KATHMANDU, OCTOBER 17
The latest macroeconomic update unveiled by the Nepal Rastra Bank (NRB) today revealed gradual economic recovery, with improvements in remittance inflows, balance of payments (BoP) and gross foreign exchange reserves and narrowing trade gap.
The remittance inflows surged 22.1 per cent to Rs 228.37 billion in the first two months of the current fiscal year (mid-July to mid-September) against an increase of 19.8 per cent in the same period of the previous year.
Total trade deficit narrowed by 4.7 per cent to Rs 233.30 billion during the two months of 2023-24. Such deficit had decreased by 9.4 per cent in the corresponding period of the previous year.
During the two months of current fiscal, merchandise imports fell by 5.1 per cent to Rs 259.75 billion against a slump of 13 per cent a year ago.
But worryingly, the merchandise exports also dropped by 7.8 per cent to Rs 26.45 billion against a plunge of 34.9 per cent in the same period of the previous year.
As per the broad economiccategories (BEC), the intermediate and final consumption goods accounted for 54.1 per cent and 45.6 per cent of the total exports respectively, whereas the ratio of capital goods in total exports remained negligible at 0.2 per cent in the review period. In the same period of the previous year, the ratio of intermediate, capital and final consumption goods had stood at 57.8 per cent, 0.03 per cent and 42.2 per cent of total exports respectively.
On the imports side, the share of intermediate goods was 52.8 per cent, capital goods 9.1 per cent and final consumption goods 38.1 per cent in the review period.
BoP - the difference between all money flowing into the country in a particular period of time and the outflow of money to the rest of the world - remained at a surplus of Rs 53.61 billion in the review period compared to a deficit of Rs 20.81 billion in the same period of previous year.
Meanwhile, the current account - country's imports and exports of goods and services, payments made to foreign investors, and transfers such as foreign aid - recorded a surplus of Rs 23.50 billion in the review period compared to a deficit of Rs 36.84 billion in the same period of the previous year.
The gross foreign exchange reserves increased 2.6 per cent to $12.01 billion in mid-September, 2023 from $11.71 billion in mid-July, 2023.
Based on the imports of two months of 2023-24, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 12.6 months, and merchandise and services imports of 10.3 months.
A version of this article appears in the print on October 18, 2023, of The Himalayan Times
