Nepal's Fiscal Half-Year Report: Forex Reserves Hit Historic High, Exceed Annual Budget
The semi-annual evaluation of the fiscal year 2080-81 BS revealed that the Gross foreign exchange reserves reached NPR 1816.57 billion and USD 13.69 billion, marking an 18% surge over the past six months. Assessing Nepal's current macroeconomic and financial status based on data from the preceding six months until mid-January, as evaluated by the central bank, indicates that the current foreign exchange reserves surpass the country's annual budget, representing the highest forex reserves to date.
As per the report, gross foreign exchange reserves demonstrated an 18% increase, reaching Rs. 1816.57 billion in mid-January 2024 from Rs. 1539.36 billion in mid-July 2023. In USD terms, the reserves rose by 16.9% to 13.69 billion in mid-January 2024 from 11.71 billion in mid-July 2023. Within the total foreign exchange reserves, those held by the NRB increased by 18.9% to Rs. 1600.23 billion in mid-January 2024 from Rs. 1345.78 billion in mid-July 2023.
Furthermore, reserves held by banks and financial institutions (excluding NRB) increased by 11.8% to Rs. 216.35 billion in mid-January 2024 from Rs. 193.59 billion in mid-July 2023. The share of Indian currency in total reserves stood at 22.5% in mid-January 2024. Based on the imports of the first six months of 2023/24, the foreign exchange reserves of the banking sector are sufficient to cover prospective merchandise imports for 14.5 months and merchandise and services imports for 12.1 months. The ratios of reserves-to-GDP, reserves-to-imports, and reserves-to-M2 were 33.8%, 100.9%, and 27.7%, respectively, in mid-January 2024, compared to 28.6%, 83%, and 25%, in mid-July 2023.
During the review period, the current account maintained a surplus of Rs. 161.62 billion, a significant improvement from the Rs. 35.57 billion deficit in the same period of the previous year. In US Dollar terms, the current account recorded a surplus of 1.21 billion in the review period, contrasting with a deficit of 279.6 million in the same period last year.
