KATHMANDU, DECEMBER 15

The macroeconomic report of the first four months of the current fiscal unveiled by Nepal Rastra Bank (NRB) today revealed some positive indicators due to import restrictions on certain non-essential goods.

According to central bank's report, there was significant improvement in remittance inflow and the country's foreign exchange reserves, which rose by $150 million in the one-month period between mid-October and mid-November.

As per the central bank, the gross foreign exchange of the country had gone up to $9.63 billion in mid-November, compared to $9.48 billion in mid-October. Likewise, the foreign exchange reserves increased one per cent from $9.54 billion in mid-July.

Likewise, import growth fell 18.1 per cent to Rs 532.69 billion during the four months of current fiscal against an increase of 61.6 per cent a year ago.

But at the same time, merchandise exports slumped 33.3 per cent to Rs 54.77 billion against an increase of 104.3 per cent in the same period of the previous year.

According to economist Bhim Bhurtel the drop of the Nepal's export is because most industries in the country are dependent on import of raw materials.

'Our exports are primarily affected by the external factors. If you look at Nepal's recent top export goods like refined palm oil and refined soyabean oil that are mostly exported to India, the raw materials have to be imported from the third countries.

And due to external factors like the Russia-Ukraine war, the source countries have restricted export of these commodities in crude form.'

While the export-import ratio decreased to 10.3 per cent in review period from 12.6 per cent in corresponding period of previous year, the total trade gap narrowed by 15.9 per cent to Rs 477.92 billion.

As per broad economic categories, the intermediate and final consumption goods accounted for 54.6 per cent and 45.4 per cent of the total exports respectively, whereas the ratio of capital goods in total exports remained negligible at 0.02 per cent in review period. In same period of previous year, ratio of intermediate, capital and final consumption goods stood at 44.1, 0.02 and 55.8 per cent of total exports, respectively.

On the imports side, the share of intermediate goods was 53 per cent, capital goods 8.3 per cent and final consumption goods 38.7 per cent in the review period. Such ratios were 53.1 per cent, 11.1 per cent and 35.8 per cent, respectively, in same period of previous year.

The current account remained at a deficit of Rs 35.40 billion in the review period compared to a deficit of Rs 220.91 billion in the same period of the previous year.

Meanwhile, balance of payments recorded a surplus of Rs 20.03 billion in the review period compared to a deficit of Rs 150.38 billion in the same period of the previous year.

Based on imports of four months of current fiscal, forex reserves of banking sector is sufficient to cover prospective merchandise imports of 9.7 months, and merchandise and services imports of 8.4 months.

Meanwhile, remittance inflows rose 20.4 per cent to Rs 378.04 billion in review period against a fall of seven per cent in same period of previous year.

A version of this article appears in the print on December 16, 2022, of The Himalayan Times.