KATHMANDU, SEPTEMBER 17
The Nepal Rastra Bank (NRB) unveiled its latest macroeconomic update today, indicating improvements in the current account.
The current account, which had been in surplus until November of 2020, had experienced a deficit for three years following that period. However, with the historical increase in remittance inflow, the country has now witnessed a current account surplus after 33 months.
In the first month of 2023-24, that is from mid-July to mid-August, the current account recorded a surplus of Rs 12.99 billion, marking a significant turnaround from the deficit of Rs 15.13 billion in the same period of the previous year.
As per the NRB's report, remittance inflows have shown significant growth, surging by 25.8 percent to Rs116.02 billion in the first month of the current fiscal year. This is an improvement compared to an increase of 20.3 percent in the same period of the previous year.
However, the number of Nepali workers (institutional and individual-new) taking approval for foreign employment decreased 12.1 per cent to 39,152 in the review period. The number of Nepali workers (renewed entry) taking approval for foreign employment decreased 19.5 percent to 16,423 in the review period. It had soared by 75.4 percent in the same period of the previous year.
Balance of payments (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 - was at a surplus of Rs 32.90 billion in the review period compared to a deficit of Rs 19.76 billion in the corresponding month of the previous year.
The gross foreign exchange reserves increased by 1.2 percent to $11.85 billion in mid-August, 2023 from $11.71 billion in mid-July, 2023. Based on the imports of the first month of 2023-24, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 12.5 months, and merchandise and services imports of 10.3 months.
The total trade deficit has narrowed by 0.7 per cent to Rs 115.71 billion during the first month of 2023-24. The trade gap had decreased 10.4 per cent in the corresponding period of the previous year.
The report also highlights a decrease in merchandise imports by 1.6 per cent, reaching Rs 129.24 billion during the first month of 2023-24. This is a positive development compared to the 12.9 per cent increase observed a year ago.
However, there has been a plunge in merchandise exports, which dropped by 8.7 percent year-on-year to Rs 13.53 billion. Even so, it was an improvement from the same period of the previous year when exports had slumped by 28.7 per cent.
A version of this article appears in the print on September 18, 2023, of The Himalayan Times.
