11 Months Macro Economic Indicators of FY 2023/24: Remittance Inflows Risen by 19.3%, Inflation at 4.17%
Nepal Rastra Bank, the central bank of Nepal, has unveiled the current macroeconomic and financial situation of Nepal based on the first eleven months of data ending mid-June of 2023/24.
Overall
Nepal Rastra Bank estimated that the inflation remained at 4.17 percent on a y-o-y basis. The gross foreign exchange reserves stood at USD 14.72 billion, whereas, the total imports decreased by 1.8 percent, exports decreased by 3.0 percent and trade deficit decreased 1.7 percent.
As of mid-June 2024, the outstanding concessional loan remained at Rs. 134.76 billion extended to 123,656 borrowers. Of this, Rs.92.06 billion has been extended to 48,142 borrowers for selected commercial agriculture and livestock businesses. Likewise, a Rs.40.92 billion loan has been extended to 73,385 women entrepreneurs. A total of 2,129 borrowers have availed of Rs.1.77 billion in concessional loans in other specified sectors.
NEPSE index stood at 2112.30 in mid-June 2024 compared to 2042.07 in mid-June 2023.
Inflation
The y-o-y wholesale price inflation stood at 4.17 percent in mid-June 2024 compared to 6.83 percent a year ago.
The y-o-y wholesale price inflation stood at 5.48 percent in mid-June 2024 compared to 3.10 percent a year ago. The y-o-y wholesale price index of consumption goods, intermediate goods, and capital goods increased 6.87 percent, 5.32 percent, and 1.66 percent respectively. The y-o-y wholesale price index of construction materials decreased by 2.12 percent in the review month.
Import and Export
During the review period, merchandise exports decreased by 3.0 percent to Rs.139.26 billion compared to a decrease of 22.7 percent in the same period of the previous year. Destination-wise, exports to India decreased by 4.5 percent while those to China increased 57.7 percent. Similarly, exports to other countries decreased by 1.7 percent. Exports of zinc sheets, particle board, juice, readymade garments, and oil cakes among others increased whereas exports of palm oil, soyabean oil, woolen carpet, brans, and tea among others decreased.
During the eleven months of 2023/24, merchandise imports decreased 1.8 percent to Rs.1453.70 billion compared to a decrease of 16 percent a year ago. Destination-wise, imports from India decreased by 3.1 percent while from China increased by 34.8 percent. Similarly, imports from other countries decreased by 3.1 percent. Imports of transport equipment, vehicles, and other vehicle spare parts, readymade garments, electrical equipment, aircraft spare parts, 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 1.7 percent to Rs.1314.44 billion during the review period. Such deficit had decreased by 15.2 percent in the corresponding period of the previous year. The export-import ratio decreased to 9.6 percent in the review period from 9.7 percent in the corresponding period of the previous year.
Services and Remittance
Net services income remained at a deficit of Rs.58.06 billion in the review period compared to a deficit of Rs.77.15 billion in the same period of the previous year.
Remittance inflows increased 19.3 percent to Rs.1327.51 billion in the review period compared to an increase of 22.7 percent in the same period of the previous year. In US Dollar terms, remittance inflows increased 17.3 percent to 9.98 billion in the review period compared to an increase of 13.0 percent in the same period of the previous year.
Inter-bank Transaction
In the review period, BFIs inter-bank transactions amounted Rs.4060.98 billion on a turnover basis including Rs.3701.43 billion inter-bank transactions among commercial banks and Rs.359.55 billion among other financial institutions (excluding transactions among commercial banks). In the corresponding period of the previous year, such transactions was Rs.3961.38 billion including Rs. 3640.21 billion among commercial banks and Rs.321.17 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 7.6 percent to US dollar 81.49 per barrel in mid-June 2024 from US dollar 75.75 per barrel a year ago. The price of gold increased 19.4 percent to US dollar 2330.45 per ounce in mid-June 2024 from US dollar 1952.35 per ounce a year ago.
Foreign Exchange Reserves and Adequacy Indicator
Of the total foreign exchange reserves, reserves held by NRB increased 30.2 percent to Rs.1752.77 billion in mid-June 2024 from Rs.1345.78 billion in mid-July 2023. Reserves held by banks and financial institutions (except NRB) increased 10.8 percent to Rs.214.42 billion in mid-June 2024 from Rs.193.59 billion in mid-July 2023. The share of Indian currency in total reserves stood at 22.3 percent in mid-June 2024.
Based on the imports of eleven months of 2023/24, the foreign exchange reserves of the banking sector is 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 34.5 percent, 105.2 percent and 29.2 percent respectively in mid-June 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 1.66 percent in mid-June 2024 from midJuly 2023. It had depreciated 2.71 percent in the same period of the previous year. The buying exchange rate per US dollar stood at Rs.133.38 in mid-June 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.1181.30 billion during the eleven months of 2023/24. Compared to a growth of 13.6 percent in the last fiscal year, government expenditure increased by 0.4 percent in the review period. The recurrent expenditure, capital expenditure and financial expenditure amounted to Rs.822.81 billion, Rs.134.98 billion, and Rs.223.51 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.919.19 billion. Revenue mobilization recorded a growth of 9.8 percent in the review period in contrast to a decrease of 11.2 percent in the same period of last fiscal year. The tax revenue amounted to Rs.829.04 billion and the nontax revenue was Rs.90.15 billion in the review period.
Cash Balance of Government
Cash Balance at various accounts of the GoN maintained with NRB remained at Rs.251.55 billion (including Provincial Governments and Local Government Accounts) in mid-June 2024. Such balance was Rs.65.36 billion in mid-July 2023.
Banking
Domestic credit increased by 3.9 percent in the review period compared to an increase of 6.9 percent in the corresponding period of the previous year. On a y-o-y basis, domestic credit increased by 5.8 percent in mid-June 2024.
The Monetary Sector's claims on the private sector increased by 6.6 percent in the review period compared to an increase of 5.1 percent in the corresponding period of the previous year. On a y-o-y basis, such claims increased by 6.0 percent in mid-June 2024.
Deposits at Banks and Financial Institutions (BFIs) increased Rs.514.57 billion (9.0 percent) in the review period compared to an increase of Rs.445.13 billion (8.8 percent) in the corresponding period of the previous year. On a y-o-y basis, deposits at BFIs expanded 12.6 percent in mid-June 2024.
Private sector credit from BFIs increased Rs.246.80 billion (5.1 percent) in the review period compared to an increment of Rs.157.36 billion (3.4 percent) in the corresponding period of the previous year. On a y-o-y basis, credit to the private sector from BFIs increased by 5.6 percent in mid-June 2024.
Interest Rates
The average base rates of commercial banks, development banks, and finance companies stood at 8.17 percent, 9.96 percent, and 11.46 percent respectively in the eleventh month of 2023/24. The average base rate of commercial banks, development banks, and finance companies was 10.18 percent, 12.47 percent, and 13.55 percent respectively in the corresponding month a year ago.
Balance of Payments
Balance of Payments (BOP) remained at a surplus of Rs.425.67 billion in the review period against a surplus of Rs.224.9 billion in the same period of the previous year. In the US Dollar terms, the BOP remained at a surplus of 3.2 billion in the review period against a surplus of 1.71 billion in the same period of the previous year.
