NRB: Remittance up despite global blues

NRB: Remittance up despite global blues
ekantipur, 2-Feb-09

Despite a global recession, the inflow of remittances increased by 65.8 percent during the first five months of the current fiscal year, according to a report on the latest micro-economic situation of the country released by Nepal Rastra Bank (NRB) on Monday.

The surge in remittances contributed to a surplus in the current account of Rs. 12.3 billion from a deficit of Rs. 7.5 billion during the same period last year. The growth of remittance flow was 17.6 percent last year.

However, recent moves by Malaysia and the United Arab Emirates (U.A.E.) to discourage foreign workers might affect remittances in the future. Remittances account for 17.4 percent of Nepal's Gross Domestic Product (GDP).

The balance of payments also recorded a significant surplus of Rs. 22.8 billion during the first five months of the current fiscal year compared to a surplus of Rs. 31.1 million during the same period last year.

According to NRB, the country's exports also grew by 30.9 percent during the period against a decline of 4.4 percent during the same period last year. Exports to India grew by just 15.1 percent compared to a 64 percent rise in third country exports.

An increase in the export of readymade garments, shoes and sandals, tooth paste, G.I. pipes and noodles was primarily responsible for the increase in exports to India. A surge in the export of pulses, woollen carpets, pashmina, readymade garments and herbs accounted for the tremendous growth in third country exports.

Likewise, imports also grew by 32.6 percent this year against an increase of 8.2 percent last year. Imports from India were up by 17.1 percent compared to 57.2 percent for third country imports. Inflation rose to 14.1 percent this year against 5.7 percent last year, according to the central bank.

During the five-month period under review, the government budget showed a surplus of Rs. 2.2 billion against a deficit of Rs. 9.8 billion previously. An increase in revenue and foreign cash grants accounted for the budget surplus during the period.

Domestic credit was up 6.5 percent compared to a growth of 10.4 percent last year. NRB stated that low government expenditure contributed to the slowdown in the growth of domestic credit in the review period.

The growth of private sector credit also went down marginally during the first five months of the current fiscal year compared to the corresponding period last year. Credit to the private sector increased by 10.1 percent this year against 10.9 percent last year, according to NRB.