Key economic indicators of the country have shown encouraging signs with the balance of payment (BoP), exports and inflation headed in the positive direction in the first month of the current fiscal year. 

According to the macro-economic situation of the country released by the Nepal Rastra Bank (NRB) on Friday, the BoP continued to go up to a surplus of Rs 8.30 billion in the first month, up from Rs 2.93 billion at the end of the last fiscal year.

The monetary policy for the current fiscal year seeks to maintain the BoP surplus at Rs 5 billion. After a two year long deficit, the BoP had turned surplus in the 11th month of the last fiscal year, 2010- 11. The NRB report states that deceleration in trade deficit, improvement in service account such as tourism income and substantial increase in the remittance are main reasons for the substantial BoP rise. The merchandise trade deficit went up by just 3.9 percent to Rs 25.58 billion in the first month this year, against the 32.9 percent during the same period last year.

The service account also registered a surplus of Rs 412.1 billion against the deficit to Rs 1.16 billion in the first month last year. Remittance also rose by 23.6 percent to Rs 21.87 billion, compared to the growth of just 6.5 percent last year. After a long time, remittance grew by more than 20 percent in the first month this year. With these positive developments in trade and remittance, the foreign exchange reserve of the country also grew by 4.3 percent to Rs 283.77 billion as compared to the end of the last fiscal. In foreign trade,

Nepal’s exports grew by 17.9 percent to Rs 6.07 billion in the first month this year against the decline of 16.9 percent during the same period last year.

Inflation has also come down to a relatively comfortable level with it declining to 7.7 percent in the first month. At the end of the last fiscal, inflation was 9.6 percent. After more than two years, inflation came down below the 8 percent mark, thanks to the decline in food and beverage prices due to the single digit growth. The central bank aims to tame the inflation at 7 percent this fiscal year.

Published on: 1 October 2011 | The Kathmandu Post