the current account deficit as it posted a deficit of Rs 2.42 billion in the first month of 2010-11 against a surplus of Rs 205.4 million in the same month last year.

The Balance of Payment (BoP) deficit, however, eased to Rs 312.8 million from Rs 8.44 billion in the same month last fiscal year. The remittance income increased by 7.8 per cent -- to Rs 17.92 billion -- compared to a growth of 35.3 per cent in mid August last year. The central bank also stated that the gross foreign exchange reserves stood at Rs 267.85 billion in mid-August 2010, up by 0.5 per cent compared to at mid-July 2010.

Despite a 12.5 per cent rise in the index of the food and beverage group, inflation moderated to a single digit at 9.5 per cent due to low increment in the index of the non-food and services group, according to the central bank and the new series of Consumer Price Index (CPI) that is started from this fiscal year. Had NRB used the old series, inflation would have been at 10.4 per cent."NRB has shifted the base year from 1995-96 to 2005-06," the central bank said, adding that under the new series, the weight assigned to the food and beverage and services groups have been changed. "The weight assigned to the food and beverage group is 46.82 per cent in the new series compared to 53.20 per cent in the 1995-96 survey. Likewise, the weight assigned to the non-food and services group has been changed from 46.80 per cent to 53.18 per cent."

There were 21 urban market centres in the old series, and the basket of 301 goods and services was used but in the new series the basket has 410 goods and services collected from 33 urban and rural market centres.The annual average consumer price inflation had moderated to 10.5 per cent in 2009-10 compared to an increase of 13.2 per cent a fiscal ago.