10 Months Macro Economic Indicators of FY 2023/24: Remittance Inflows Risen by 19.2%, Inflation at 4.40%
Nepal Rastra Bank, the central bank of Nepal, has unveiled the current macroeconomic and financial situation of Nepal based on the first ten month's data ending mid-May of 2023/24.
Overall
Nepal Rastra Bank estimated that the inflation remained at 4.40 percent on a y-o-y basis. The gross foreign exchange reserves stood at USD 14.54 billion, whereas, the total imports decreased 2.4 percent, exports decreased 3.6 percent and trade deficit decreased 2.3 percent.
As of mid-May 2024, the outstanding concessional loan remained at Rs.138.71 billion extended to 126,191 borrowers. Of which, Rs.94.04 billion has been extended to 49,063 borrowers for selected commercial agriculture and livestock businesses. Likewise, a Rs.42.87 billion loan has been extended to 74,942 women entrepreneurs. A total of 2,186 borrowers have availed of Rs.1.80 billion in concessional loans in other specified sectors.
NEPSE index stood at 1998.89 in mid-May 2024 compared to 1821.65 in mid-May 2023.
Inflation
The y-o-y wholesale price inflation stood at 5.68 percent in mid-May 2024 compared to 3.31 percent a year ago.
The y-o-y wholesale price index of consumption goods, intermediate goods, and capital goods increased 10.40 percent, 3.71 percent, and 1.76 percent respectively. The y-o-y wholesale price index of construction materials decreased by 5.55 percent in the review month.
Import and Export
During the review period, merchandise exports decreased 3.6 percent to Rs.126.17 billion compared to a decrease of 24.5
percent in the same period of the previous year. Destination-wise, exports to India and other countries decreased by 5.6 percent and 1.4 percent respectively, whereas exports to China increased by 68.1 percent. Exports of zinc sheets, particle board, juice, readymade garments, and oil cakes among others increased whereas exports of palm oil, soyabean oil, woolen carpets, tea, brans among others decreased.
During the ten months of 2023/24, merchandise imports decreased 2.4 percent to Rs.1303.36 billion compared to a decrease of 16.8 percent a year ago. Destination-wise, imports from India and other countries decreased 3.4 percent and 20.8 percent respectively while imports from China increased 34.4 percent. Imports of transport equipment, vehicle and other vehicle spare parts, readymade garments, aircraft spare parts, electrical equipment, and textiles among others increased whereas imports of crude soyabean oil, gold, hot rolled sheet in coil, crude palm oil, rice/paddy among others decreased.
The total trade deficit decreased by 2.3 percent to Rs.1177.18 billion during the review period. Such deficit had decreased 15.9 percent in the corresponding period of the previous year. The export-import ratio decreased to 9.7 percent in the review period from 9.8 percent in the corresponding period of the previous year.
Services and Remittance
Net services income remained at a deficit of Rs.51.92 billion in the review period compared to a deficit of Rs.65.88 billion in the same period of the previous year.
Remittance inflows increased 19.2 percent to Rs.1198.6 billion in the review period compared to an increase of 23.4 percent in the same period of the previous year. In US Dollar terms, remittance inflows increased 17.1 percent to 9.02 billion in the review period compared to an increase of 13.4 percent in the same period of the previous year.
Inter-bank Transaction
In the review period, BFIs inter-bank transactions amounted Rs. 3821.09 billion on a turnover basis including Rs.3477.04 billion inter-bank transactions among commercial banks and Rs.344.05 billion among other financial institutions (excluding transactions among commercial banks). In the corresponding period of the previous year, such transactions was Rs.3441.97 billion including Rs. 3150.95 billion among commercial banks and Rs.291.02 billion among other financial institutions (excluding transactions among commercial banks).
Price of Oil and Gold
The price of oil (Crude Oil Brent) in the international market increased 11.6 percent to US dollar 83.18 per barrel in mid-May 2024 from US dollar 74.54 per barrel a year ago. The price of gold increased 16 percent to US dollar 2343.80 per ounce in mid-May 2024 from US dollar 2019.90 per ounce a year ago.
Foreign Exchange Reserves and Adequacy Indicator
Gross foreign exchange reserves increased 26.2 percent to Rs.1942.4 billion in mid-May 2024 from Rs.1539.36 billion in mid-July 2023. In US dollar terms, the gross foreign exchange reserves increased 24.2 percent to 14.54 billion in mid-May 2024 from 11.71 billion in mid-July 2023.
Of the total foreign exchange reserves, reserves held by NRB increased 28 percent to Rs.1722.02 billion in mid-May 2024 from Rs.1345.78 billion in mid-July 2023. Reserves held by banks and financial institutions (except NRB) increased 13.8 percent to Rs.220.38 billion in mid-May 2024 from Rs.193.59 billion in mid-July 2023. The share of Indian currency in total reserves stood at 22.1 percent in mid-May 2024.
Based on the imports of ten months of 2023/24, the foreign exchange reserves of the banking sector are sufficient to cover the prospective merchandise imports of 15.1 months and merchandise and services imports of 12.6 months. The ratio of reserves-to-GDP, reserves-to-imports, and reserves-to-M2 stood at 34 percent, 105.3 percent, and 29.2 percent respectively in mid-May 2024. Such ratios were 28.8 percent, 83.0 percent, and 25.0 percent respectively in mid-July 2023.
Exchange Rate
Nepalese currency vis-à-vis the US dollar depreciated 1.61 percent in mid-May 2024 from mid-July 2023. It had depreciated 2.79 percent in the same period of the previous year. The buying exchange rate per US dollar stood at Rs.133.31 in mid-May 2024 compared to Rs.131.17 in mid-July 2023.
Nepal Government Expenditure and Revenue
According to the Ministry of Finance, Financial Comptroller General Office (FCGO), the total expenditure of the Nepal Government stood at Rs.1056.89 billion during the ten months of 2023/24. Compared to a growth of 15.3 percent in the last fiscal year, government expenditure increased by 0.9 percent in the review period. The recurrent expenditure, capital expenditure and financial expenditure amounted to Rs. 752.56 billion, Rs.111.88 billion, and Rs.192.45 billion respectively in the review period.
In the review period, the total revenue mobilization of the Nepal Government (including the amount to be transferred to provincial and local governments) stood at Rs.831.93 billion. Revenue mobilization recorded a growth of 10.0 percent in the review period in contrast to a decrease of 12.6 percent in the same period of last fiscal year. The tax revenue amounted to Rs.746.83 billion and the nontax revenue was Rs. 85.10 billion in the review period.
Cash Balance of Government
Cash Balance at various accounts of the GoN maintained with NRB remained at Rs.279.74 billion (including Provincial Governments and Local Government Accounts) in mid-May 2024. Such balance was Rs.65.36 billion in mid-July 2023.
Banking
Domestic credit increased by 2.8 percent in the review period compared to an increase of 5.7 percent in the corresponding period of the previous year. On a y-o-y basis, domestic credit increased 5.9 percent in mid-May 2024.
The Monetary Sector's claims on the private sector increased 5.7 percent in the review period compared to an increase of 4.7 percent in the corresponding period of the previous year. On a y-o-y basis, such claims increased by 5.6 percent in mid-May 2024.
Deposits at Banks and Financial Institutions (BFIs) increased Rs. 443.08 billion (7.8 percent) in the review period compared to an increase of Rs.370.78 billion (7.3 percent) in the corresponding period of the previous year. On a y-o-y basis, deposits at BFIs expanded 12.8 percent in mid-May 2024.
Private sector credit from BFIs increased Rs.225.24 billion (4.7 percent) in the review period compared to an increment of Rs.153.17 billion (3.3 percent) in the corresponding period of the previous year. On a y-o-y basis, credit to the private sector from BFIs increased 5.2 percent in mid-May 2024.
Interest Rates
The average base rates of commercial banks, development banks, and finance companies stood at 8.34 percent, 10.15 percent, and 11.61 percent respectively in the tenth month of 2023/24. The average base rate of commercial banks was 10.27 percent in the corresponding month a year ago.
Balance of Payments
Balance of Payments (BOP) remained at a surplus of Rs.392.64 billion in the review period against a surplus of Rs.209.49 billion in the same period of the previous year. In the US Dollar terms, the BOP remained at a surplus of 2.95 billion in the review period against a surplus of 1.59 billion in the same period of the previous year.
