5 Months Macro Economic Indicators of FY 2024/25: Remittance Inflows Risen by 4.4%, Inflation at 6.05%

Nepal Rastra Bank, the central bank of Nepal, has unveiled the current macroeconomic and financial situation of Nepal based on the five months' data for FY 2024/25.

Overall

Nepal Rastra Bank estimated that the inflation remained at 6.05 percent on a y-o-y basis. The gross foreign exchange reserves stood at USD 16.76 billion, whereas, the total imports and exports increased 3 percent and 16.5 percent respectively.

NEPSE index stood at 2682.29 in mid-December 2024 compared to 1994.60 in mid-December 2023.

Inflation

The y-o-y consumer price inflation stood at 6.05 percent in mid-December 2024 compared to 4.95 percent a year ago.

The y-o-y wholesale price inflation stood at 6.52 percent in mid-December 2024 compared to 2.63 percent a year ago. The y-o-y wholesale price of consumption goods, intermediate goods and capital goods increased 12.59 percent, 3.77 percent and 3.20 percent respectively. The y-o-y wholesale price of construction material decreased by 4.14 percent in the review month.

Import and Export

During the five months of 2024/25, merchandise exports increased 16.5 percent to Rs.73.66 billion against a decrease of 6.1 percent in the same period of the previous year. Destination-wise, exports to India and China increased 23.7 percent and 68.9 percent respectively whereas export to other countries decreased 1.2 percent. Exports of soyabean oil, tea, polyster yarn and thread, particle board, woolen carpet, among others increased whereas exports of palm oil, zinc sheet, ginger, readymade garments, herbs, among others decreased in the review period.

During the five months of 2024/25, merchandise imports increased 3 percent to Rs.661.49 billion against a decline of 3.4 percent a year ago. Destination-wise, imports from India and China increased 4.0 percent and 4.6 percent respectively, while import from other countries decreased 1.8 percent. Imports of transport equipment, vehicle and other vehicle spare parts, crude soyabean oil, sponge iron, garlic, edible oil, among others increased whereas imports of petroleum products, gold, crude palm oil, peas, bitumen, among others decreased in the review period.

The total trade deficit increased 1.5 percent to Rs.587.83 billion during the five months of 2024/25. Such a deficit had decreased 3.1 percent in the corresponding period of the previous year. The export-import ratio increased to 11.1 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.40.71 billion in the review period compared to a deficit of Rs.26.55 billion in the same period of the previous year.

Remittance inflows increased 4.4 percent to Rs.640.43 billion in the review period compared to an increase of 24.2 percent in the same period of the previous year. In the US Dollar terms, remittance inflows increased 2.5 percent to 4.73 billion in the review period compared to an increase of 21.1 percent in the same period of the previous year.

Inter-bank Transaction

In the review period, BFIs inter-bank transactions amounted Rs. 687.36 billion on a turnover basis, including Rs. 608.55 billion inter-bank transactions among commercial banks, and Rs.78.81 billion among other financial institutions (excluding transactions among commercial banks). In the corresponding period of the previous year, such transaction was Rs.2318.53 billion, including Rs. 2081.67 billion among commercial banks and Rs.236.86 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 2.5 percent to US dollar 74.89 per barrel in mid-December 2024 from US dollar 76.84 per barrel a year ago. The price of gold increased 30.3 percent to US dollar 2659.05 per ounce in mid-December 2024 from US dollar 2041.35 per ounce a year ago.

Foreign Exchange Reserves and Adequacy Indicator

Gross foreign exchange reserves increased 11.4 percent to Rs.2273.26 billion in mid-December 2024 from Rs.2041.10 billion in mid-July 2024. In the US dollar terms, the gross foreign exchange reserves increased 9.7 percent to 16.76 billion in midDecember 2024 from 15.27 billion in mid-July 2024. 

Of the total foreign exchange reserves, the reserves held by NRB increased 10.0 percent to Rs.2033.27 billion in mid-December 2024 from Rs.1848.55 billion in mid-July 2024. Reserves held by banks and financial institutions (except NRB) increased 24.6 percent to Rs.240 billion in mid-December 2024 from Rs.192.55 billion in mid-July 2024. The share of Indian currency in total reserves stood at 22.8 percent in mid-December 2024.

Based on the imports of five months of 2024/25, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 17.6 months, and merchandise and services imports of 14.6 months. The ratio of reserves-to-GDP, reserves-to-imports and reserves-to-M2 stood at 39.8 percent, 121.6 percent and 31.6 percent respectively in midDecember 2024. Such ratios were 35.8 percent, 108.6 percent and 29.3 percent respectively in midJuly 2024.

Exchange Rate

Nepalese currency vis-à-vis the US dollar depreciated 1.48 percent in mid-December 2024 from mid-July 2024. It had depreciated 1.01 percent in the same period of the previous year. The buying exchange rate per US dollar stood at Rs.135.37 in mid-December 2024 compared to Rs.133.36 in mid-July 2024.

Nepal Government Expenditure and Revenue

According to the Ministry of Finance, Financial Comptroller General Office (FCGO), the total expenditure of the Government of Nepal stood at Rs.556.12 billion during five months of FY 2024/25. The recurrent expenditure, capital expenditure and financial expenditure amounted to Rs.363.55 billion, Rs.40.80 billion and Rs.151.77 billion respectively in the review period.

. In the review period, total revenue mobilization of the Government of Nepal (including the amount to be transferred to provincial and local governments) stood at Rs.399.60 billion. The total revenue comprises of tax revenue amounting Rs.362.58 billion and non tax revenue Rs.37.02 billion in the review period.

Cash Balance of Government

Cash Balance at various accounts of the GoN maintained with NRB remained Rs.219.83 billion (including Provincial Governments and Local Government Account) in mid-December 2024. Such balance was Rs.91.78 billion in mid-July 2024.

Banking

Domestic credit increased 1.6 percent in the review period compared to an increase of 2.8 percent in the corresponding period of the previous year. On y-o-y basis, domestic credit increased 4.9 percent in mid-December 2024.

Monetary Sector's claims on the private sector increased 4.5 percent in the review period compared to an increase of 3.8 percent in the corresponding period of the previous year. On y-o-y basis, such claims increased 6.8 percent in mid-December 2024.

Deposits at Banks and Financial Institutions (BFIs) increased Rs.172.32 billion (2.7 percent) in the review period compared to an increase of Rs.263.72 billion (4.6 percent) in the corresponding period of the previous year. On y-o-y basis, deposits at BFIs expanded 10.9 percent in mid-December 2024.

Private sector credit from BFIs increased Rs.178.29 billion (3.5 percent) in the review period compared to an increase of Rs.110.01 billion (2.3 percent) in the corresponding period of previous year. On y-o-y basis, credit to the private sector from BFIs increased 7.0 percent in mid-December 2024.

Interest Rates

The average base rates of commercial banks, development banks and finance companies stood 6.82 percent, 8.65 percent and 9.77 percent respectively in the fifth month of 2024/25. The average base rate of commercial banks, development banks and finance companies were 9.64 percent, 11.64 percent and 13.14 percent respectively in the corresponding month a year ago.

Balance of Payments

Balance of Payments (BOP) remained at a surplus of Rs. 225.34 billion in the review period compared to a surplus of Rs. 216.05 billion in the same period of the previous year. In the US Dollar terms, the BOP remained at a surplus of 1.67 billion in the review period compared to a surplus of 1.63 billion in the same period of the previous year.