KATHMANDU, MARCH 16
The country's current account remained at a deficit of more than Rs 100 billion in the first seven months of the current fiscal year, according to the latest macroeconomic update unveiled by the Nepal Rastra Bank today.
The deficit in current account - which represents imports and exports of goods and services, payments made to foreign investors, and transfers such as foreign aid - was Rs 101.90 billion in the review period (mid-July to mid-February), slightly better compared to Rs 106 billion recorded in the corresponding period of the previous fiscal.
In the review period, capital transfers decreased by 5.7 per cent to Rs 7.83 billion and net foreign direct investment (FDI) slumped by 37.3 per cent to Rs 9.02 billion. In the same period of previous year, capital transfers and net FDI amounted to Rs 8.30 billion and Rs 14.38 billion, respectively.
According to the central bank, the balance of payment has registered a surplus of Rs 97.36 billion in the review period as compared to a surplus of Rs 21.61 billion in the same period of previous year.
The current account had been in surplus for the first four months of the current fiscal year. However, it slipped back to deficit thereafter.
On the other hand, the country's foreign exchange reserve continues to swell. According to NRB, the gross foreign exchange reserve increased by 4.3 per cent to Rs 1,462.03 billion in mid-February 2021 from Rs 1,401.84 billion in mid-July 2020. Of the total foreign exchange reserve, the reserve held by the central bank increased by five percentage points to Rs 1,287.50 billion in mid-February 2021 from Rs 1,226.12 billion in mid-July 2020.
Such reserves held by banks and financial institutions (except NRB) decreased by 0.7 percentage point to Rs 174.53 billion in mid-February 2021 from Rs 175.71 billion in mid-July 2020.
Based on the imports of the seven months of 2020-21, the foreign exchange reserve of the banking sector is sufficient to cover the prospective merchandise imports of 13.1 months, and merchandise and services imports of 11.9 months.
Amid this, remittance inflow has increased by 10.9 percentage points to Rs 567.70 billion in the review period against a decrease of 0.7 per cent in the same period of the previous year. According to NRB, the number of Nepali workers taking approval for foreign employment has however decreased by 75.9 per cent in the review period.
It had increased by 21.7 per cent in the same period of the previous year.
A version of this article appears in the print on March 17, 2021, of The Himalayan Times.
