Inflow of remittance from Nepali workers in foreign countries shot up by 80.7 percent during the first three months of the current fiscal year, according to a central bank report released Sunday. Remittance growth in the first quarter of the previous fiscal year was 17.2 percent, Nepal Rastra Bank (NRB) said.The big jump in remittance also helped boost the country's overall balance of payments (BOP) during the period pushing it into positive territory after a long time, the report said.

According to the quarterly report on the current macroeconomic situation of the country, Nepal's BoP recovered from a deficit of Rs. 5.6 billion recorded in the first quarter of Fiscal Year 2007/08 to a surplus of Rs. 7.7 billion in the first three months of Fiscal Year 2008/09.

Similarly exports witnessed an upsurge of 27.1 percent during the first quarter of the current fiscal year against a mere 4.3 percent rise in the corresponding period last year.NRB said that exports to both India and third countries swelled this year. It said exports to India during the period increased by 10.1 percent against a 0.6 percent rise recorded during the corresponding months last year. Likewise, exports to countries other than India swelled by 58.3 percent compared to an increase of 11.9 percent last year.

Exports to India increased due to a rise in export of readymade garments, shoes and sandals, polyester yarn, copper wire rods and G.I. pipes. An upsurge in export of pulses, woolen carpets, pashmina, herbs and tanned skin mainly contributed to an increase in overall exports to third countries.

Meanwhile the country imported 30.6 percent more in the first quarter this year. In the corresponding period last year, imports had gone up 13.1 percent.Imports from India went up 19.3 percent in the review period, compared to a 13.7 percent rise in the corresponding period last year.

NRB attributed the growth to rise in petroleum imports and higher import of vehicles and spare parts, cold rolled steel in coil, hot rolled sheet in coil and cement among other from India.On the other hand imports from other countries jumped 48.5 percent in the three months while it had grown just 12.1 percent during the corresponding period last year. NRB said higher inflow gold, MS billet, telecom equipment and parts, computers and related products, and polythene granules among others from these countries contributed to the big surge.

During the first three months of the current fiscal year, total government spending decreased by 2.4 percent to Rs. 29.3 billion compared to an increase of 53.7 percent in the corresponding period last year.
The government's failure to make both recurrent and capital expenditures at significant levels resulted in the decline of overall expenditures. Given the relatively huge size of the budget, spending money has remained a big challenge for the government.

Recurrent expenditures increased by 13.2 percent to Rs. 18.5 billion compared to an increase of 35.6 percent in the corresponding period last year. The government's budget deficit stood at Rs. 2.9 billion compared to a deficit of Rs. 9.4 billion in the corresponding period last year.

At the same time revenue collection saw an increase of 16 percent during the review period to Rs. 22.3 billion. The Ministry of Finance has said on Nov. 21 that revenue collection increased by 35.5 percent between mid-October and mid-November this year. It said Rs 32.97 billion had been collected in revenue in the first four months of this fiscal year. The government aims to increase revenue by 31.7 percent to meet its target of Rs. 142 billion, set for this year.

Domestic credit claims by non-financial government enterprises increased by 6.2 percent over the period compared to a decline of 17.3 percent in the corresponding period last year.Higher credit claims by government enterprises like Janakpur Cigarette Factory, Nepal Oil Corporation, Nepal Airlines Corporation, Janak Education Material Center and Nepal Electricity Authority contributed to the increase, NRB said.However, claims on government financial institutions declined by 6.7 percent in the review period. Meanwhile, overall domestic credit increased by 6.8 percent during the period against 6.9 percent recorded in the corresponding period last year.Gross foreign exchange reserves stood at Rs. 230.8 billion in mid-October, an increase of 8.5 percent compared to a decline of 4.1 percent in the corresponding period last year. The current level of reserves is adequate for financing merchandise imports for 10.1 months, and merchandise and service imports for eight months, according to NRB.