Kathmandu, April 11
The 'Current Macroeconomic and Financial Situation of Nepal' report unveiled by the Nepal Rastra Bank (NRB) today reveals improvement in foreign exchange reserves in the first eight months of fiscal year 2022-23 (mid-July, 2022 to mid-March, 2023) with a surge in remittance inflow.
Remittance inflows increased by 25.3 per cent to Rs 794.32 billion in the review period against a decrease of 1.3 per cent in the same period of the previous year, as per the central bank report.
The gross foreign exchange reserves increased 12.1 per cent to $10.69 billion in mid-March from $9.54 billion in mid-July.
Of the total foreign exchange reserves, reserves held by NRB increased 17.8 per cent to Rs 1,215.80 billion in mid-March 2023 from Rs 1,056.39 billion in mid-July 2022. Reserves held by banks and financial institutions (except NRB) decreased two per cent to Rs 156.27 billion in mid- March from Rs 159.41 billion in mid-July. The share of Indian currency in total reserves stood at 23.9 per cent in mid-March.
During the eight months of 2022-23, merchandise imports decreased 19.1 per cent to Rs 1,058.39 billion against an increase of 38.6 per cent a year ago.
Destination-wise, imports from India, China, and other countries decreased by 17.6 per cent, 21.7 per cent, and 21 4 per cent, respectively. Imports of petroleum products, sponge iron, chemical fertiliser, gold, other stationeries, among others, increased whereas imports of transport equipment and parts, medicine, MS billet, telecommunication equipment and parts, silver, among others, de-creased in the review period.
At the same time, merchandise exports slumped by 29.1 per cent to Rs 104.80 billion against a surge of 82.9 per cent in the same period of previous year.
Destination-wise, exports to India and China fell 37.5 per cent and 4.9 per cent, respectively, whereas exports to other countries increased six 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 17.9 per cent to Rs 953.58 billion during the first eight months of 2022-23 against a surge of 34.5 per cent in the corresponding period of the previous year. The export-import ratio decreased to 9.9 per cent in the review period from 11.3 per cent in the corresponding period of the previous year.
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-to imports and reserves-to-M2 stood at 28.9 per cent, 78.5 per cent and 24.2 per cent, respectively, in mid-March.
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 148.11 billion in the review period against a deficit of Rs 258.64 billion in the same month of previous year.
A version of this article appears in the print on April 12, 2023, of The Himalayan Times.
