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Nepal's Economic Outlook - List of Major Highlights Presenting the Current Economic & Financial Situation of the Country

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Tue, Apr 11, 2023 5:15 PM on National, Featured, Economy,
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The "Press Conference" to discuss the current economic and financial situation of the country was held on April 11, 2023, and was organized by Nepal Rastra Bank (NRB). The program's keynote speaker included the Governor of NRB, Maha Prasad Adhikari along with representatives of NRB.

The governor brought up a number of queries that every Nepalese citizen had about the country's economic situation. The event's key highlights are listed below:

  • Economy is on a path toward potential growth. According to the first quarter of FY 22/23, the economy has grown by 0.8 percent.
  • The inflation rate continues to be greater than the 7 percent target specified in the budget and monetary policy statements. In the upcoming months, an improvement is anticipated. Inflation during the first eight months of 2079/80 is 7.93%.
  • Average monthly imports: 2020/21 = Rs. 128 billion, 2021/22= Rs. 160 billion, 2022/23 = Rs. 132 billion.
  • As of Falgun 2079 (during the first eight months of 2079/80), remittance inflows increased by 25.3% in NPR terms and by 14.8% in USD, compared to declines of 1.3% in NPR terms and 2.6% in USD during the same time period the previous FY. Growing remittance inflows were aided by an increase in the number of expatriates and increased interest rates (1% plus).
  • Average Remittance inflows: 2020/21 = Rs. 80 billion, 2021/22 = Rs. 84 billion, 2022/23 = Rs. 99 billion.
  • Education expenses amounted to Rs. 54.7 billion as of Falgun 2079 registering a growth of 80 percent over last year.
  • To prevent the BOP's balance of payments from deteriorating, the NRB boosted policy rates in Falgun 2078 and Shrawan 2079 in addition to introducing cash margin on LC opening in Poush and Magh 2078. In Baishakh 2079, the government instituted import restrictions. Now the Import restrictions and cash margin provisions have been eliminated.
  • The external sector is no longer under as much pressure, and foreign exchange reserves are at a reasonable level. Additionally, it has contributed to increased liquidity in the banking sector. In order to strengthen the external sector, higher interest rates assisted in reducing imports and promoting remittance inflows.
  • Higher credit growth helped to increase import during 2078/79, beginning of Baishakh 2078.
  • Given the pegged exchange rate with Indian Currency, interest rates have to adjust to correct any imbalances in the external sector (BOP deficit).
  • During 2078/79, real interest rates remained lower than the previous year, and negative real deposit rate. These real interest rates started increasing after Kartik 2079, after this real deposit rate also became positive. Only then, BOP turned into positive.
  • From Magh 2079, the nominal base rate and deposit rate have started declining.
  • Nominal and real lending rate is expected to decline from Baishakh 2080.
  • As of Chaitra 19, 2079, Outstanding SLF (Standing Liquidity Facility) = Rs. 2.2 billion, Outstanding OLF (5. Overnight Liqudity Facility) = Rs. 36.4 billion, Out sanding Refinance = Rs. 6.3 billion.
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