Still more, current account that was recorded at surplus for quite some time too posted a deficit of Rs 646.1 million during the first two months of this fiscal year 2012/13.[break]
Nepal Rastra Bank (NRB) that released the latest macro-economic report on Friday said the deficit in current account surfaced mainly because country´s imports rose sharply and net service income declined by 217 percent, compared to the same period last year.
Despite weakening of Nepali currency, which raised exports income in rupee terms, Nepal´s outbound trade grew at the slower rate of 12 percent and touched Rs 13.96 billion during the first two months of 2012/13. Exports in the same period last year had grown by 18 percent.
NRB attributed this slowed growth to drop in export of key items like readymade garment, pashmina and zinc sheet. “Exports of readymade garment to third country valued at meager Rs 632.2 million during the period, while it was well over Rs 1.07 billion,” reads its report.
Likewise, exports of pashmina, another prime Nepali export to third country, dropped by 45 percent and landed at Rs 338.7 million. Zinc sheet, one of the largest export items to India, also declined by 47 percent and landed to Rs 544.2 million during the period.
Moreover, data showed country´s exports to India declined by 0.4 percent during the period and landed at Rs 8 billion. Exports to third countries, despite drop of garment and pashmina, rose by 34 percent to almost Rs 6 billion. NRB attributed this growth to rise in exports of pulses (by 45 percent) and leather goods, among others.
Imports, on the other hand, rose by almost 30 percent and touched Rs 90.64 billion during the first two months of 2012/13. As usual, rise in import of petroleum product (by 25 percent), MS Billet (by 122 percent), vehicles and spare parts (by 22.5 percent) and rice (by 848 percent) caused imports from India to swell by 31.5 percent.
“Imports from third countries too rose by almost 27,” states the NRB report.
Sharper rise in imports, compared to slowed exports growth, fuelled country´s deficit, widening it by 33.5 percent to Rs 76.68 billion.
Good news though is that during the period, Nepal received Rs 65.38 billion worth of remittances, which is a massive 38 percent rise over that received in the same period last year. While this kept the consumption going, inflow of foreign direct investment also stood at Rs 932.6 million during the period.
Thanks to such a sharp rise in remittances, country´s foreign currency reserve grew by 1.3 percent and crossed over Rs 445 billion, that is $ 5.10 billion, during the period. “The reserve is enough to finance imports for 8.5 months,” adds the NRB report.
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