External sector strengthened in national economy

Kathmandu, March 10: The external sector has seen growth in the national economy in the past seven months of the current fiscal year.

According to the current macroeconomic and financial situation of Nepal (based on seven months of data ending mid-February, 2024/25) issued on Monday by Nepal Rastra Bank, Nepal’s remittances have increased, and the gross foreign exchange reserves have reached high.

Similarly, the current account and the balance of payments have remained at a surplus. In the past seven months of the current fiscal year, remittance inflows increased 7.3 percent to reach Rs.900.58 billion compared to an increase of 18.8 percent in the same period of the previous year.

In US dollar terms, remittance inflows increased 5.3 percent to 6.65 billion in the review period compared to an increase of 16.4 percent in the same period of the previous year. The number of Nepali workers, both institutional and individual, taking first-time approval for foreign employment stands at 274,622, and taking approval for re-entry stands at 190,886.

In the previous year, such numbers were 245,432 and 157,045, respectively. The current account remained at a surplus of Rs.166.80 billion in the review period compared to a surplus of Rs.162.52 billion in the same period of the previous year. In US dollar terms, the current account registered a surplus of 1.24 billion in the review period against a surplus of 1.22 billion in the same period last year.

In the review period, net capital transfer amounted to Rs.5.83 billion. In the same period of the previous year, such a transfer amounted to Rs.3.80 billion. Similarly, in the review period, Rs. 7.45 billion in foreign direct investment (equity only) was received.

In the same period of the previous year, foreign direct investment inflow (equity only) amounted to Rs. 5.19 billion. The Balance of Payments (BOP) remained at a surplus of Rs.284.41 billion in the review period compared to a surplus of Rs.297.72 billion in the same period of the previous year.

In US dollar terms, the BOP remained at a surplus of 2.11 billion in the review period compared to a surplus of 2.24 billion in the same period of the previous year. Similarly, in the review period, Rs. 7.45 billion in foreign direct investment (equity only) was received.

In the same period of the previous year, foreign direct investment inflow (equity only) amounted to Rs. 5.19 billion. The Balance of Payments (BOP) remained at a surplus of Rs.284.41 billion in the review period compared to a surplus of Rs.297.72 billion.

In US dollar terms, the BOP remained at a surplus of 2.11 billion in the review period compared to a surplus of 2.24 billion in the same period of the previous year. Gross foreign exchange reserves increased 16.1 percent to Rs.2369.08 billion in mid-February 2025 from Rs.2041.10 billion in mid-July 2024.

In US dollar terms, the gross foreign exchange reserves increased 11.7 percent to 17.05 billion in mid-February 2025 from 15.27 billion in mid-July 2024. Of the total foreign exchange reserves, the reserves held by NRB increased 13.9 percent to Rs.2105.14 billion in mid-February 2025 from Rs.1848.55 billion in mid-July 2024.

Reserves held by banks and financial institutions (except NRB) increased 37.1 percent to Rs.263.93 billion in mid-February 2025 from Rs.192.55 billion in mid-July 2024. The share of Indian currency in total reserves stood at 22.0 percent in mid-February 2025.

Based on the imports of seven months of 2024/25, the foreign exchange reserves of the banking sector are sufficient to cover the prospective merchandise imports of 17.2 months and merchandise and services imports of 14.4 months.

The ratio of reserves to GDP, reserves to imports, and reserves to M2 stood at 41.5 percent, 120.3 percent, and 32.5 percent, respectively, in mid-February 2025. Such ratios were 35.8 percent, 108.6 percent, and 29.3 percent, respectively, in mid-July 2024. —RSS