According to monthly economic status released by Nepal Rastra Bank (NRB), Nepal´s merchandise exports declined by 9.8 percent to Rs 55.37 billion by the end of the eleventh month of 2009/10. [break]Export to both India and other countries shrunk by 9.8 percent and 18.5 percent respectively during period.
Similarly, total imports surged by 35 percent to Rs 343 billion, as the imports from both Indian and other countries rose by around 35 percent during the period. Petroleum products, and vehicles and parts continued to be the largest imports from India while gold was the largest third country imports.
Despite the rise in trade deficit, the balance of payment (BoP) improved gradually from a record high deficit of Rs. 23.53 billion in mid-March to Rs 15.07 billion by mid-June, thank to a surplus seen in the transfer account that includes grants, pension receipts and remittance.
As a result, the level of gross foreign exchange reserve improved to Rs 247.42 billion in mid-June and the amount is sufficient for financing merchandise imports of 8.1 months and merchandise and service imports of 6.8 months.
During the period, the year on year inflation as measured by the consumer price index slowed to 9.6 percent compared to 10 percent recorded a month earlier. The price index of food and beverages group increased by 11.3 percent, whereas the index of non-food and services group rose only by 7.3 percent during the period, NRB said in a statement on Sunday.
Similarly, the salary and wage rate index rose by 13.4 percent in the review period compared to a rise of 21.5 percent recorded in the same period a year ago. The increase in basic salary and allowances in mid-August 2009/10 by the government for civil servants and its simultaneous effect on salary of the private sector contributed to such a rise.
During the period, NRB injected net liquidity amounting to Rs 114 billion from the open market operations of government bonds and Rs 101 billion through net purchase of $1.4 billion from commercial banks.
Likewise, deposit mobilization of the commercial banks increased by 6.3 percent to Rs 584.4 billion while extension of loan and advances of the commercial banks increased by 14.1 percent to Rs 591.8 billion.
Similarly, private sector credit of commercial banks grew by 17.2 percent. Of that, credit to the production sector increased by 12.1 percent in the review period compared to a growth of 14.2 percent in the same period of the previous year.
Sugar, cement, and iron and steel industries witnessed a significant credit expansion under the production sector credit, the release added.
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