Import value drops

NBE (Photo: Anteneh Aklilu)

The recent released quarterly bulletin report of National Bank of Ethiopia (NBE) second quarter report for the 2019/20 fiscal year indicates that the total merchandise import stood at USD 3.8 billion during the second quarter of 2019/20.
The report stated that the import value shows a 13.9 percent decrease over the last year same quarter due to lower import values of fuel, capital goods, consumer goods and miscellaneous goods.
The report further stated that import bill of capital goods fell by 28.2 percent and 88.4 percent decline in payments for transport capital goods despite 33 percent increase for industrial capital goods and 123.3 percent surge for agricultural capital goods. Hence, the share of capital goods in total goods import bill stood at 34.3 percent compared with 41.1 percent a year earlier.
Meanwhile the value of oil import dropped in the quarter, which is from October to December 2019, the volume has continued in its growth as in the past.
“Likewise, fuel import value decreased by 5.1 percent while its share in total import payments rose 16.7 percent from 15.2 percent last year same period,” the report states.
According to the NBE quarter report, besides fuel payments, consumer goods went down by 11.6 percent over the last year same quarter due to lower import payments for durable and non-durable goods.
“Nevertheless, the share of consumer goods in total imports slightly increased to 27.5 percent from 26.8 percent a year ago,” it added.
The total import value in the same period of last year was over USD 4.4 billion. “In juxtaposition, total merchandise import bill at USD 3.8 billion depicted a 13.9 percent annual decline due to lower import values of fuel (5.1 percent), capital goods (28.2 percent), consumer goods (11.6 percent) and miscellaneous goods (4.5 percent),” the quarterly report of NBE shows the sectors whose values are reduced for the period in the current fiscal year.
Such kind of report is rare. Even the quarterly report in the past shows slight value increment and expansion of trade balance gap. While the latest report of value reduction on import has also narrowed the trade balance.
According to the quarterly review the average price of Brent crude oil, which is used as a benchmark for international oil price, exhibited a 6.3 percent slowdown from USD 67.7 per barrel to USD 63.4 per barrel. The reduction of oil price has contributed for value reduction on import.
According to the report, the total current account payments also decreased by 13.6 percent and reached USD 5.2 billion due to a 13.9 percent decline in merchandise import payments and 13.7 percent in service payments.
The current payment on the same period in last year was almost USD 6 billion.
Meanwhile the current payments reduced, private transfer payments and public transfers showed significant increase. “Hence, the current account balance recorded USD 1.2 billion deficit which was 35.7 percent lower than that of a year ago,” it explained.
Service payment for second quarter of the fiscal year was USD 1.3 billion that was 1,520.4 in the same period of last fiscal year.
At the same time the total current account receipts amounted to USD 4 billion registering a 3.7 percent decline over last year same quarter owing to slowdown in receipts from public transfers (55.6 percent) in contrast to an increase in merchandise export proceeds (4.5 percent), services receipts (3.4 percent) and private transfers (21.1 percent).
The current receipt at the same period of last year was over USD 4.1 billion.
Regarding balance of trade in the second quarter also narrowed because of import reduction. It stated that during second quarter of the fiscal year merchandise trade deficit narrowed to USD 3.2 billion from USD 3.9 billion a year ago as merchandise export receipts improved and merchandise import bills declined.
In the period the export that was USD 610.5 million has increased by 4.5 percent from last year same quarter, while the horticulture and livestock export have registered marvelous performance.
The report explained that current account balance (including official transfers) registered USD 1.2 billion in deficit which was 35.7 percent lower than that of a year ago.
Regarding monetary development at the end of second quarter of 2019/20, broad money supply stood at 950.55 billion birr, showing a 20.5 percent growth over the corresponding quarter of last fiscal year. “The annual growth in broad money was attributed to 23.2 percent increase in domestic credit while 162.2 percent drawdown of net foreign assets,” it said.
On the other hand the total deposit liabilities of the banking system reached 958.9 billion birr by the close of the second quarter of 2019/20, indicating 21 percent annual growth rate. Branch expansion, saving culture, growing of access to finance is stated as a reason for growing of saving.
“Likewise, during the review quarter, 58.7 billion birr was disbursed in fresh loans, indicating a 27.6 percent annual increase. Of the total new loans disbursed, the share of state owned banks was 46.9 percent while that of private banks was 53.1 percent,” the quarter report stated.