Remittance inflow up, trade deficit widens

Kathmandu, May 12

Remittance inflow to Nepal by the end of the third quarter of the current fiscal year 2020/21 has gone up by 16.5 per cent to Rs. 729.02 billion despite a gradual fall in the number of migrant workers. The remittance inflow had witnessed a fall of 4.2 per cent in the corresponding period the previous fiscal year.

According to the 'Current macroeconomic and financial situation' report of the Nepal Rastra Bank, in the US Dollar terms, remittance inflow increased by 13.0 per cent to 6.19 billion in the first nine months of this fiscal year against a decrease of 4.9 per cent in the same period the previous year.

However, the number of Nepali workers (institutional and individual-new and legalised) taking approval for foreign employment decreased by 66.7 per cent during the review period. It had increased by 10.2 per cent in the same period the previous year.

Likewise, the number of Nepali workers (renewed entry) taking approval for foreign employment fell by 55.7 per cent during the review period.

 

Trade deficit up

Total trade deficit increased by 12.5 per cent to Rs.1016.63 billion in the first nine months of 2020/21. Such deficit had decreased by 8.9 per cent in the same period the previous year.

Export-import ratio went up by 8.5 per cent during the review period from 8.0 per cent in the same period the previous year.

The report stated that the merchandise  exports   increased by  20.2  per cent  to Rs.94.77 billion compared to an increase of 12.9 per cent  in  the  same  period  the  previous year.

Destination-wise, exports to India and other countries increased by 23.5 per cent   and   14.5 per cent respectively whereas exports to China decreased by 27.3 per cent.

Export of the soybean oil, cardamom,   jute   goods,   polyester   yarn   and threads and   pashmina,   among   others,   increased whereas exports of palm oil, pulses, zinc sheet, wire and cattle feed decreased.

Similarly, merchandise imports increased by 13.1 per cent to Rs.1111.40 billion against a decrease of 7.5 per cent a year ago.

Destination-wise, imports from India and China increased by 20.3 per cent and 7.7 per cent respectively whereas imports from other countries decreased by 2.3 per cent.

Import of transport equipment and parts, crude soybean oil, M.S. billet, rice, telecommunication equipment and parts increased whereas imports of aircraft spare parts, petroleum products, crude palm oil, video television and parts, and silver decreased in the review period.

 

Current account deficit widened

The current account remained at a deficit of Rs.207.41 billion during the review period compared to a deficit of Rs.126.09 billion in the same period the previous year.

During the review period, capital transfer increased by 10.7 per cent to Rs.12.86 billion and net foreign direct investment (FDI) decreased by 25.0 per cent to Rs.12.35 billion.

In the same period the previous year, capital transfer and net FDI amounted to Rs.11.62 billion and Rs.16.48 billion respectively.

Balance of Payments (BOP) registered a surplus of Rs.42.54 billion in the review period as compared to a surplus of Rs.36.61 billion in the same period the previous year.

Gross foreign exchange reserves increased by 2.2 per cent to Rs.1433.27 billion in mid-April 2021 from Rs.1401.84 billion in mid-July 2020. Deposit in banks and financial institutions increased by 13.7 per cent during the review period compared to a growth of 9.7 per cent in the corresponding period the previous year.

Published in The Rising Nepal daily on 13 May 2021.