Most of economic indicators positive : Nepal Rastra Bank

KATHMANDU, MAY 12: Most of the economic indicators of the country in the first nine months of the current fiscal appear positive.  This is based on the report on the Current Macroeconomic and Financial Situation of Nepal issued by the Nepal Rastra Bank (NRB) today.

Inflation declines to over 4.50 percent 

The CPI-based inflation remained at 4.61 percent on a year-on-year basis during the review period compared to 7.76 percent in the corresponding period last year. The food and beverage category inflation stood at 5.21 percent, whereas the non-food and service category inflation stood at 4.14 percent in the review month.

Under the Food and Beverage Category, the year-on-year 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 from mid-June to mid-May of 2022/23.  The year-on-year price index of the ghee and oil subcategory decreased by 10.10 percent in the review period..

Under the Non-Food and Services Category, the year-on-year price index of miscellaneous goods and services sub-categories increased by 12.81 percent, recreation and culture by 12.61 percent, and education by 7.31 percent. The year-on-year price index of the transportation sub-category decreased by 0.33 percent in the review period.

The year-on-year consumer price inflation rates in the Kathmandu Valley declined to 4.06 percent from 8.57 percent and, in Terai, the same decreased to 4.58 percent from 7.68 per cent.  The price hike in the hilly area went down to 5.33 per cent from 7.01 percent and the Mountain region saw the very hike declining to 4.32 percent from 7.47 percent.

Remittances up by more than 20 percent

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 last 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 was recorded at 329,422 and getting approvals for renewed entry was recorded at 212,721. In the previous year, such numbers were 387,839 and 217,959, respectively.

Current account at a surplus of over Rs 179 billion 

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.

BoP at a surplus of more than Rs 356 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 last year year.

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 the NRB increased by 25.4 percent to Rs. 1688.21 billion from mid-June to mid-April 2024 2023/24 from Rs. 1345.78 billion recorded in the same period last year. Reserves held by banks and financial institutions (except NRB) increased by 15.5 percent to Rs. 223.65 billion in the review period from Rs. 193.59 billion the corresponding period last year.

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 ratios of reserves-to-GDP, reserves-to-imports, and reserves-to-M2 stood at 33.5 percent, 104 percent, and 28.9 percent, respectively, in the first nine months of this year. Such ratios were 28.8 percent, 83.0 percent, and 25.0 percent, respectively, in the corresponding period last year

Govt expenditure declines by around 4 percent and revenue mobilisation increases to Rs 748 billion 

The government’s expenditure amounted to Rs. 909.39 billion, and revenue collection amounted to Rs. 748.04 billion. Compared to the growth of 18.7 percent in the last fiscal year, such 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, the 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, in contrast to a decrease of 13.4 percent in the same period of the last fiscal year. The tax revenue amounted to Rs. 671.12 billion and non-tax revenue Rs. 76.93 billion in the review period.

The 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 year-on-year 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.