The outflow of money surpassed by Rs 67.4 billion in the last fiscal year 2018-19 due to a rise in imports that increased by 13.9 per cent to Rs 1,418.54 billion, according to a central bank report.
According to the annual macroeconomic statistics of the last fiscal year 2018-19 published by the central bank today, the balance of payments (BoP) remained a deficit of Rs 67.4 billion compared to a surplus of Rs 960 million a fiscal year ago.
The imports increased by 13.9 per cent to Rs 1,418.54 billion in the last fiscal year, whereas merchandise exports increased by 19.4 per cent to Rs 97.11 billion in the fiscal year 2018-19 widening the total trade deficit by 13.5 per cent to Rs 1,321.43 billion. The trade deficit stands at 38.1 per cent of the country’s total gross domestic product (GDP).
The central bank data revealed that the current account also registered a deficit of Rs 265.37 billion in the last fiscal year. “The current account deficit stood at Rs 247.57 billion a fiscal year ago in 2017-18,” the report reads, adding that the gross foreign exchange reserves decreased to Rs 1,038.92 billion as on mid-July 2019 from Rs 1,102.59 billion in the previous year. “Of the total foreign exchange reserves, reserves held by the central bank decreased to Rs 902.44 billion in mid-July 2019 from Rs 989.40 billion a year ago.”
The decision of reference price for the customs has helped capital flight, said an economist without wanting to be named. “The finance minister Dr Yuba Raj Khatiwada claimed that the reference price will help check revenue leakage,” he said, adding that the commodity price is very unstable in the international market and the notorious traders got an opportunity for capital flight. “The decision of reference price cost the country dearly as it has put pressure on foreign exchange reserve.”
However, reserves held by banks and financial institutions – except central bank – increased to Rs 136.47 billion in mid-July 2019 from Rs 113.19 billion a year ago.
“The domestic credit expanded by 20.1 per cent in the last fiscal year compared to a growth of 26.5 per cent a fiscal year ago,” the macroeconomic report reads, adding that claims on private sector increased 19.1 per cent compared to a growth of 22.3 per cent a fiscal year ago. “
Though, the number of Nepali migrant workers – institutional and individual-new and legalised – decreased by 32.6 per cent in the last fiscal year against a decrease by 9.3 per cent a fiscal year ago, the remittance inflows increased by 16.5 per cent to Rs 879.27 billion.
The central bank macroeconomic report also claims that inflation remained at 4.6 per cent on an annual average in the last fiscal year. “Though the Nepali economy has been growing in the last three fiscal years at a higher pace than the average growth rate of the last decade, some of the macroeconomic indicators, particularly related to the external sector, are still worsening,” the report adds.
While the government has been harping about the above-average growth, economists claim that the current remittance-led and consumption-based growth is not sustainable. “The economy is estimated to have grown by 7.1 per cent in the last fiscal year 2018-19.”
Apart from boosting exports to improve the BoP position and bettering the growth, economists call for creating a favorable environment to attract private sector investment, particularly foreign direct investment (FDI), to make the growth investment and productivity driven. Despite the government's efforts to bring in foreign investment, the FDI inflow fell to Rs 13.07 billion in the last fiscal year 2018-19 compared to Rs 17.51 billion FDI a fiscal year ago in 2017-18.
Even the private sector investment – within the country – has been hit by shortage of loanable funds in the banking sector resulting to the lending rate going up to 16 per cent, which is very high.
According to the annual macroeconomic statistics of the last fiscal year 2018-19 published by the central bank today, the balance of payments (BoP) remained a deficit of Rs 67.4 billion compared to a surplus of Rs 960 million a fiscal year ago.
The imports increased by 13.9 per cent to Rs 1,418.54 billion in the last fiscal year, whereas merchandise exports increased by 19.4 per cent to Rs 97.11 billion in the fiscal year 2018-19 widening the total trade deficit by 13.5 per cent to Rs 1,321.43 billion. The trade deficit stands at 38.1 per cent of the country’s total gross domestic product (GDP).
The central bank data revealed that the current account also registered a deficit of Rs 265.37 billion in the last fiscal year. “The current account deficit stood at Rs 247.57 billion a fiscal year ago in 2017-18,” the report reads, adding that the gross foreign exchange reserves decreased to Rs 1,038.92 billion as on mid-July 2019 from Rs 1,102.59 billion in the previous year. “Of the total foreign exchange reserves, reserves held by the central bank decreased to Rs 902.44 billion in mid-July 2019 from Rs 989.40 billion a year ago.”
The decision of reference price for the customs has helped capital flight, said an economist without wanting to be named. “The finance minister Dr Yuba Raj Khatiwada claimed that the reference price will help check revenue leakage,” he said, adding that the commodity price is very unstable in the international market and the notorious traders got an opportunity for capital flight. “The decision of reference price cost the country dearly as it has put pressure on foreign exchange reserve.”
However, reserves held by banks and financial institutions – except central bank – increased to Rs 136.47 billion in mid-July 2019 from Rs 113.19 billion a year ago.
“The domestic credit expanded by 20.1 per cent in the last fiscal year compared to a growth of 26.5 per cent a fiscal year ago,” the macroeconomic report reads, adding that claims on private sector increased 19.1 per cent compared to a growth of 22.3 per cent a fiscal year ago. “
Though, the number of Nepali migrant workers – institutional and individual-new and legalised – decreased by 32.6 per cent in the last fiscal year against a decrease by 9.3 per cent a fiscal year ago, the remittance inflows increased by 16.5 per cent to Rs 879.27 billion.
The central bank macroeconomic report also claims that inflation remained at 4.6 per cent on an annual average in the last fiscal year. “Though the Nepali economy has been growing in the last three fiscal years at a higher pace than the average growth rate of the last decade, some of the macroeconomic indicators, particularly related to the external sector, are still worsening,” the report adds.
While the government has been harping about the above-average growth, economists claim that the current remittance-led and consumption-based growth is not sustainable. “The economy is estimated to have grown by 7.1 per cent in the last fiscal year 2018-19.”
Apart from boosting exports to improve the BoP position and bettering the growth, economists call for creating a favorable environment to attract private sector investment, particularly foreign direct investment (FDI), to make the growth investment and productivity driven. Despite the government's efforts to bring in foreign investment, the FDI inflow fell to Rs 13.07 billion in the last fiscal year 2018-19 compared to Rs 17.51 billion FDI a fiscal year ago in 2017-18.
Even the private sector investment – within the country – has been hit by shortage of loanable funds in the banking sector resulting to the lending rate going up to 16 per cent, which is very high.
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