Depletion of Nepal’s forex reserve continues, reserves sufficient to finance imports for only 6.7 months

April 12, 2022, 03:11:26 PM |

KATHMANDU: Indicating deteriorating state of the economy, country’s balance of Payments (BoP) remained at a deficit of Rs 258.64 billion in the first eight months of fiscal year 2021-22 against a surplus of Rs 68.01 billion in the same period of the previous year.

As per Nepal Rastra Bank (NRB), the BoP remained at a deficit of 2.17 billion (US Dollar) in the review period against a surplus of 565.8 million (US Dollar) in the same period of the previous year.

Based on the imports of eight months of 2021/22, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 7.4 months, and merchandise and services imports of 6.7 months, as per NRB.

The y-o-y consumer price inflation stood at 7.14 percent in the eighth month of 2021/22 compared to 3.03 percent a year ago. Food and beverage inflation stood at 7.51 percent whereas non-food and service inflation stood at 6.84 percent in the review month.

Similarly, the current account remained at a deficit of Rs.462.93 billion in the review period compared to a deficit of Rs.151.42 billion in the same period of the previous year. In the US Dollar terms, the current account registered a deficit of 3.88 billion in the review period compared to deficit of 1.29 billion in the same period last year.

Total trade deficit increased 34.5 percent to Rs.1160.99 billion during the eight months of 2021/22. Such a deficit had increased 1.6 percent in the corresponding period of the previous year. The export-import ratio increased to 11.3 percent in the review period from 8.6 percent in the corresponding period of the previous year.

During the eight months of 2021/22, merchandise exports increased 82.9 percent to Rs.147.75 billion compared to an increase of 7.8 percent in the same period of the previous year. Similarly, merchandise imports increased 38.6 percent to Rs.1308.73 billion compared to an increase of 2.1 percent a year ago.

In the review period, Remittance inflows decreased 1.7 percent to Rs.631.19 billion in the review period against an increase of 8.7 percent in the same period of the previous year. Meanwhile, number of Nepali workers (institutional and individual-new and legalized) taking approval for foreign employment increased significantly to 227,900 in the review period. It had decreased 82.9 percent in the same period of the previous year.

Likewise, Gross foreign exchange reserves decreased 16.3 percent to Rs.1171 billion in mid-March 2022 from Rs.1399.03 billion in mid-July 2021. In the US dollar terms, the gross foreign exchange reserves decreased 18.5 percent to 9.58 billion in mid-March 2022 from 11.75 billion in mid-July 2021.

Fiscal Nepal |

Tuesday April 12, 2022, 03:11:26 PM |