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Kathmandu Thursday June 14, 2001 Jestha 32, 2058.
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BOP declines but not in the red
Post Report
KATHMANDU, June 13 - Despite the historic decline in trade
deficit and surge in net transfer, the double digit plunge in net service pulled down the
favorable Balance of Payment (BOP) by around 45 per cent to remain at Rs 6.18 billion.
According to Nepal Rastra Bank’s latest statistics on
BOP based on the first seven months of the current fiscal year, trade deficit, one of the
important components of the current account of BOP account, narrowed by 7.6 per cent as
compared to the same period last year and remained at Rs 32.38 billion. Continuing smaller
growth in the import against the robust growth in export, particularly to India, greatly
helped to squeeze the trade deficit.
During the period, the total import rose by just 6.8 per cent
whereas such growth during like period last year was 33.1 per cent. Of the total import,
aid imports, which constitutes 7 per cent showed a majestic growth of 45 per cent, whereas
non-aid imports swelled by just 4.7 per cent. The imports from India increased by 17 per
cent while third country imports recorded a marginal rise of just 3.2 per cent. Such
increments last year were 40.2 and 26.6 per cent respectively.
Similarly, in the export front, with a surge of 25.4 per cent
the total export touched Rs 33.76 billion whereas it was Rs 26.92 billion during
corresponding period last year. Export to India surged by 29.3 per cent while export to
other countries went up by 16.2 per cent.
On the service account of BOP, due to slump of 5.6 per cent
in the gross receipts along with the growth of almost 6 per cent in the payments front,
the net service rose by 12.5 per cent to touch Rs 14.16 billion against Rs 16.18 billion
recorded last year.
Significant declines in the government n.i.e along with
declines in the receipt from other transportation and travel pushed the gross receipt
down. Poor performance of the tourism sector in the recent months is one of the main
reasons behind the slump in the travel receipts. The investment income increased
impressively by almost 30 per cent to touch Rs 2.76 billion. However, with sliding
international interest rate such income in the days ahead might tumble.
On the payment side, despite double-digit decline in other
transportation and government n.i.e, significant rise in travel and investment income shot
up the gross payment on service by 5.9 per cent.
On the transfer front, the net receipt recorded a nominal
increase of 2.9 per cent against 15.4 per cent recorded during the same period last year
and has touched Rs 14.13 billion. The gross private inward transfer, which increased by
30.5 per cent last year continued to maintain healthy growth of 33.6 per cent with Rs 8.11
billion. The ever-rising number of Nepalis going abroad for foreign employment and
consequent increase in remittance is the main cause for such robust growth.
Similarly, the grant receipt of the government, during the
period tumbled by 22 per cent to remain at Rs 5.43 billion, which is only 45 per cent of
the budgetary target of grant for the current fiscal year. In the same way, the Indian
excise refund also dipped by 15.4 per cent. Since the Indian budget for the current year
has sliced the rate of excise duty inside India, such refund in the coming months is more
likely to tumble further.
On the basis of these components, the current account deficit
during the period narrowed by 20.3 per cent to remain at Rs 4.9 billion. Such deficit
during same period last year was Rs 5.13 billion and during last fiscal year it was Rs
8.97 billion.
On the capital account front, the net official capital inflow
increased by almost 20 per cent to touch Rs 5.12 billion. Of the amount, foreign loans
receipt touched Rs 7.50 billion and principal repayment of the previous loans was Rs 2.38
billion.
Similarly, first time in many years amortization of private
capital outstripped the inflow of private foreign loans. With a decline of 95 per cent,
the total private loan inflow, during the period, was just 24.5 million whereas private
amortization was Rs 214 million.
The inflow of foreign capital in the form of foreign direct
investment (FDI) continued to remain nil in the period. However, the repatriation of the
foreign investment, particularly in the hydropower projects as Khimti and Bhotekoshi
soared heavily to touch Rs 33 million from Rs 1.8 million recorded last year.
The Miscellaneous capital item, which includes unidentifiable
items registered a surge of 13.8 per cent to touch Rs 9.97 billion against Rs 8.76 billion
recorded during the same period last year. Such increased inflow largely helped the BOP to
remain positive.
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