Nepal’s balance of payments surplus reached an all-time high of Rs 144.85 billion ($1.3 billion) in fiscal 2014-15, mainly due to low growth of import, and increased flow of remittances, among others.
The country has undertaken reforms to improve the position of current account after the BoP crisis of fiscal 2009-10 when the current account deficit stood at Rs 32.35 billion ($307 million) and overall BoP deficit was recorded at Rs 2.62 billion ($24 million), Himalayan News Service reported.
Since then, the country has adopted numerous reforms including curbing the rampant import of gold and other commodities that were being brought into the country with the aim of distorting market prices.
Unveiling its latest Macroeconomic Situation Report, Nepal Rastra Bank has said that the significant surplus in BoP, comfortable reserve position and single digit inflation rate all indicate stable macroeconomic situation.
The average inflation in the last fiscal year was recorded at 7.2%, as against 9.1% in the previous year. However, the central bank has said the slackening of economic activities is a matter of concern in the aftermath of the devastating earthquake. The earthquake that struck in the fourth quarter of the review year has severely affected the economic development of the country.
According to the central bank, remittance inflow in the country surged by 13.6% to Rs 617.28 billion ($5.8 billion) in fiscal 2014-15 when compared to the previous fiscal. The increased inflow of remittances has contributed to the trade gap financing, which stood at Rs 689.37 billion. Remittance inflow picked up significantly after the devastating earthquake of April 25, as foreign migrant workers started to send more funds to their family to rebuild their houses and help recover from the quake-inflicted damages.
The outflow of migrant workers, which had dropped in the aftermath of the earthquake, has started to gradually pick up at present.
Last fiscal, the country imported goods worth Rs 774.68 billion ($7.3 billion) against exports of Rs 85.32 billion ($809.5 million). Export growth was a negative 7.3%, whereas import went up by 8.4% during the review period, when compared to the corresponding period of the previous fiscal year.
The huge gap in export and import has posed numerous challenges to the country’s economic growth. The major challenges for the import-based economy are to create jobs, enhance its productive capacity and lessen the inflationary pressure to move towards higher growth trajectory.
The report also said that the country has foreign exchange reserves worth Rs 702.88 billion. Based on the total imports of previous fiscal year, the foreign exchange reserves is sufficient for financing merchandise imports for 13 months, and merchandise and services imports for 11.2 months.
