Macroeconomic Snapshot of 8 Months: Inflation at 3.75%; Foreign Reserves Reach USD 17.27 Billion; Remittance Surges 9.4%
Nepal Rastra Bank, the central bank of Nepal, has unveiled the current macroeconomic and financial situation of Nepal based on eight months of data for FY 2024/25.
Overall
Nepal Rastra Bank estimated that the inflation remained at 3.75 percent on a y-o-y basis. The gross foreign exchange reserves stood at 17.27 billion in USD terms, whereas the total imports and exports increased 11.2 percent and 57.2 percent, respectively.
The NEPSE index stood at 2736.49 in mid-March 2025 compared to 2108.73 in mid-March 2024.
Inflation
The y-o-y consumer price inflation stood at 3.75 percent in mid-March 2025 compared to 4.82 percent a year ago.
The y-o-y wholesale price inflation stood at 4.43 percent in mid-March 2025 compared to 3.69 percent a year ago. The y-o-y wholesale price of consumption goods, intermediate goods, and capital goods increased 8.02 percent, 2.57 percent, and 3.17 percent, respectively. The y-o-y wholesale price of construction materials increased 1.63 percent in the review month.
Import and Export
During the eight months of 2024/25, merchandise exports increased 57.2 percent to Rs.158.17 billion against a decrease of 4.0 percent in the same period of the previous year. Destination-wise, exports to India, China, and other countries increased 82.5 percent, 8.8 percent, and 2.9 percent, respectively. Exports of soybean oil, polyester yarn, thread, tea, particle board, and cardamom, among others, increased, whereas exports of palm oil, zinc sheet, ginger, readymade garments, and juice, among others, decreased in the review period.
During the eight months of 2024/25, merchandise imports increased 11.2 percent to Rs.1145.57 billion against a decline of 2.7 percent a year ago. Destination-wise, imports from India, China, and other countries increased by 7.9 percent, 12.5 percent, and 20.6 percent, respectively. Imports of crude soybean oil, rice/paddy, transport equipment, vehicle and spare parts, edible oil, sponge iron, among others increased whereas imports of petroleum products, crude palm oil, aircraft spare parts, writing and printing paper, and chemical fertilizer among others decreased in the review period.
The total trade deficit increased 6.2 percent to Rs.987.39 billion during the eight months of 2024/25. Such a deficit had decreased 2.5 percent in the corresponding period of the previous year. The export-import ratio increased to 13.8 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.75.13 billion in the review period compared to a deficit of Rs.43.63 billion in the same period of the previous year.
Remittance inflows increased 9.4 percent to Rs.1051.77 billion in the review period compared to an increase of 18.3 percent in the same period of the previous year. In US dollar terms, remittance inflows increased 6.9 percent to 7.74 billion in the review period compared to an increase of 16.1 percent in the same period of the previous year.
Inter-bank Transaction
In the review period, BFIs' interbank transactions amounted to Rs. 1293.09 billion on a turnover basis, including Rs. 1162.71 billion in interbank transactions among commercial banks and Rs. 130.38 billion among other financial institutions (excluding transactions among commercial banks). In the corresponding period of the previous year, such transaction was Rs.3189.35 billion, including Rs.2894.94 billion among commercial banks and Rs.294.41 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 15.64 percent to US dollar 70.82 per barrel in mid-March 2025 from US dollar 83.95 per barrel a year ago. The price of gold increased 37.15 percent to US dollar 2974.05 per ounce in mid-March 2025 from US dollar 2168.40 per ounce a year ago
Foreign Exchange Reserves and Adequacy Indicator
Gross foreign exchange reserves increased 18.0 percent to Rs.2409.25 billion in mid-March 2025 from Rs.2041.10 billion in mid-July 2024. In US dollar terms, the gross foreign exchange reserves increased 13.1 percent to 17.27 billion in mid-March 2025 from 15.27 billion in mid-July 2024.
Of the total foreign exchange reserves, the reserves held by NRB increased 15.2 percent to Rs.2130.31 billion in mid-March 2025 from Rs.1848.55 billion in mid-July 2024. Reserves held by banks and financial institutions (except NRB) increased 44.9 percent to Rs.278.95 billion in mid-March 2025 from Rs.192.55 billion in mid-July 2024. The share of Indian currency in total reserves stood at 21.7 percent in mid-March 2025.
Based on the imports of eight months of 2024/25, the foreign exchange reserves of the banking sector are sufficient to cover the prospective merchandise imports of 17.2 months and merchandise and services imports of 14.3 months. The ratio of reserves-to-GDP, reserves-to-imports, and reserves-to-M2 stood at 42.2 percent, 119.4 percent, and 33.0 percent, respectively, in mid-March 2025. Such ratios were 35.8 percent, 108.6 percent, and 29.3 percent, respectively, in mid-July 2024.
Exchange Rate
Nepalese currency vis-à-vis the US dollar depreciated 4.22 percent in mid-March 2024 from mid-July 2024. It had depreciated 0.73 percent in the same period of the previous year. The buying exchange rate per US dollar stood at Rs.139.24 in mid-March 2025 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.839.36 billion during eight months of FY 2024/25. The recurrent expenditure, capital expenditure, and financial expenditure amounted to Rs.584.13 billion, Rs.82.34 billion, and Rs.172.89 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.720.35 billion. The total revenue comprises tax revenue amounting to Rs.638.80 billion and non-tax revenue of Rs.81.55 billion in the review period.
Cash Balance of Government
The Cash Balance at various accounts of the GoN maintained with NRB remained Rs.392.36 billion (including Provincial Government and Local Government Accounts) in mid-March 2025. Such balance was Rs.93.96 billion in mid-July 2024.
Banking
Domestic credit increased 1.8 percent in the review period compared to an increase of 4.0 percent in the corresponding period of the previous year. On a y-o-y basis, domestic credit increased 3.9 percent in mid-March 2025.
Monetary Sector's claims on the private sector increased 6.8 percent in the review period compared to an increase of 5.6 percent in the corresponding period of the previous year. On a y-o-y basis, such claims increased 7.3 percent in mid-March 2025.
Deposits at Banks and Financial Institutions (BFIs) increased Rs.277.23 billion (4.3 percent) in the review period compared to an increase of Rs.435.87 billion (7.6 percent) in the corresponding period of the previous year. On a y-o-y basis, deposits at BFIs expanded 9.5 percent in mid-March 2025.
Private sector credit from BFIs increased Rs.304.82 billion (6.0 percent) in the review period compared to an increase of Rs.199.5 billion (4.2 percent) in the corresponding period of the previous year. On a y-o-y basis, credit to the private sector from BFIs increased by 7.7 percent in mid-March 2025.
Interest Rates
The average base rates of commercial banks, development banks, and finance companies stood at 6.34 percent, 8.42 percent, and 9.32 percent, respectively,y in the eighth month of 2024/25. The average base rate of commercial banks, development banks, and finance companies were 8.77 percent, 10.71 percent, and 12.33 percent, respectively,y in the corresponding month a year ago.
Balance of Payments
The Balance of Payments (BOP) remained at a surplus of Rs.310.37 billion in the review period compared to a surplus of Rs.327.55 billion in the same period of the previous year. In US dollar terms, the BOP remained at a surplus of 2.29 billion in the review period compared to a surplus of 2.46 billion in the same period of the previous year.
