Kathmandu, April 11: Remittance inflow has increased 25.3 percent in eight months of the current fiscal year, 2022/23. Against 1.3 percent decrement during the same period in the previous FY, the inflows reached Rs 794.32 billion, according to the current macroeconomic and financial situation of Nepal based on eight months’ data published by the Nepal Rastra Bank.
In the US dollar terms, the remittance inflows increased 14.8 percent to 6.09 billion in the review period against a decrease of 2.6 percent in the same period of the corresponding year.
Likewise, the number of Nepali workers (institutional and individual-new) taking approval for foreign employments surged 54.3 percent to 351,761. The number of Nepali workers getting their labour permit renewed increased eight percent to 192,559, a 240.3 percent increment against during the same period in the previous year.
Inflation exceeds cap of 7.44 percent
The year–over-year consumer price inflation remained at 7.44 percent in mid-March 2023 compared to 7.14 percent a year ago. It may be noted that in the current fiscal year, the government has a target of limiting the inflation below 7 percent.
Food and beverage inflation stood at 5.64 percent whereas non-food and service inflation rose to 8.87 percent in the review month. Likewise, remittances increased by 25.3 percent in NPR terms and 14.8 percent in USD terms while the Balance of Payments remained at a surplus of Rs.148.11 billion.
Gross foreign exchange reserves stood at NPR 1401.21 billion and 10.69 billion in USD terms, the report highlights. Federal Government expenditure is amounted to Rs.779.23 billion and revenue collection is Rs.582.77 billion.
Broad money (M2) increased by 5.3 percent. On y-o-y basis, M2 increased 9.1 percent. Deposits at BFIs increased 5.5 percent and private sector credit increased 4.6 percent. On y-o-y basis, deposits increased 10.5 percent and private sector credit increased 3.1 percent.
Similarly, till mid-March, imports decreased by 19.1 percent, exports decreased 29.1 percent and trade deficit decreased 17.9 percent.
Current Account and Balance of Payments
The current account remained at a deficit of Rs.44.31 billion in the review period compared to a deficit of Rs.460.72 billion in the same period of the previous year. In the US Dollar terms, the current account registered a deficit of 345.7 million in the review period compared to deficit of 3.86 billion in the same period last year.
In the review period, capital transfer decreased 20.3 percent to Rs.5.58 billion and net foreign direct investment (FDI) remained Rs.1.17 billion. In the same period of the previous year, capital transfer and net FDI amounted to Rs.7 billion and Rs.16.30 billion respectively.
Balance of Payments (BOP) remained at a surplus of Rs.148.11 billion in the review period compared to a deficit of Rs.258.64 billion in the same period of the previous year. In the US Dollar terms, the BOP remained at a surplus of 1.12 billion in the review period against a deficit of 2.17 billion in the same period of the previous year.
Foreign Exchange Reserves
Gross foreign exchange reserves increased 15.2 percent to Rs.1401.21 billion in mid-March 2023 from Rs.1215.80 billion in mid-July 2022. In the US dollar terms, the gross foreign exchange reserves increased 12.1 percent to 10.69 billion in mid-March 2023 from 9.54 billion in mid-July 2022.
Of the total foreign exchange reserves, reserves held by NRB increased 17.8 percent to Rs.1244.94 billion in mid-March 2023 from Rs.1056.39 billion in mid-July 2022. Reserves held by banks and financial institutions (except NRB) decreased 2 percent to Rs.156.27 billion in mid-March 2023 from Rs.159.41 billion in mid-July 2022. The share of Indian currency in total reserves stood at 23.9 percent in mid-March 2023.
Foreign Exchange Adequacy Indicators
Based on the imports of eight months of 2022/23, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 10.9 months, and merchandise and services imports of 9.4 months.
The ratio of reserves-to-GDP, reserves-toimports and reserves-to-M2 stood at 28.9 percent, 78.5 percent and 24.2 percent respectively in mid-March 2023. Such ratios were 25.1 percent, 57.8 percent and 22.1 percent respectively in mid-July 2022.
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