Economy's external factors present robust picture with growth in remittance inflow and higher BoP: NRB

KATHMANDU: Despite a decrease in the number of people going abroad in the current fiscal year 2023/24, the inflow of remittances into the country has increased at a steady rate of around 20%, due to the robust exchange rate of the US dollar among other factors. The country received Rs 1198.6 billion in remittances in the first 10 months of the current fiscal year.

Nepal Rastra Bank (NRB) released the current macroeconomic and financial situation report based on 10 months' data for the current fiscal year on Monday. The NRB reported that remittance inflows increased by 19.2%, compared to an increase of 23.4% in the same period of the previous year. "In US dollar terms, remittance inflows increased by 17.1% to 9.02 billion in the review period, compared to an increase of 13.4% in the same period of the previous year," the central bank stated.

During this period, the number of Nepali workers approved for foreign employment stood at 374,887, and those approved for re-entry stood at 237,893. In the previous year, these numbers were 421,279 and 238,976 respectively.

Consumer price inflation moderated to 4.4% in mid-May 2024, compared to 7.41% a year ago. Inflation in the food and beverage category stood at 6.27%, while non-food and service category inflation stood at 2.96% in the review month.

According to the central bank, the current account remained at a surplus of Rs 193.25 billion during the review period, against a deficit of Rs 63.74 billion in the same period of the previous year.

In the review period, net foreign direct investment (FDI) remained positive at Rs 6.98 billion. In the same period of the previous year, the net FDI was Rs 4.36 billion, as stated in the NRB report.

Similarly, the Balance of Payments (BOP) remained at a surplus of Rs 392.64 billion in the review period, against a surplus of Rs 209.49 billion in the same period of the previous year.

Despite improvements from the last fiscal year, merchandise exports continued to decrease in the review period of the current fiscal year. Merchandise exports decreased by 3.6% to Rs 126.17 billion, compared to a significant decrease of 24.5% in the same period of the previous year.

Nepal's exports to India decreased by 5.6%, while exports to China increased by 68.1%, as stated by the central bank.

Likewise, imports decreased by 2.4% to Rs 1,303.36 billion, compared to a decrease of 16.8% a year ago. According to the NRB, imports from India and other countries decreased by 3.4% and 20.8% respectively, while imports from China increased by 34.4%.

The report shows that exports of zinc sheets, particle boards, juice, ready-made garments, and oil cakes, among others, increased, while exports of palm oil, soybean oil, woollen carpets, and tea, among others, decreased.

Imports of transport equipment, vehicles and other vehicle spare parts, ready-made garments, aircraft spare parts, electrical equipment, and textiles, among others, increased, whereas imports of crude soybean oil, gold, hot rolled sheet in coil, crude palm oil, rice/paddy, among others, decreased.

The gross foreign exchange reserves increased by 26.2%, reaching Rs 1942.4 billion in mid-May 2024, up from Rs 1539.36 billion in mid-July 2023. In US dollar terms, the gross foreign exchange reserves increased by 24.2% to 14.54 billion in mid-May 2024, up from 11.71 billion in mid-July 2023.