Nepal Rastra Bank Releases Annual Macroeconomic and Financial Report on Nepal's 2023/24 Situation
Nepal Rastra Bank, the central bank of Nepal, has unveiled the current macroeconomic and financial situation of Nepal based on the annual data for FY 2023/24.
Overall
Nepal Rastra Bank estimated that the inflation remained at 5.44 percent on a y-o-y basis. The gross foreign exchange reserves stood at USD 15.27 billion, whereas, the total imports decreased 1.2 percent and 3.0 percent respectively. In the previous year, imports and exports decreased by 16.1 percent and 21.4 percent respectively.
The outstanding amount of interest-subsidized loans extended to 120,274 borrowers is Rs.126.82 billion in mid-July 2024. Of this, Rs.86.90 billion has been extended to 46,356 borrowers for commercial agriculture and livestock businesses. Likewise, a Rs.38.29 billion loan has been extended to 71,883 women entrepreneurs. The remaining Rs.1.63 billion loan has been extended to 2,035 borrowers of other categories of concessional loans.
NEPSE index stood at 2240.41 in mid-July 2024 compared to 2097.10 in mid-July 2023.
Inflation
The y-o-y wholesale price inflation stood at 4.17 percent in mid-June 2024 compared to 6.83 percent a year ago.
The y-o-y wholesale price inflation stood at 5.48 percent in mid-June 2024 compared to 3.10 percent a year ago. The y-o-y wholesale price index of consumption goods, intermediate goods, and capital goods increased 6.87 percent, 5.32 percent, and 1.66 percent respectively. The y-o-y wholesale price index of construction materials decreased by 2.12 percent in the review month.
Real Sector
National Statistics Office has estimated economic growth of 3.87 percent for 2023/24. Agriculture, industry, and service sectors are estimated to grow 3.05 percent, 1.25 percent, and 4.50 percent respectively. Share of agriculture, industry, and service sectors in
GDP stands at 24.10 percent, 13.00 percent, and 62.90 percent respectively in 2023/24.
Gross domestic saving to GDP stands at 7.61 percent in 2023/24. The ratio of gross fixed capital formation and gross national saving to GDP stands at 24.45 percent and 36.15 percent respectively.
The installed capacity of electricity increased to 3156.96 Megawatt in 2023/24, which consists of 2990.6 Megawatt of hydroelectricity, 106.9 Megawatt of solar, 6.0 Megawatt of cogeneration and 53.4 Megawatt of thermal electricity. The total number of tourist arrivals increased significantly to 1,128,284 in 2023/24, which was 862,992
in the previous fiscal year.
Import and Export
During 2023/24, merchandise exports decreased 3.0 percent to Rs.152.38 billion against a decrease of 21.4 percent in the previous year. Destination-wise, exports to India and other countries decreased 3.3 percent and 4.3 percent respectively whereas exports to China increased 46.6 percent. Exports of zinc sheet, particle board, juice, polyester yarn & thread, and oil cakes among others, increased whereas exports of palm oil, soyabean oil, woolen carpet, brans, and jute goods, among others, decreased in the review period.
Merchandise imports decreased 1.2 percent to Rs.1592.99 billion against a decrease of 16.1 percent a year ago. Destination-wise, imports from India and other countries decreased 3.0 percent, and 17.6 percent respectively whereas imports from China increased by 34.2 percent. Imports of transport equipment, vehicle and other vehicle spare parts, readymade garments, aircraft spareparts, electrical equipment, and other machinery and parts among others, increased whereas imports of crude soyabean oil, gold, hot rolled sheet in coil, crude palm oil, rice/paddy among others, decreased in the review year.
The trade deficit decreased 1.0 percent to Rs.1440.60 billion in the review year. Such a deficit had decreased by 15.5 percent in the previous year. The export-import ratio decreased to 9.6 percent in the review year from 9.7 percent in the previous year.
Services and Remittance
Net services income remained at a deficit of Rs. 55.86 billion during 2023/24 compared to a deficit of Rs.79.89 billion in the previous year.
Remittance inflows increased 16.5 percent to Rs.1445.32 billion during 2023/24 compared to an increase of 23.2 percent in the previous year. In US Dollar terms, remittance inflows increased 14.5 percent to 10.86 billion in the review year compared to an increase of 13.9 percent in the previous year.
Inter-bank Transaction
In the review year, BFIs’ interbank transactions amounted to Rs.4226.48 billion including Rs.3863.48 billion inter-bank transactions among commercial banks and Rs.363 billion among other financial institutions (excluding transactions among commercial banks). In the previous year, such transactions were Rs.4294.22 billion including Rs.3942.15 billion among commercial banks and Rs.352.07 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 8.2 percent to US dollar 86.42 per barrel in mid-July 2024 from US dollar 79.90 per barrel a year ago. The price of gold increased 23.9 percent to US dollar 2421.25 per ounce in mid-July 2024 from US dollar 1953.7 per ounce a year ago.
Foreign Exchange Reserves and Adequacy Indicator
Gross foreign exchange reserves increased 32.6 percent to Rs.2041.10 billion in mid-July 2024 from Rs.1539.36 billion in mid-July 2023. In US dollar terms, the gross foreign exchange reserves increased 30.4 percent to 15.27 billion in mid-July 2024 from 11.71 billion in mid-July 2023.
Of the total foreign exchange reserves, reserves held by NRB increased 37.4 percent to Rs. 1848.55 billion in mid-July 2024 from Rs. 1345.78 billion in mid-July 2023. Reserves held by banks and financial institutions (except NRB) decreased 0.5 percent to Rs. 192.55 billion in mid-July 2024 from Rs.193.59 billion in mid-July 2023. The share of Indian currency in total reserves stood at 22.5 percent in mid-July 2024.
Based on the imports of 2023/24, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 15.6 months, and merchandise and services imports of 13 months. The ratio of reserves-to-GDP, reserves-to-imports and reserves-to-M2 stood at 35.8 percent, 108.6 percent and 29.3 percent respectively in mid-July 2024. Such ratios were 28.8 percent, 83 percent and 25 percent respectively in mid-July 2023.
Exchange Rate
Nepalese currency vis-à-vis the US dollar depreciated 1.64 percent in mid-July 2024 from mid-July 2023. It had depreciated 2.79 percent in the previous year. The buying exchange rate per US dollar stood at Rs.133.36 in mid-July 2024 compared to Rs. 131.17 in mid-July 2023.
Nepal Government Expenditure and Revenue
The total expenditure of the Nepal government according to the Financial Comptroller General Office (FCGO), Ministry of Finance, amounted to Rs.1408.02 billion in 2023/24 compared to Rs. 1421.33 billion a year ago. The recurrent expenditure, capital expenditure, and financing expenditure of the federal government amounted to Rs.951.64 billion, Rs.191.75 billion, and Rs.264.63 billion respectively in 2023/24.
Revenue collection (including the amount to be transferred to provincial and local governments) stood at Rs.1058.90 billion in 2023/24. Total government revenue was Rs. 957.35 billion a year ago. Total resource mobilization (including revenue and other receipts) of the Nepal government stood at\ Rs.1082.75 billion in 2023/24.
Cash Balance of Government
Cash balance at various accounts of the GoN maintained with NRB remained at Rs.99.27 billion (including Provincial Government and Local Authorities accounts) in mid-July 2024.
Banking
Domestic credit increased 6.1 percent in the review year compared to a growth of 8.8 percent in the previous year.
The Monetary Sector's claims on the private sector increased 6.1 percent in the review year compared to a growth of 4.6 percent in the previous year.
Deposits at Banks and Financial Institutions (BFIs) increased Rs.742.37 billion (13.0 percent) in the review year compared to an increase of Rs. 627.25 billion (12.3 percent) in the previous year.
Private sector credit from BFIs increased Rs.276.94 billion (5.8 percent) in the review year compared to an increase of Rs.175.94 billion (3.8 percent) in the previous year.
Interest Rates
The average base rate of commercial banks, development banks, and finance companies stood at 8.00 percent, 9.71 percent, and 11.21 percent respectively in the last month of 2023/24. Such rates were 10.03 percent, 12.15 percent, and 13.41 percent respectively in the corresponding month a year ago.
Balance of Payments
Balance of Payments (BOP) remained at a surplus of Rs.502.49 billion in the review year compared to a surplus of Rs. 285.82 billion in the previous year. In US Dollar terms, the BOP remained at a surplus of 3.77 billion in the review year compared to a surplus of 2.17 billion in the previous year.
