Nepal’s balance of payments has shown a significant improvement this year, although still running at a deficit.
The overall balance of payments recorded a deficit of Rs 4.43 billion during the six months of FY 2010/11, an improvement compared to a deficit of Rs. 16.64 billion in the same period last year. The current account registered a deficit of Rs 3.53 billion, compared to a deficit of Rs 25.07 billion in the same period last year. A decline in the trade deficit along with an improvement in the service account contributed to improve the numbers in the current account deficit, according to Nepal Rastra Bank.
An increase in merchandise export and workers’ remittances together with a decline in imports were the factors responsible for the lower deficit in the balance of payments. There has been a rise of 5.9 per cent in merchandise exports to Rs 32.63 billion. However, this month’s exports decreased by 4 per cent compared to the export value last month.
Exports to India have increased by 9.7 per cent while exports to other countries decreased by 0.5 per cent. However, the rate of export decline to other countries has decreased significantly; there was a decline of 20.9 per cent in the same period last year from the year before.
The Nepali currency’s value against the US dollar also appreciated by 3.46 per cent in mid-January 2011 to 71.95, up from Rs. 74.44 in mid-July 2010.
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This is a good sign though the governments have been not successful. It is an initiative from the private sectors as well as the individual’s contribution through earning foreign exchange by the toll of individuals.