KATHMANDU: Nepal Rastra Bank has issued the country's macroeconomic and financial situation report based on three months’ data ending mid-October, 2021/22.
Inflation Consumer Price Inflation As per report prepared by the central bank's Economic Research Department the year-over -year (y-o-y) consumer price inflation stood at 4.24 per cent in the third month of 2021/22 compared to 3.79 per cent a year ago. The food and beverage inflation stood at 3.63 per cent whereas non-food and service inflation stood at 4.72 per cent in the review month. Likewise, the price of ghee and oil; meat and fish; pulses and legumes; tobacco products and non-alcoholic drinks sub-categories rose 31.68 per cent, 11.93 per cent, 10.71 per cent, 10.12 per cent and 9.63 respectively on YOY basis. In the review month, the Kathmandu Valley, Tarai, Hill and Mountain regions witnessed 3.48 per cent, 4.01 per cent, 5.68 per cent and 3.12 per cent inflation respectively. Inflation in these regions was 3.35 per cent, 4.46 per cent, 3.03 per cent and 4.39 per cent respectively a year ago. Wholesale Price Inflation The y-o-y wholesale price inflation stood at 3.83 per cent in the review month compared to 8.26 per cent a year ago. The y-o-y wholesale price of consumption goods, intermediate goods and capital goods increased by 2.11 per cent, 4.55 per cent and 5.86 per cent respectively. The wholesale price of construction materials increased 12.32 per cent in the review month. Salary and Wage Rate Index The y-o-y salary and wage rate index increased 4.92 per cent in the review month. Such a growth rate was 0.92 per cent a year ago. In the review month, salary index and wage rate index increased 9.44 and 3.63 per cent, respectively. Inflation in Nepal and India The y-o-y consumer price inflation in Nepal in the third month of 2020/21 remained 4.24 per cent. Such inflation in India was 4.48 per cent in October 2021.
Remittances Remittance inflows decreased 7.6 per cent to Rs.239.32 billion in the review period against an increase of 12.7 per cent in the same period of the previous year. In the US Dollar terms, remittance inflows decreased 7.7 per cent to 2.02 billion in the review period against an increase of 7.6 per cent in the same period of the previous year. The number of Nepali workers (institutional and individual-new and legalised) taking approval for foreign employment increased significantly to 66,316 in the review period. It had decreased 96.8 per cent in the same period of the previous year. The number of Nepali workers (Renew entry) taking approval for foreign employment increased significantly to 34,823 in the review period. It had decreased 78.6 per cent in the same period of the previous year. Net transfer decreased 8.1 per cent to Rs.263.73 billion in the review period. Such a transfer had increased 10.2 per cent in the same period of the previous year.
Foreign Exchange Reserves Gross foreign exchange reserves decreased 5.7 per cent to Rs.1319.32 billion in mid-October 2021 from Rs.1399.02 billion in mid-July 2021. In US Dollar terms, the gross foreign exchange reserves decreased 6.5 per cent to 10.98 billion in mid-October 2021 from 11.75 billion in mid-July 2021. Of the total foreign exchange reserves, reserves held by NRB decreased 8.0 per cent to Rs.1145.29 billion in mid-October 2021 from Rs.1244.63 billion in mid-July 2021. Reserves held by banks and financial institutions (except NRB) increased 12.7 per cent to Rs.174.03 billion in mid-October 2021 from Rs.154.39 billion in mid-July 2021. The share of Indian currency in total reserves stood at 24.1 per cent in mid-October 2021. Foreign Exchange Adequacy Indicators Based on the imports of three months of 2021/22, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 8.6 months, and merchandise and services imports of 7.8 months. The ratio of reserves-to-GDP, reserves-to-imports and reserves-to-M2 stood at 30.9 per cent, 64.7 per cent and 25.1 per cent respectively in mid-October 2021. Such ratios were 32.8 per cent, 84.7 per cent and 27.1 per cent respectively in mid-July 2021.
Monetary Situation Money Supply Broad money (M2) increased 2.2 per cent in the review period compared to the growth of 5.6 per cent in the corresponding period of the previous year. On y-o-y basis, M2 expanded 17.9 per cent in mid-October 2021. The net foreign assets (NFA after adjusting foreign exchange valuation gain/loss) decreased Rs. 76.14 billion (5.7 per cent) in the review period compared to an increase of Rs.101.09 billion (7.6 per cent) in the corresponding period of the previous year. Reserve money decreased 2.8 per cent in the review period compared to an increase of 1.7 per cent in the corresponding period of the previous year. On y-o-y basis, reserve money increased 0.5 per cent in mid-October 2021. Domestic Credit Domestic credit increased 5.1 per cent in the review period compared to an increase of 2.8 per cent in the corresponding period of the previous year. On y-o-y basis, domestic credit increased 29.7 per cent in mid-October 2021. Monetary Sector's claims on the private sector increased 7.8 per cent in the review period compared to an increase of 4.2 per cent in the corresponding period of the previous year. On y-o-y basis, such claims increased 30.7 per cent in mid-October 2021. Deposit Mobilisation Deposits at Banks and Financial Institutions (BFIs) increased 1.2 per cent in the review period compared to an increase of 4.9 per cent in the corresponding period of the previous year. On y-o-y basis, deposits at BFIs expanded 17.2 per cent in mid-October 2021. The share of demand, saving, and fixed deposits in total deposits stand at 7.7 per cent, 34.4 per cent and 50.3 per cent respectively in mid-October 2021. Such shares were 9.1 per cent, 32.8 per cent and 49.5 per cent respectively a year ago. The share of institutional deposits in the total deposit of BFIs stands at 40.5 per cent in mid-October 2021. Such a share was 43.2 per cent in mid-October 2020. Credit Disbursement Private sector credit from BFIs increased 7.7 per cent in the review period compared to an increase of 4.0 per cent in the corresponding period of the previous year. On y-o-y basis, credit to the private sector from BFIs increased 31.7 per cent in mid-October 2021. In the review period, private sector credit from commercial banks, development banks and finance companies increased 7.4 per cent, 10.2 per cent and 10.4 per cent respectively. 43. In the review period, out of the total outstanding credit of the BFIs, 66.6 per cent is against the collateral of land and building and 12.3 per cent against the collateral of current assets (such as agricultural and non-agricultural products). Such ratios were 65.9 per cent and 12.6 per cent respectively a year ago. Outstanding loan of BFIs to the agriculture sector increased 9.1 per cent, industrial production sector 7.1 per cent, transportation, communication and public sector 4.8 per cent, wholesale and retail sector 7.5 per cent and service industry sector 5.0 per cent in the review period. In the review period, term loan extended by BFIs increased 7.1 per cent, overdraft 13.4 per cent, demand and working capital loan 6.1 per cent, real estate loan (including residential personal home loan) 5.9 per cent, trust receipt (import) 4.7 per cent and hire purchase loan 3.6 per cent while that of margin nature loan decreased 2.2 per cent. READ ALSO:
Inflation Consumer Price Inflation As per report prepared by the central bank's Economic Research Department the year-over -year (y-o-y) consumer price inflation stood at 4.24 per cent in the third month of 2021/22 compared to 3.79 per cent a year ago. The food and beverage inflation stood at 3.63 per cent whereas non-food and service inflation stood at 4.72 per cent in the review month. Likewise, the price of ghee and oil; meat and fish; pulses and legumes; tobacco products and non-alcoholic drinks sub-categories rose 31.68 per cent, 11.93 per cent, 10.71 per cent, 10.12 per cent and 9.63 respectively on YOY basis. In the review month, the Kathmandu Valley, Tarai, Hill and Mountain regions witnessed 3.48 per cent, 4.01 per cent, 5.68 per cent and 3.12 per cent inflation respectively. Inflation in these regions was 3.35 per cent, 4.46 per cent, 3.03 per cent and 4.39 per cent respectively a year ago. Wholesale Price Inflation The y-o-y wholesale price inflation stood at 3.83 per cent in the review month compared to 8.26 per cent a year ago. The y-o-y wholesale price of consumption goods, intermediate goods and capital goods increased by 2.11 per cent, 4.55 per cent and 5.86 per cent respectively. The wholesale price of construction materials increased 12.32 per cent in the review month. Salary and Wage Rate Index The y-o-y salary and wage rate index increased 4.92 per cent in the review month. Such a growth rate was 0.92 per cent a year ago. In the review month, salary index and wage rate index increased 9.44 and 3.63 per cent, respectively. Inflation in Nepal and India The y-o-y consumer price inflation in Nepal in the third month of 2020/21 remained 4.24 per cent. Such inflation in India was 4.48 per cent in October 2021.
Remittances Remittance inflows decreased 7.6 per cent to Rs.239.32 billion in the review period against an increase of 12.7 per cent in the same period of the previous year. In the US Dollar terms, remittance inflows decreased 7.7 per cent to 2.02 billion in the review period against an increase of 7.6 per cent in the same period of the previous year. The number of Nepali workers (institutional and individual-new and legalised) taking approval for foreign employment increased significantly to 66,316 in the review period. It had decreased 96.8 per cent in the same period of the previous year. The number of Nepali workers (Renew entry) taking approval for foreign employment increased significantly to 34,823 in the review period. It had decreased 78.6 per cent in the same period of the previous year. Net transfer decreased 8.1 per cent to Rs.263.73 billion in the review period. Such a transfer had increased 10.2 per cent in the same period of the previous year.
Foreign Exchange Reserves Gross foreign exchange reserves decreased 5.7 per cent to Rs.1319.32 billion in mid-October 2021 from Rs.1399.02 billion in mid-July 2021. In US Dollar terms, the gross foreign exchange reserves decreased 6.5 per cent to 10.98 billion in mid-October 2021 from 11.75 billion in mid-July 2021. Of the total foreign exchange reserves, reserves held by NRB decreased 8.0 per cent to Rs.1145.29 billion in mid-October 2021 from Rs.1244.63 billion in mid-July 2021. Reserves held by banks and financial institutions (except NRB) increased 12.7 per cent to Rs.174.03 billion in mid-October 2021 from Rs.154.39 billion in mid-July 2021. The share of Indian currency in total reserves stood at 24.1 per cent in mid-October 2021. Foreign Exchange Adequacy Indicators Based on the imports of three months of 2021/22, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 8.6 months, and merchandise and services imports of 7.8 months. The ratio of reserves-to-GDP, reserves-to-imports and reserves-to-M2 stood at 30.9 per cent, 64.7 per cent and 25.1 per cent respectively in mid-October 2021. Such ratios were 32.8 per cent, 84.7 per cent and 27.1 per cent respectively in mid-July 2021.
Monetary Situation Money Supply Broad money (M2) increased 2.2 per cent in the review period compared to the growth of 5.6 per cent in the corresponding period of the previous year. On y-o-y basis, M2 expanded 17.9 per cent in mid-October 2021. The net foreign assets (NFA after adjusting foreign exchange valuation gain/loss) decreased Rs. 76.14 billion (5.7 per cent) in the review period compared to an increase of Rs.101.09 billion (7.6 per cent) in the corresponding period of the previous year. Reserve money decreased 2.8 per cent in the review period compared to an increase of 1.7 per cent in the corresponding period of the previous year. On y-o-y basis, reserve money increased 0.5 per cent in mid-October 2021. Domestic Credit Domestic credit increased 5.1 per cent in the review period compared to an increase of 2.8 per cent in the corresponding period of the previous year. On y-o-y basis, domestic credit increased 29.7 per cent in mid-October 2021. Monetary Sector's claims on the private sector increased 7.8 per cent in the review period compared to an increase of 4.2 per cent in the corresponding period of the previous year. On y-o-y basis, such claims increased 30.7 per cent in mid-October 2021. Deposit Mobilisation Deposits at Banks and Financial Institutions (BFIs) increased 1.2 per cent in the review period compared to an increase of 4.9 per cent in the corresponding period of the previous year. On y-o-y basis, deposits at BFIs expanded 17.2 per cent in mid-October 2021. The share of demand, saving, and fixed deposits in total deposits stand at 7.7 per cent, 34.4 per cent and 50.3 per cent respectively in mid-October 2021. Such shares were 9.1 per cent, 32.8 per cent and 49.5 per cent respectively a year ago. The share of institutional deposits in the total deposit of BFIs stands at 40.5 per cent in mid-October 2021. Such a share was 43.2 per cent in mid-October 2020. Credit Disbursement Private sector credit from BFIs increased 7.7 per cent in the review period compared to an increase of 4.0 per cent in the corresponding period of the previous year. On y-o-y basis, credit to the private sector from BFIs increased 31.7 per cent in mid-October 2021. In the review period, private sector credit from commercial banks, development banks and finance companies increased 7.4 per cent, 10.2 per cent and 10.4 per cent respectively. 43. In the review period, out of the total outstanding credit of the BFIs, 66.6 per cent is against the collateral of land and building and 12.3 per cent against the collateral of current assets (such as agricultural and non-agricultural products). Such ratios were 65.9 per cent and 12.6 per cent respectively a year ago. Outstanding loan of BFIs to the agriculture sector increased 9.1 per cent, industrial production sector 7.1 per cent, transportation, communication and public sector 4.8 per cent, wholesale and retail sector 7.5 per cent and service industry sector 5.0 per cent in the review period. In the review period, term loan extended by BFIs increased 7.1 per cent, overdraft 13.4 per cent, demand and working capital loan 6.1 per cent, real estate loan (including residential personal home loan) 5.9 per cent, trust receipt (import) 4.7 per cent and hire purchase loan 3.6 per cent while that of margin nature loan decreased 2.2 per cent. READ ALSO:
Published Date: November 16, 2021, 12:00 am
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