NRB Macroeconomic Report: BoP makes impressive recovery

KATHMANDU, JAN 13 -

After sliding for four straight months, the balance of payment (BoP) situation has made a remarkable improvement—increasing by Rs 1.45 billion—in the fifth month of the current fiscal year.  According to Nepal Rastra Bank’s (NRB) latest macroeconomic report, Nepal’s BoP surplus reached Rs 1.6 billion from Rs 140.7 million in the fourth month.

The BoP surplus has been on a downward trend since the start of the fiscal year. The surplus amounted to Rs 3.85 billion in the first month and Rs 3.82 billion in the second month. The BoP surplus had shrunk by over Rs 3 billion in the third month to Rs 347.3 million.

There has been some improvement in foreign exchange reserve too, rising to Rs 445.59 billion in the fifth month from Rs 442.33 billion in the fourth month.

The current level of reserves is sufficient for financing merchandise imports of 10.1 months and merchandise and service imports of 8.6 months, according to the central bank. According to NRB report, trade deficit has expanded by 30.3 percent to reach Rs 192.52 billion in the first five-month. The trade deficit widened due to rise in the trade deficit with India, which was increased by 33.7 percent during the period.

The country’s exports have surged by 9.4 percent to Rs 32.88 billion, mainly due to expansion in exports to third countries. The exports to India, country’s largest trading partner, surged by 4.2 percent whereas exports to third countries increased by 19.3 percent.

Likewise, imports have increased by 28.8 percent to Rs 225.39 billion during the period largely due to sharp rise in imports from India and third countries.

Meanwhile, inflation continued to remain in the double digits for the fifth consecutive month of the current fiscal, reaching 10.4 percent compared to 7.5 percent year on year. The index of food and beverage group increased by 8.7 percent whereas non-food and services group increased by 11.8 percent during the review period, according to the NRB report.

The report says banks and financial institutions (BFIs) collected deposits of Rs 41.39 billion in the first five months of this year whereas their lending grew by Rs 83.38 billion. The deposit mobilisation of commercial banks, development banks and finance companies over that period increased by 3.2 percent, 6.9 percent and 5.3 percent respectively.