NRB admits BoP deficit is growing

HIMALAYAN NEWS SERVICE

KATHMANDU: The Balance of Payment (BoP) has registered a deficit of Rs 5.03 billion in the first four months (mid-November) of the current fiscal year, compared to a deficit of Rs 15.78 billion in the same period last year, revealed Nepal Rastra Bank (NRB) data.

According to the micro-economic report of first four months of the current fiscal year released here by the central bank, the year-on-year inflation as measured by the consumer price index stood at 8.4 per cent in mid-November from 9.1 per cent in the same period last year, due to price index of food and beverage group that grew by 13.3 per cent. The current account has also registered a deficit of Rs 1.92 billion, compared to a deficit of Rs 14.78 billion in the same period last year. The BoP deficit has been attributed to decelerating growth of trade deficit and an improvement in the growth rate of transfer income, particularly grants and remittances.

The workers’ remittances have increased by 13.6 per cent to Rs 76.88 billion compared to 6.6 per cent growth in the same period last year. “On a monthly basis, the remittance inflows, however, declined by 16.3 per cent in October-November compared to a month ago of this fiscal year,” the central bank said, adding that under the financial account, foreign direct investment (FDI) of Rs 3.42 billion has been recorded, compared to the level of Rs 744 million in the same period a year ago. However, the report also shows that the import-export gap has not been bridged. Nepal’s import continues to be about six times higher than the exports as exports stand at Rs 21.64 billion against the imports worth Rs 121.35 billion.

Liquidity crunch

KATHMANDU: Around Rs 15 billion revenue has been unspent in the government account, squeezing liquidity in the market,” the central bank Governor Dr Yubaraj Khatiwada, said here today. “Had the budget come on time, the liquidity crunch would have been eased,” he added. The budget was delayed by four months. The macro-economic report shows that there is still a gap between the deposit mobilisation and lending by commercial banks in mid-November. The deposit mobilisation of commercial banks declined by Rs 4.5 billion in the first four months of 2010-11, against a growth of Rs 19 billion in the same period last year due to the diversion of deposits on account of relatively higher interest rate offered by them, it added.