Trade deficit continues to balloon as it touched Rs 396.96 billion in the first eight months of the current fiscal year.

The deficit stood Rs 87.4 billion less in the same period of the last fiscal year, according to the central bank. “The country exported Rs 60.90 billion worth merchandise, whereas imported Rs 457.85 billion,” the report said, adding that imports from both India and third countries have surged contributing to the massive trade deficit. “The export-import imbalance is so wide that the country’s export earnings are adequate to pay only 13.3 percent of its total import bills.”

However, the country’s ability to import goods and services has improved – despite huge trade deficit – due to a massive inflow of remittance in the country resulting in comfortable foreign exchange reserve. “The foreign exchange reserve stood at Rs 653.42 billion – as of mid-March – that is adequate to sustain imports of goods and services for 10.1 months,” the central bank added.

The inflow of remittance surged by 34.1 per cent to Rs 356.72 billion in eight months. Remittance inflow coupled with good service income like income from tourism and foreign aid surged posting a record balance of payments (BoP) – the difference between money coming into the country and the money going out – at Rs 102.81 billion.

Price hike continue to rise

Inflation increased to 8.9 per cent in mid-March from 8.8 per cent in mid-February, according to the central bank report. The central bank, though had revised inflation target upward to 8.5 per cent, it seems the monetary policy failed to crack whip on price hike.

Spread rate decreasing

The spread rate – the difference between lending and borrowing rates – of the commercial banks has come down by 0.3 percentage points to 6.73 per cent, though the central bank has asked to bring it down to five per cent by the end of the current fiscal year. However, bankers have been demanding withdrawal of such provision, claiming that such a provision is against the free market policy and hurts their profit.

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