KATHMANDU: Most economic indicators based on the nine-month data ending mid-April are positive in the country.
According to the report on the Current Macroeconomic and Financial Situation of Nepal issued by the Nepal Rastra Bank (NRB) today, the Consumer Price Index (CPI)-based inflation remained within expectations, while the balance of payment stayed at a surplus and foreign exchange reserves increased.
CPI-based inflation remained at 4.61 percent on a year-on-year (y-o-y) basis compared to 7.76 percent in the corresponding period last year.
In the food and beverage category, inflation stood at 5.21 percent, whereas in the non-food and service category, it stood at 4.14 percent in the review month.
Under the food and beverage category, the y-o-y price index of the spices sub-category increased by 22.64 percent, vegetables by 16.99 percent, pulses and legumes by 10.94 percent, cereal grains and their products by 7.59 percent, and non-alcoholic drinks by 6.06 percent in the review month.
However, the y-o-y price index of the ghee and oil sub-category decreased by 10.10 percent in the review month.
Under the non-food and services category, the y-o-y price index of the miscellaneous goods and services sub-category increased by 12.81 percent, recreation and culture by 12.61 percent, and education by 7.31 percent.
The y-o-y price index of the transportation sub-category decreased by 0.33 percent in the review month. The y-o-y consumer price inflation in the Kathmandu Valley, Terai, Hill, and Mountain regions stood at 4.06 percent, 4.58 percent, 5.33 percent, and 4.32 percent, respectively, in the review month.
Such inflation in these regions was 8.57 percent, 7.68 percent, 7.01 percent, and 7.47 percent, respectively, a year ago.
Remittance Inflow Up
Remittance inflows increased by 19.8 percent to Rs. 1082.62 billion in the review period compared to an increase of 24.2 percent in the same period of the previous year.
In US Dollar terms, remittance inflows increased by 17.7 percent to $8.15 billion in the review period compared to an increase of 13.9 percent in the same period of the previous year.
In the review period, the number of Nepali workers, both institutional and individual, taking first-time approval for foreign employment recorded 329,422, and taking approval for renew entry recorded 212,721.
In the previous year, such numbers were 387,839 and 217,959, respectively.
Current Account and Balance of Payments (BOP) in Surplus
The current account remained at a surplus of Rs. 179.48 billion in the review period against a deficit of Rs. 60.43 billion in the same period of the previous year.
In US Dollar terms, the current account registered a surplus of $1.35 billion in the review period against a deficit of $468.3 million in the same period last year.
In the review period, capital transfer decreased by 19.2 percent to Rs. 4.78 billion, and net foreign direct investment (FDI) remained positive at Rs. 6.48 billion.
In the same period of the previous year, capital transfer amounted to Rs. 5.91 billion, and net FDI amounted to Rs. 2.62 billion.
The Balance of Payments (BOP) remained at a surplus of Rs. 365.16 billion in the review period against a surplus of Rs. 174.28 billion in the same period of the previous year.
In US Dollar terms, the BOP remained at a surplus of $2.75 billion in the review period against a surplus of $1.32 billion in the same period of the previous year.
Increase in Gross Foreign Exchange Reserves
Gross foreign exchange reserves increased by 24.2 percent to Rs. 1911.86 billion in mid-April 2024 from Rs. 1539.36 billion in mid-July 2023.
In US dollar terms, the gross foreign exchange reserves increased by 22.7 percent to $14.36 billion in mid-April 2024 from $11.71 billion in mid-July 2023.
Of the total foreign exchange reserves, reserves held by NRB increased by 25.4 percent to Rs. 1688.21 billion in mid-April 2024 from Rs. 1345.78 billion in mid-July 2023.
Reserves held by banks and financial institutions (except NRB) increased by 15.5 percent to Rs. 223.65 billion in mid-April 2024 from Rs. 193.59 billion in mid-July 2023.
The share of Indian currency in total reserves stood at 21.6 percent in mid-April 2024.
Based on the imports of nine months of 2023/24, the foreign exchange reserves of the banking sector are sufficient to cover the prospective merchandise imports of 15 months and merchandise and services imports of 12.5 months.
The ratio of reserves-to-GDP, reserves-to-imports, and reserves-to-M2 stood at 33.5 percent, 104 percent, and 28.9 percent, respectively, in mid-April 2024. Such ratios were 28.8 percent, 83.0 percent, and 25.0 percent, respectively, in mid-July 2023.
Government Expenditure and Revenue Collection
The government’s expenditure amounted to Rs. 909.39 billion, while revenue collection reached Rs. 748.04 billion.
Compared to the growth of 18.7 percent in the last fiscal year, government expenditure decreased by 3.6 percent in the review period.
The recurrent expenditure, capital expenditure, and financial expenditure amounted to Rs. 644.03 billion, Rs. 97.38 billion, and Rs. 167.99 billion, respectively, in the review period.
In the review period, total revenue mobilization of the Nepal Government (including the amount to be transferred to provincial and local governments) stood at Rs. 748.04 billion.
Revenue mobilization recorded a growth of 9.4 percent in the review period, contrasting with a decrease of 13.4 percent in the same period of the last fiscal year.
Tax revenue amounted to Rs. 671.12 billion, and non-tax revenue amounted to Rs. 76.93 billion in the review period.
Broad Money (M2) and Trade Deficit
Broad money (M2) increased by 7.5 percent in the review period compared to an increase of 6.4 percent in the corresponding period of the previous year.
On a y-o-y basis, M2 expanded by 12.3 percent in mid-April 2024. The net foreign assets (NFA, after adjusting foreign exchange valuation gain/loss) increased by Rs. 365.16 billion (25.1 percent) in the review period compared to an increase of Rs. 174.28 billion (15.1 percent) in the corresponding period of the previous year.
Reserve money increased by 6.4 percent in the review period compared to an increment of 2.5 percent in the corresponding period of the previous year.
On a y-o-y basis, reserve money increased by 14.6 percent in mid-April 2024.
The total trade deficit decreased by 2.8 percent to Rs. 1053.42 billion during the review period. Such a deficit had decreased by 17.1 percent in the corresponding period of the previous year.
The export-import ratio remained at 9.8 percent in the review period, the same as in the corresponding period of the previous year.
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