Kathmandu, February 6
The 'Current Macroeconomic and Financial Situation of Nepal' report unveiled by the Nepal Rastra Bank reveals improvement in foreign exchange reserves in the first six months of fiscal year 2022-23 (mid-July, 2022 to mid-January, 2023) with surge in remittance inflow.
Remittance inflows rose 24.3 per cent to Rs 585.08 billion in the review period against a drop of five per cent in the same period of the previous year, as per the central bank report.
The gross foreign exchange reserves increased eight per cent to $10.30 billion in mid-January from $9.54 billion in mid-July. Of the total foreign exchange reserves, reserves held by NRB increased 12 per cent to Rs 1,183.37 billion in mid-January 2023 from Rs 1,056.39 billion in mid-July 2022. Reserves held by banks and financial institutions (except NRB) decreased 3.4 per cent to Rs 153.91 billion in mid-January 2023 from Rs 159.41 billion in mid-July 2022.
The share of Indian currency in total reserves stood at 23.6 per cent in mid-January.
During the six months of 2022-23, merchandise imports decreased 20.7 per cent to Rs 792.67 billion against an increase of 51.1 per cent a year ago. Destination-wise, imports from India, China, and other countries decreased by 19.4 per cent, 24.6 per cent, and 21.4 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, silver, telecommunication equipment, and parts, among others, decreased in the review period.
At the same time, merchandise exports slumped by 32 per cent to Rs 80.81 billion against surge of 95.5 per cent in the same period of previous year.
Destination-wise, exports to India and China fell by 40.1 per cent and 25.2 per cent, respectively, whereas exports to other countries rose by 3.6 per cent.
Exports of zinc sheet, particle board, cardamom, woollen carpets, polyester yarn and thread, among others, increased whereas exports of soyabean oil, palm oil, oil cakes, textiles, silverware, and jewellery, among others, decreased in the review period.
The total trade deficit decreased 19.2 per cent to Rs 711.86 billion during the first half of 2022-23 against a surge of 46.6 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 11.9 per cent in the corresponding period of the previous year.
Based on the imports for six months of 2022-23, the foreign exchange reserves of banking sector are sufficient to cover the prospective merchandise imports of 10.4 months, and merchandise and services imports of 9.1 months. The ratio of reserves-to-GDP, reserves-to-imports, and reserves-to-M2 stood at 27.6 per cent, 75.5 per cent, and 23.4 per cent respectively in mid-January. 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 97.10 billion in sixth month of 2022-23 from deficit of Rs 241.23 billion in the sixth month of 2021-22.
A version of this article appears in the print on February 7, 2023, of The Himalayan Times.
