5 Months Macro Economic Indicators of FY 2023/24: Remittance Inflows Risen by 27.6%, Inflation at 4.95%
Nepal Rastra Bank, the central bank of Nepal, has unveiled the current macroeconomic and financial situation of Nepal based on the first five month's data ending mid-December of 2023/24.
Overall
Nepal Rastra Bank estimated that the inflation remained at 4.95 percent on a y-o-y basis. The gross foreign exchange reserves stood at USD 13.31 billion, whereas, the total imports decreased 3.4 percent, exports decreased 6.1 percent and trade deficit decreased 3.1 percent.
As of mid-December 2023, the outstanding concessional loan remained at Rs.180.53 billion extended to 140,158 borrowers. Of this, Rs.126.25 billion has been extended to 57,416 borrowers for selected commercial agriculture and livestock businesses. Likewise, a Rs.51.77 billion loan has been extended to 80,227 women entrepreneurs. A total of 2,515 borrowers have availed of Rs.2.50 billion in concessional loans in other specified sectors.
NEPSE index stood at 1994.60 in mid-December 2023 compared to 1882.61 in mid-December 2022.
Inflation
The y-o-y consumer price inflation moderated to 4.95 percent in mid-December 2023 compared to 7.38 percent a year ago.
The y-o-y wholesale price inflation stood at 2.63 percent in mid-December 2023 compared to 9.15 percent a year ago. The y-o-y wholesale price index of consumption goods, intermediate goods, and capital goods increased 4.46 percent, 1.68 percent, and 2.52 percent respectively. The y-o-y wholesale price index of construction materials decreased by 0.66 percent in the review month.
Import and Export
During the review period, merchandise exports decreased 6.1 percent to Rs.63.21 billion compared to a decrease of 34.6 percent in the same period of the previous year. Destination-wise, exports to India decreased by 11.3 percent whereas exports to China and other countries increased by 322.3 percent and 2.3 percent respectively. Exports of zinc sheets, particle boards, juice, polyester yarn & thread, and readymade garments, among others increased whereas exports of palm oil, soyabean oil, tea, woolen carpet, and rosin, among others decreased.
During the five months of 2023/24, merchandise imports decreased 3.4 percent to Rs.642.21 billion compared to a decrease of 20.7 percent a year ago. Destination-wise, imports from India and other countries decreased 1.3 percent and 28.4 percent respectively while imports from China increased 32.8 percent. Imports of readymade garments, M.S. wire rods, bars, and coils, electrical equipment, textiles, and aircraft spare parts, among others, increased whereas imports of gold, crude soyabean oil, crude palm oil, petroleum products, and rice/paddy, among others decreased
The total trade deficit decreased 3.1 percent to Rs.579 billion during the review period. Such a deficit had decreased by 18.8 percent in the corresponding period of the previous year. The export-import ratio decreased to 9.8 percent in the review period from 10.1 percent in the corresponding period of the previous year.
Services and Remittance
Net services income remained at a deficit of Rs.26.93 billion in the review period compared to a deficit of Rs.30.96 billion in the same period of the previous year.
Remittance inflows increased 27.6 percent to Rs.613.25 billion in the review period compared to an increase of 23.0 percent in the same period of the previous year. In US Dollar terms, remittance inflows increased 24.5 percent to 4.62 billion in the review period compared to an increase of 13.1 percent in the same period of the previous year.
Inter-bank Transaction
BFIs inter-bank transactions amounted to Rs.2318.53 billion on turnover basis including Rs.2081.67 billion inter-bank transactions among commercial banks and Rs.236.86 billion among other financial institutions (excluding transactions among commercial banks). In the corresponding period of the previous year, such transactions were Rs.1653.86 billion including Rs. 1500.26 billion among commercial banks and Rs.153.60 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 decreased 6.7 percent to US dollar 76.84 per barrel in mid-December 2023 from US dollar 82.34 per barrel a year ago. The price of gold increased 14.5 percent to US dollar 2041.35 per ounce in mid-December 2023 from US dollar 1783.55 per ounce a year ago.
Foreign Exchange Reserves and Adequacy Indicators
Gross foreign exchange reserves increased 14.8 percent to Rs.1767.04 billion in mid-December 2023 from Rs.1539.36 billion in mid-July 2023. In US dollar terms, the gross foreign exchange reserves increased 13.6 percent to 13.31 billion in mid-December 2023 from 11.71 billion in mid-July 2023.
Of the total foreign exchange reserves, reserves held by NRB increased 15.6 percent to Rs.1556.25 billion in mid-December 2023 from Rs.1345.78 billion in mid-July 2023. Reserves held by banks and financial institutions (except NRB) increased 8.9 percent to Rs.210.79 billion in mid-December 2023 from Rs.193.59 billion in mid-July 2023. The share of Indian currency in total reserves stood at 21.6 percent in mid-December 2023.
Based on the imports of five months of 2023/24, the foreign exchange reserves of the banking sector are sufficient to cover the prospective merchandise imports of 14.1 months and merchandise and services imports of 11.8 months. The ratio of reserves-to-GDP, reserves-to-imports and reserves-to-M2 stood at 32.8 percent, 98.3 percent, and 27.5 percent respectively in mid-December 2023. Such ratios were 28.6 percent, 83.0 percent, and 25.1 percent respectively in mid-July 2023.
Exchange Rate
Nepalese currency vis-à-vis the US dollar depreciated 1.01 percent in mid-December 2023 from mid-July 2023. It had depreciated 3.14 percent in the same period of the previous year. The buying exchange rate per US dollar stood at Rs.132.51 in mid-December 2023 compared to Rs.131.17 in mid-July 2023.
According to the Ministry of Finance, Financial Comptroller General Office (FCGO), the total expenditure of the Nepal Government stood at Rs.453 billion during the five months of 2023/24. Compared to the growth of 12.4
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.276.64 billion. The tax revenue amounted to Rs.254.30 billion and the nontax revenue was Rs. 22.34 billion in the review period. The recurrent expenditure, capital expenditure, and financial expenditure amounted to Rs.360 billion, Rs.36.06 billion, and Rs.56.94 billion respectively in the review period.
Banking
Domestic credit increased by 2.8 percent in the review period compared to an increase of 3.0 percent in the corresponding period of the previous year. On a y-o-y basis, domestic credit increased 8.5 percent in mid-December 2023.
Monetary Sector's claims on the private sector increased 3.8 percent in the review period compared to an increase of 3.1 percent in the corresponding period of the previous year. On a y-o-y basis, such claims increased by 5.3 percent in mid-December 2023.
Interest Rates
The average base rates of commercial banks, development banks, and finance companies stood at 9.64 percent, 11.64 percent, and 13.14 percent respectively in the fifth month of 2023/24. The average base rate of commercial banks was 10.69 percent in the corresponding month a year ago.
Balance of Payments
Balance of Payments (BOP) remained at a surplus of Rs.210.59 billion in the review period against a surplus of Rs.45.87 billion in the same period of the previous year. In US Dollar terms, the BOP remained at a surplus of 1.58 billion in the review period against a surplus of 346.8 million in the same period of the previous year.
