Nepal Records Surplus BoP for the first time after 12 Months

Y-o-Y Inflation stands at 6.95 percent

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Nepal Records Surplus BoP for the first time after 12 Months

September 25: The country has recorded a surplus Balance of Payments for the first time after 12 months. The BoP, which was in deficit through the last fiscal year, recorded a surplus of Rs 6.5 billion in the first month of the current fiscal year,  according to the latest report on the current macroeconomic situation of the country published by Nepal Rastra Bank.

According to the central bank, BoP was at a deficit of Rs 24.77 billion during last year.

The report also showed an improvement on the current account this year although it is still at a deficit of Rs Rs.9.37 billion against Rs.25.16 billion deficit during the same period of the previous year.

Executive Director of Nepal Rastra Bank Dr Gunakar Bhatta said that the BoP remained in surplus this year because of the increase in export and a curb in import of goods.

He further said that another contributing factor for the surplus BoP is the high amount of foreign loan taken by the government.

According to Bhatta, the government has acquired loan of Rs 2.9 billion during the review period of last fiscal year while it has already received loan of Rs 12.34 billion this year.

“The massive foreign loan taken by the government is also one of the reasons for surplus BoP,” he said.

Bhatta further said that it is quite challenging to keep the BoP on surplus. According to him, it is possible not to let the BoP slip into deficit if there is a proper check on imports and at the same time export is increased.

Likewise, foreign direct investment has also increased during the review period.

In the review period, capital transfer and foreign direct investment (FDI) in Nepal amounted to Rs 1.03 billion and Rs 1.44 billion respectively. In the same period of the previous year, capital transfer and FDI amounted to Rs 1.70 billion and Rs 295.7 million respectively.

Inflow of remittance increased 2.0 percent to Rs75.40 billion in the review period compared to an increase of 33.1 percent in the same period of the previous year.

According to the report, the year-on-year consumer price inflation stood at 6.95 percent in mid-August 2019 compared to 4.19 percent a year ago. Food and beverage inflation stood at 8.02 percent and non-food and service inflation stood at 6.12 percent in the review month.

 

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