Trade deficit widens

Despite the massive surplus in balance of payments (BoP) account, trade deficit has further deepened in the first nine months of the current fiscal year.

Total trade deficit during the first nine months of the fiscal year 2011-12 went up by 18.4 per cent to Rs 284.6 billion. Trade deficit had increased by 2.3 per cent to Rs 240.08 billion in the same period of the last fiscal year, according to the macroeconomic report published by Nepal Rastra Bank (NRB).

Trade deficit with India increased by 12 per cent which had gone up by 28.3 per cent in the same period of the last fiscal year. Likewise, trade deficit with other countries increased by 31.9 per cent against a drop by 28.3 per cent in the same period of the last fiscal year.

Though, the increased import has led to a reduction in the export to import ratio to 16.3 per cent during the review period from 16.6 per cent a year ago, merchandise exports rose by 15.9 per cent to Rs 55.24 billion compared to a growth of five per cent to Rs 47.66 billion in the same period of the last fiscal year.

On the other hand, merchandise imports increased by 18 per cent to Rs 339.84 billion. Such imports had increased by 2.8 per cent to Rs 287.97 billion during the same period of the previous fiscal year, the report added.

However, the worsening trade prospect was not reflected in the BoP situation which is surplus by Rs 91.37 billion during the nine months. The overall BoP was deficit by Rs 14.94 billion in the same period last fiscal year.

The central bank attributed substantial rise in the growth of remittance and foreign grants accompanied with the improvement in the service account for the substantial surplus in the current account
The current account registered a surplus of Rs 41.94 billion compared to a deficit of Rs 15.20 billion in the same period of the last fiscal year. Net service account witnessed a surplus of Rs 12.48 billion in contrast to a deficit of Rs 8.24 billion in the same period of the last fiscal year.

Under services, tourism income rose by 28.9 per cent which had declined by 17.7 per cent in the same period of the last fiscal year. Likewise, net transfer account registered a growth of 33.1 per cent to Rs 294.50 billion compared to that of a year ago, thanks to a 36.5 per cent growth in workers' remittance to Rs 248.18 billion in the nine months.