Trade Deficit down 24.9% in the second month of fiscal year 2077/78; Inflation at 4.52%
The central bank published macro-economic data based on the first two month's data of FY 2077/78. 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 the capital market.
Some of the major highlights from the reports are:
Inflation: The y-o-y consumer price inflation stood at 4.52% in the second month of 2020/21 compared to 6.16% a year ago. Food and beverage inflation stood at 6.91% whereas non-food and service inflation stood at 2.68% in the review month. However, the price of vegetables, pulses, and legumes rose significantly in the review month compared to a year ago.
Import and export: Exports to India increased by 18.7% whereas exports to China and other countries decreased by 54.9% and 2.9% respectively.
Exports of medicine (ayurvedic), noodles, herbs, jute goods, and pashmina, among others, increased whereas exports of palm oil, pulses, juice, textiles, and zinc sheet, among others, decreased in the review period.
The total trade deficit narrowed down 24.9% to Rs.158.40 billion in two months of 2020/21. Such deficit had contracted 3.1% in the corresponding period of the previous year. The export-import ratio increased to 11.4% in the review period from 8.1% in the corresponding period of the previous year.
Services: Net services income remained at a deficit of Rs. 5.45 billion in the review period compared to a deficit of Rs. 5.80 billion in the same period of the previous year.
Under the service account, travel income decreased by 90.5% to Rs. 973.7 million in the review period which was Rs. 10.21 billion in the same period of the previous year.
Remittance: Remittance inflows increased by 8.1 % to Rs. 165.73 billion in the review period against a decrease of 0.6% in the same period of the previous year.
Current account: The current account remained at a surplus of Rs.26.07 billion in the review period against a deficit of Rs. 22.69 billion in the same period of the previous year.
BOP position: Balance of Payments (BOP) registered a surplus of Rs.67.63 billion in the review period. Such surplus was Rs.8.83 billion in the same period of the previous year.
Exchange rate: Nepalese currency vis-à-vis the US Dollar appreciated 2.4 percent in mid-Septemeber 2020 from mid-July 2020. It had depreciated 4.3 percent in the same period of the previous year.
The buying exchange rate per US Dollar stood at Rs.117.54 in mid-September 2020 compared to Rs.120.37 in mid-July 2020.
Government expenditure: In the review period, the total expenditure of the federal government based on banking transactions (excluding direct payments and unrealized cheques) stood at Rs. 53.55 billion. Such expenditure was Rs. 43.12 billion in the corresponding period of the previous year.
Government revenue: In the review period, revenue collection based on banking transactions (including the amount to be transferred to provincial and local governments) stood at Rs.105.37 billion. Total government revenue was Rs.141.51 billion in the corresponding period of the previous year.
Fiscal Deficit/ Surplus: Based on banking transactions, the government's fiscal position remained at a surplus of Rs. 50.37 billion in the review period compared to a surplus of Rs.105.05 billion in the corresponding period of the previous year.
Banking:
-Deposit collection: Deposits at Banks and Financial Institutions (BFIs) increased 0.5% in the review period compared to a growth of 0.4% in the corresponding period of the previous year. On a y-o-y basis, deposits at BFIs expanded 18.7% in mid-September 2020.
-Credit distribution: Private sector credit from BFIs increased by 0.5% in the review period compared to a growth of 2.5% in the corresponding period of the previous year. On a y-o-y basis, credit to the private sector from BFIs increased by 9.8% in mid-September 2020.
-Liquidity management: In the review period, NRB mopped up Rs. 60 billion liquidity through reverse repo auction on a cumulative basis. Rs.30 billion liquidity was mopped up in the corresponding period of the previous year. Rs. 34.02 billion liquidity was injected through a standing liquidity facility (SLF) in the corresponding period of the previous year.
In the review period, NRB also injected liquidity of Rs.85.27 billion through the net purchase of USD 715.1 million from the foreign exchange market. Liquidity of Rs.52.46 billion was injected through the net purchase of USD 460.7 million in the corresponding period of the previous year.
-Interest rates: The average base rate of commercial banks decreased to 7.83% in the second month of 2020/21 from 9.53% a year ago. Weighted average deposit rate and lending rate of commercial banks stood at 5.61% and 10.18% respectively in the review month. Such rates were 6.80% and 11.97% respectively a year ago.
