KATHMANDU, MARCH 12
The 'Current Macroeconomic and Financial Situation of Nepal' report unveiled by the Nepal Rastra Bank reveals improvement in foreign exchange reserves in the first seven months of the fiscal year 2022- 23 (mid-July, 2022 to mid-February, 2023) with a surge in remittance inflow.
Remittance inflows increased by 27.1 per cent to Rs 689.88 billion in the review period against a drop of 4.4 per cent in the same period of the previous year, as per the central bank report.
The gross foreign exchange reserves increased 10.2 per cent to $10.50 billion in mid-February from $9.54 billion in mid-July.
Of the total foreign exchange reserves, reserves held by NRB increased 16.2 per cent to Rs 1,228.05 billion in mid- February 2023 from Rs 1,056.39 billion in mid-July 2022.
The reserves held by the banks and financial institutions (except NRB) decreased 2.6 per cent to Rs 155.28 billion in mid-February 2023 from Rs 159.41 billion in mid-July 2022.
The share of Indian currency in the total forex reserves stood at 22.4 per cent in mid-February.
During the seven months of 2022-23, merchandise imports decreased 19.9 per cent to Rs 919.16 billion against an increase of 42.8 per cent a year ago. Destination-wise, imports from India, China, and other countries decreased by 18 per cent, 24.3 per cent, and 22 per cent, respectively. Imports of petroleum products, sponge iron, chemical fertiliser, gold, and other stationeries, among others, increased whereas imports of transport equipment and parts, medicine, MS billet, telecommunication equipment and parts, silver, among others, decreased in the review period.
At the same time, merchandise exports slumped by 29 per cent to Rs 93.43 billion against a surge of 88.3 per cent in the same period of previous year.
Destination-wise, exports to India and China fell 37.7 per cent and 13.4 per cent, respectively, whereas exports to other countries increased eight per cent.
Exports of zinc sheet, cardamom, particle board, woollen carpets, polyester yarn and thread, among others, increased whereas exports of soyabean oil, palm oil, oil cakes, textiles, silverware and jewelleries, among others, decreased in the review period.
The total trade deficit narrowed 18.7 per cent to Rs 825.73 billion during the first seven months of 2022-23 against a surge of 38.4 per cent in the corresponding period of the previous year. The export-import ratio decreased to 10.2 per cent in the review period from 11.5 per cent in the corresponding period of the previous year.
Based on the imports of seven months of 2022-23, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 10.8 months, and merchandise and services imports of 9.4 months.
The ratio of reserves-to-GDP, reserves-to imports and reserves-to-M2 stood at 28.5 per cent, 78.3 per cent and 24 per cent, respectively, in mid-February 2023. Such ratios were 25.1 per cent, 57.8 per cent and 22.1 per cent, respectively, in mid-July 2022.
Balance of payments - defined as difference in total value between payments into and out of a country over a period - was at a surplus of Rs 133.21 billion in the review period from a deficit of Rs 247.03 billion in the same month of previous year.
A version of this article appears in the print on March 13, 2023, of The Himalayan Times.
