Central Bank Unveils Current Macroeconomic and Financial Situation of Nepal For 9 Months (Mid July-Mid April -2021/22)

Nepal Rastra Bank, the central bank of Nepal, has unveiled the current macroeconomic and financial situation of Nepal based on the nine months' data ending mid-April, 2022. 

Overalls

The Nepal Rastra Bank estimated that the inflation remained at 7.28 percent on a y-o-y basis. The gross foreign exchange reserves stood at USD 9.61 billion and the imports increased 32.0 percent and exports increased 69.4 percent.

An amount of Rs. 138.84 billion has been extended to 59,931 borrowers for selected commercial agriculture and livestock business. Likewise, Rs. 73.52 billion loan has been extended to 82,926 women entrepreneurs. Similarly, the areas most affected due to covid -19, viz tourism, cottages, and others have also been granted a loan of Rs. 1.13 billion as of mid-April, 2022.

NEPSE index stood at 2415.3 in mid-April 2022 compared to 2714.8 in mid-April 2021.

Inflation

The average consumer price inflation stood at 7.8 percent in the nine months of 2021/22 compared to 3.10 percent a year ago. The y-o-y wholesale price inflation stood at 14.2 percent in mid-April 2022 compared to 6.14 percent a year ago.

The y-o-y consumer price inflation in Nepal in the nine months of 2021/22 remained 7.28 percent. Such inflation in India was 6.95 percent in March 2022.

Import and Export

During 2021/ 22, merchandise exports increased 69.4 percent to Rs. 160.57 billion compared to an increase of 20.2 percent in the previous year. Destination-wise, exports to India and other countries increased by 86.9 percent and 25.5 percent respectively whereas exports to China decreased by 21.8 percent. Exports of soya bean oil, palm oil, threads, woolen carpet, and oil cakes, among others, increased whereas exports of cardamom, tea, wire, toothpaste, and copper wire rod, among other things decreased in the review period.

During 2021/22, merchandise imports increased 32.0 percent to Rs.1466.66 billion against an increase of 13.1 percent a year ago. Destination-wise, imports from India, China, and other countries increased by 24.4 percent, 28.6 percent, and 59.2 percent respectively. Imports of petroleum products, medicine, crude palm oil, other machinery parts, and gold, among others, increased whereas imports of M.S. billet, chemical fertilizer, cement, pulses, and molasses sugar, among others, decreased in the review period.

The total trade deficit increased 28.5 percent to Rs.1306.09 billion during 2021/22. Such a deficit had increased 12.5 percent in the previous year. The export-import ratio increased to 10.9 percent in the review period from 8.5 percent in the previous year.

Services and Remittance

Net services income remained at a deficit of Rs.80.35 billion in the review year compared to a deficit of Rs.53.26 billion in the previous year. Under the service account, travel income increased 232.3 percent to Rs.18.47 billion in the review year which was Rs. 5.56 billion in the previous year.

Remittance inflows decreased 0.6 percent to Rs.724.74 billion in the review year against an increase of 16.5 percent in the previous year. In the US Dollar terms, remittance inflows decreased 2.2 percent to 6.05 billion in the review year against an increase of 13.1 percent in the previous year. The number of Nepali workers (institutional and individual-new and legalized) taking approval for foreign employment increased significantly to 256,031 in the review year. It had decreased 74.9 percent in the previous year. The number of Nepali workers (Renew entry) taking approval for foreign employment increased 199.9 percent to 206,629 in the review year. It had decreased 60.7 percent in the previous year.

Inter-bank Transaction

The BFI’S interbank transactions amounted to Rs. 2568.91 Billion including Rs. 2299.22 billion interbank transactions among commercial banks and Rs. 269.68 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 72.7 percent to US Dollar 108.49 per barrel in mid-April 2022 from US Dollar 62.83 per barrel a year ago. The price of gold increased 13.1 percent to US Dollar 1976.75 per ounce in mid-April 2022 from US Dollar 1747.95 per ounce a year ago.

Exchange Rate

Nepalese currency vis-à-vis the US Dollar depreciated 2.04 percent in mid-April 2022 from mid-July 2021. It had depreciated 0.48 percent in the previous year. The buying exchange rate per US Dollar stood at Rs.121.52 in mid-April 2022 compared to Rs.119.04 in mid-July 2021.

According to Financial Comptroller General Office (FCGO), the total expenditure of the federal government amounted to Rs.794.26 billion in 2021/22 compared to Rs. 690.47 billion a year ago. The recurrent expenditure, capital expenditure, and financing expenditure of the federal government amounted to Rs. 625.50 billion, Rs. 103.79 billion, and Rs.64.97 billion respectively in 2021/22.

Revenue collection (including the amount to be transferred to provincial and local governments) stood at Rs.789.26 billion in 2021/22. Total government revenue was Rs.683.87 billion a year ago. Total resource mobilization (including revenue and other receipts) of the federal government stood at Rs.125.53 billion in 2020/21.

Banking

Domestic credit increased 10.7 percent in the review year compared to a growth of 17 percent in the previous year. Deposits at Banks and Financial Institutions (BFIs) increased 5.1 percent in the review year compared to a growth of 13.7 percent in the previous year.

Private sector credit from BFIs increased 13.5 percent in the review year compared to a growth of 22.5 percent in the previous year.

Interest Rates

The average base rate of commercial banks increased to 9.17 percent in the review month (mid-April to mid-April) of 2021/22 from 6.90 percent a year ago. The weighted average deposit rate and lending rate of commercial banks stood at 7.11 percent and 10.78 percent respectively in the review month. Such rates were 4.79 percent and 8.61 percent respectively a year ago.