The Balance of Payments (BoP) recorded a surplus of Rs 6.05 billion in the first month of this fiscal year – from mid-July to mid-August – compared to a deficit of Rs 24.77 billion in the same month of last fiscal year, according to the central bank.
The BoP has recorded a surplus for the first time since July 2018, due to increase in export volume and reduction in import, though the ballooning trade deficit has not seen any remarkable reduction. The Current Macroeconomic and Financial Situation report of the first month of fiscal year 2019-20 also revealed trade deficit has declined by 11.5 per cent due to higher export earnings and a steep fall in imports, though the transformation in import and export patterns seems ‘unusual’ because the government’s policy adjustments has nothing to do with the change.
“The merchandise imports contracted by 11.5 per cent to Rs 106.73 billion against an increase of 54.3 per cent in the same period of the last fiscal year, whereas merchandise exports rose by 27.7 per cent to Rs 8.84 billion compared to an increase by 3.2 per cent – in the first month of the last fiscal year – largely due to huge quantity export of refined palm oil. Nepal started exporting refined palm oil a few months ago as it imports crude palm oil. “The crude palm oil is refined and then exported again,” according to the traders, who were surprised to find out the increasing export of palm oil in recent months.
However, the government claimed that its policy to discourage import of luxury four-wheelers has bring the imports down. The government has doubled the excise duty on imported vehicles through the budget for the fiscal year 2018-19. The down payment on auto loans has also been jacked up to 50 per cent of the value of the vehicle. The central bank statistics revealed that imports of vehicles and spare parts during the review period fell by 20.3 per cent year-on-year to Rs 6.56 billion.
The reduction in the trade deficit has brought down the country’s current account deficit to Rs 9.37 billion, down from Rs 25.16 billion in the first month of the last fiscal year. “In US dollar terms, current account deficit remained at $84 million in the review period compared to $228.5 million a year ago,” the report reads, adding that the remittance inflows, though marginal, increased by two per cent to Rs 75.40 billion against an increase of 33.1 per cent in the first month of the last fiscal year.
Similarly, the country witnessed an increase in the gross foreign exchange reserves to Rs 1,064.64 billion in mid-August from Rs 1,038.92 billion in mid-July this year.
The BoP has recorded a surplus for the first time since July 2018, due to increase in export volume and reduction in import, though the ballooning trade deficit has not seen any remarkable reduction. The Current Macroeconomic and Financial Situation report of the first month of fiscal year 2019-20 also revealed trade deficit has declined by 11.5 per cent due to higher export earnings and a steep fall in imports, though the transformation in import and export patterns seems ‘unusual’ because the government’s policy adjustments has nothing to do with the change.
“The merchandise imports contracted by 11.5 per cent to Rs 106.73 billion against an increase of 54.3 per cent in the same period of the last fiscal year, whereas merchandise exports rose by 27.7 per cent to Rs 8.84 billion compared to an increase by 3.2 per cent – in the first month of the last fiscal year – largely due to huge quantity export of refined palm oil. Nepal started exporting refined palm oil a few months ago as it imports crude palm oil. “The crude palm oil is refined and then exported again,” according to the traders, who were surprised to find out the increasing export of palm oil in recent months.
However, the government claimed that its policy to discourage import of luxury four-wheelers has bring the imports down. The government has doubled the excise duty on imported vehicles through the budget for the fiscal year 2018-19. The down payment on auto loans has also been jacked up to 50 per cent of the value of the vehicle. The central bank statistics revealed that imports of vehicles and spare parts during the review period fell by 20.3 per cent year-on-year to Rs 6.56 billion.
The reduction in the trade deficit has brought down the country’s current account deficit to Rs 9.37 billion, down from Rs 25.16 billion in the first month of the last fiscal year. “In US dollar terms, current account deficit remained at $84 million in the review period compared to $228.5 million a year ago,” the report reads, adding that the remittance inflows, though marginal, increased by two per cent to Rs 75.40 billion against an increase of 33.1 per cent in the first month of the last fiscal year.
Similarly, the country witnessed an increase in the gross foreign exchange reserves to Rs 1,064.64 billion in mid-August from Rs 1,038.92 billion in mid-July this year.
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