7 Months Macro Economic Indicators of FY 2024/25: Remittance Inflows Risen by 7.3%, Inflation at 4.16%

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

Overall

Nepal Rastra Bank estimated that the inflation remained at 4.16 percent on a y-o-y basis. The gross foreign exchange reserves stood at 17.05 billion in USD terms, whereas the total imports and exports increased 10.1 percent and 46.5 percent, respectively.

NEPSE index stood at 2685.73 in mid-February 2025 compared to 2101.16 in mid-February 2024.

Inflation

The y-o-y consumer price inflation stood at 4.16 percent in mid-February 2025 compared to 5.01 percent a year ago.

The y-o-y wholesale price inflation stood at 3.47 percent in mid-February 2025 compared to 2.82 percent a year ago. The y-o-y wholesale price of consumption goods, intermediate goods, and capital goods increased 4.27 percent, 3.11 percent, and 2.90 percent, respectively. The y-o-y wholesale price of construction materials decreased by 0.72 percent in the review month.

Import and Export

During the seven months of 2024/25, merchandise exports increased 46.5 percent to Rs.127.20 billion against a decrease of 7.1 percent in the same period of the previous year. Destination-wise, exports to India, China, and other countries increased 66.9 percent, 8.6 percent, and 3.5 percent, respectively. Exports of soybean oil, polyester yarn and thread, tea, cardamom, and particle board, among others, increased, whereas exports of palm oil, zinc sheet, ginger, herbs, and ready-made garments, among others, decreased in the review period.

During the seven months of 2024/25, merchandise imports increased 10.1 percent to Rs.988.59 billion against a decline of 2.3 percent a year ago. Destination-wise, imports from India, China, and other countries increased by 7.5 percent, 11.2 percent, and 17.5 percent, respectively. Imports of crude soybean oil, rice/paddy, transport equipment, vehicle and other vehicle spare parts, edible oil, sponge iron, among others increased whereas imports of petroleum products, crude palm oil, aircraft spare parts, peas, writing and printing paper, among others decreased in the review period.

The total trade deficit increased 6.2 percent to Rs. 861.38 billion during the seven months of 2024/25. Such a deficit had decreased 1.8 percent in the corresponding period of the previous year. The export-import ratio increased to 12.9 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.50.22 billion in the review period compared to a deficit of Rs. 36.38 billion in the same period of the previous year. 

Remittance inflows increased 7.3 percent to Rs.900.58 billion in the review period compared to an increase of 18.8 percent in the same period of the previous year. In the US Dollar terms, remittance inflows increased 5.3 percent to 6.65 billion in the review period compared to an increase of 16.4 percent in the same period of the previous year.

Inter-bank Transaction

In the review period, BFIs' inter-bank transactions amounted to Rs. 1040.01 billion on a turnover basis, including Rs.. 937.81 billion inter-bank transactions among commercial banks and Rs.. 102.20 billion among other financial institutions (excluding transactions among commercial banks). In the corresponding period of the previous year, such transaction was Rs.2872.44 billion, including Rs.2596.18 billion among commercial banks and Rs.276.26 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 10.13 percent to US dollar 75.38 per barrel in mid-February 2025 from US dollar 83.88 per barrel a year ago. The price of gold increased 43.48 percent to US dollar 2891.50 per ounce in mid-February 2025 from US dollar 2015.20 per ounce a year ago.

Foreign Exchange Reserves and Adequacy Indicator

Gross foreign exchange reserves increased 16.1 percent to Rs.2369.08 billion in mid-February 2025 from Rs.2041.10 billion in mid-July 2024. In US dollar terms, the gross foreign exchange reserves increased 11.7 percent to 17.05 billion in mid-February 2025 from 15.27 billion in mid-July 2024.

Of the total foreign exchange reserves, the reserves held by NRB increased 13.9 percent to Rs.2105.14 billion in mid-February 2025 from Rs.1848.55 billion in mid-July 2024. Reserves held by banks and financial institutions (except NRB) increased 37.1 percent to Rs.263.93 billion in mid-February 2025 from Rs.192.55 billion in mid-July 2024. The share of Indian currency in total reserves stood at 22.0 percent in mid-February 2025.

Based on the imports of seven months of 2024/25, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 17.2 months and merchandise and services imports of 14.4 months. The ratio of reserves-to-GDP, reserves-to-imports, and reserves-to-M2 stood at 41.5 percent, 120.3 percent, and 32.5 percent, respectively, in mid-February 2025. Such ratios were 35.8 percent, 108.6 percent,t, and 29.3 percent, respectively, in mid-July 2024.

Exchange Rate

Nepalese currency vis-à-vis the US dollar depreciated 3.80 percent in mid-February 2024 from mid-July 2024. It had depreciated 1.05 percent in the same period of the previous year. The buying exchange rate per US dollar stood at Rs.138.63 in mid-February 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.754.85 billion during the seven months of FY 2024/25. The recurrent expenditure, capital expenditure, and financial expenditure amounted to Rs.522.63 billion, Rs.68.42 billion, and Rs.163.81 billion, respectively, in the review period.

In the review period, the total revenue mobilization of the Government of Nepal (including the amount to be transferred to provincial and local governments) stood at Rs.642.85 billion. The total revenue comprises tax revenue amounting to Rs.565.64 billion and non-tax revenue Rs.77.21 billion in the review period.

Cash Balance of Government

Cash Balance at various accounts of the GoN maintained with NRB remained Rs.350.07 billion (including Provincial Governments and Local Government Account) in mid-February 2025. Such balance was Rs.83.99 billion in mid-July 2024.

Banking

Domestic credit increased 1.3 percent in the review period compared to an increase of 3.2 percent in the corresponding period of the previous year. On y-o-y basis, domestic credit increased 4.3 percent in mid-February 2025.

Monetary Sector's claims on the private sector increased 6.0 percent in the review period compared to an increase of 5.1 percent in the corresponding period of the previous year. On y-o-y basis, such claims increased 7.0 percent in mid-February 2025.

Deposits at Banks and Financial Institutions (BFIs) increased Rs.239.06 billion (3.7 percent) in the review period compared to an increase of Rs.377.07 billion (6.6 percent) in the corresponding period of the previous year. On y-o-y basis, deposits at BFIs expanded 9.9 percent in mid-January 2025.

Private sector credit from BFIs increased by Rs.283.46 billion (5.6 percent) in the review period compared to an increase of Rs.197.21 billion (4.1 percent) in the corresponding period of the previous year. On a y-o-y basis, credit to the private sector from BFIs increased by 7.3 percent in mid-February 2025.

Interest Rates

The average base rates of commercial banks, development banks, and finance companies stood at 6.46 percent, 8.52 percent, and 9.39 percent, respectively, in the seventh month of 2024/25. The average base rate of commercial banks, development banks, and finance companies were 9.06 percent, 11.13 percent, and 12.70 percent, respectively, in the corresponding month a year ago.

Balance of Payments

The balance of Payments (BOP) remained at a surplus of Rs.284.41 billion in the review period compared to a surplus of Rs.297.72 billion in the same period of the previous year. In US Dollar terms, the BOP remained at a surplus of 2.11 billion in the review period compared to a surplus of 2.24 billion in the same period of the previous year.