COVID-19 impact in economy

COVID-19 impact in economy

By Our Reporter

Although the government has been making tall talks to achieve high economic growth, the entire economy has already been impacted by the COVID-19 and lockdown.

Latest data made public by the Nepal Rastra Bank showed that remittance inflow has fallen significantly following the COVID-19 pandemic outbreak.

Remittance inflows decreased by 6.1 per cent to Rs.680.84 billion in the 10 months of the current fiscal year 2019/20 against an increase of 19.6 per cent in the same period of the previous year, according to the Macroeconomic and Financial Situation report of the Nepal Rastra Bank (NRB).

Remittance inflows had decreased by 4 per cent to Rs.626.90 billion by mid-April against an increase of 20.9 per cent of the previous year.

Impact of COVID-19 has become more visible in other areas of economy as well due to decreased economic activities, foreign trade and everyday operations of the government and private sector.

According to the central bank, the current account registered a deficit of Rs.105.74 billion in 10 months. Such deficit was Rs.221.77 billion in the same period the previous year.

Likewise, capital transfer and foreign direct investment (FDI) in Nepal amounted to Rs.12.49 billion and Rs.17.42 billion respectively. In the same period of the previous year, capital transfer and FDI had amounted to Rs.13.48 billion and Rs.9.47 billion respectively.

In ten months of 2019/20, merchandise exports increased by 4.5 per cent to Rs.82.06 billion compared to an increase of 18.9 per cent a year ago.

Exports to India increased by 16.1 per cent whereas exports to China and other country decreased by 38.6 per cent and 14.6 per cent, respectively. Exports of palm oil, ayurvedic medicine, paper and Nepalese paper products, plastic utensils, M.S. pipe, among others, increased whereas exports of zinc sheet, wire, polyester yarn and threads, woollen carpet, juice, among others decreased.

Similarly, merchandise imports decreased by 13 percent to Rs.1025.14 billion against an increase of 19.6 per cent in 10 months of the last year.

Meanwhile, the consumer price inflation stood at 5.83 per cent in mid-May 2020 compared to 5.29 per cent a year ago.

Food and beverage inflation stood at 8.66 per cent whereas non-food and service inflation stood at 3.67 per cent in the review month. Within the food and beverage group, the price of fruit, vegetable, pulses and legumes and spices sub-groups rose significantly in the review month.

However, the expenditure of the federal government based on banking transactions (excluding direct payments and unrealized cheques) stood at Rs.725.61 billion which is higher than the expenses Rs.677.68 billion made last year.

But revenue collection has gone down. In the review period, revenue collection based on banking transactions (including the amount to be transferred to provincial and local governments) stood at Rs.606.82 billion. Total government revenue was Rs.665.91 billion in the corresponding period of the previous year.

Now when the government was planning to collect revenue, the Supreme Court ordered the government to extend the revenue collection deadline until the lifting of the lockdown. Though the government appealed to vacate the order, SC refuted it.

(People’s Review Print Edition)