Dr. Khatiwada’s two years of tenure almost to an end; Import rises, export declines and trade deficit rises! The debatable finance minister disappoints general public with the macro-economic annual data!

The central bank published annual macro-economic data for the year of 2018/19. Situation has not improved significantly. The reports present the same old facts that are consistently pointing out the weaker side of the economy. It would be wrong to say that efforts on planning have failed. The constant updates from finance ministry and several events held under Prime Minister KP Sharma Oli at least reflect that the work is being done. However, when plans are drafted yet the reports are disturbing, the only conclusion that can be drawn out is that we are missing the execution phase.

Besides, the welcoming of current financial minister Dr Yuvaraj khatiwada was led with a lot of speculations and debates. However, Dr. Khatiwada vowed to answer all the criticisms with an impressive report. However, the increasing imports, decreasing exports and increasing trade deficit are enough to solely justify Dr. Khatiwada’s failed policies as his tenure as a finance minister is near to end.  

The report covers major details on inflation, trade, services, remittance, BOP position, foreign exchange reserves, fiscal deficit, surplus, expenditure, revenue, money supply, deposit, credit liquidity, interest rates and capital market. However, the statistics point out the rising liabilities and declining assets of the economy.

Can't make it through the whole news? Find the snapshot of data in the table below:

Some of the major highlights from the reports are:

Inflation: Inflation remained at 4.6% in the review month compared to 4.2% of the same period last year.

Import and export: Imports of the nation expanded 13.9% amounting to Rs 1418.54 billion, which had expanded by 25.8% last year. On the other hand, the export has risen only by only 19.4% amounting to Rs 97.11 billion. As a result, trade deficit expanded to 13.5% worth Rs 1321.43 billion in 2018/19. The amount is 38.1% of the GDP. This shows Nepal’s loss of export continued even in the previous year.

Services: Net service deficit remained at Rs 16.52 billion compared to the surplus of Rs 2..27 billion in the same period, last year. For the twelve months of this year, travel payments worth Rs 89.58 billion has gone out of Nepal, out of which Rs 46.32 billion is for education.

This shows an increasing trend of brain-drain and skilled Human capital outflow.

Remittance: Remittance increased 16.5% amounting to Rs 879.27 billion. Remittance had increased by 8.6% in the same period of the previous year.

Current account: It posted a deficit of Rs.265.37 billion in the review period against the deficit of Rs. 247.57 billion in the same period of the previous year.

BOP position: The overall BOP remained at a deficit of Rs. 67.40 billion in the review period compared to a surplus of Rs. 0.96 billion in the same period of the previous year.

FDI inflows: Nepal received FDI worth of Rs 13.07 billion which was Rs.17.51 billion last year in the same period.

The declining FDI inflow might be the result of our political leaders’ coziness with communist economies, which indirectly assaults our relationship with democratic countries like US.

Exchange rate: Nepalese currency vis-à-vis US dollar depreciated 0.02% against 5.9% depreciation of last year in between mid-June and mid-July.

Government expenditure: The government expenditure stood at Rs 1031.15 billion in the twelve months of 2018/19, which was Rs 1066.18 billion in the corresponding period of last year. Since all transactions are done via bank, these figures are based on the banking transactions.

Government revenue: It increased to Rs. 865.55 billion which was Rs. 726.72 billion in the corresponding period previous year.

Banking:

-Deposit collection: Deposits at BFIs increased 18 percent in the review period compared to a growth of 19.2 percent in the corresponding period previous year.

-Credit distribution: Credit to the private sector from BFIs increased 19.4 percent in the review period compared to a growth of 22.5 percent in the corresponding period of the previous year.

-Liquidity management: In the review period, NRB mopped up Rs.100.35 billion liquidity through open market operations. Rs.130.25 billion liquidity was mopped up in the corresponding period of previous year.

-Interbank transactions: The inter-bank transactions among commercial banks stood at Rs.1775.11 billion and among other financial institutions (excluding transactions among commercial banks) amounted to Rs. 209.55 billion.

-Interest rates: The weighted average 91-day Treasury bills rate increased to 4.97 percent from 4.38 percent a year ago. The weighted average inter-bank transaction rate among commercial banks, which was 2.96 percent a year ago, increased to 4.52 percent in the review period.