Macroeconomic Summary of First 11 Months: Inflation at 2.72%, Remittances Rises by 15.5%, Foreign Currency Enough to Cover 14.7 Months Import

Nepal Rastra Bank, the central bank of Nepal, has unveiled the current macroeconomic and financial situation of Nepal based on eleven months of data for FY 2024/25.

Overall

Nepal Rastra Bank estimated that the inflation remained at 2.72 percent on a year-over-year basis. The gross foreign exchange reserves stood at 18.65 billion in USD terms, whereas the total imports and exports increased 13.1 percent and 77.8 percent, respectively.

The NEPSE index stood at 2655.39 in mid-June 2025 compared to 2112.30 in mid-June 2024.

Inflation

The y-o-y consumer price inflation stood at 2.72 percent in mid-June 2025 compared to 4.17 percent a year ago.

The y-o-y wholesale price inflation stood at 1.56 percent in mid-June 2025 compared to 5.48 percent a year ago. The y-o-y wholesale price inflation of consumption goods stood at 5.66 percent, while intermediate goods and capital goods stood at -0.93 percent and 2.99 percent respectively. The y-o-y wholesale price index of construction material increased 0.35 percent in the review month.

Import and Export

During the eleven months of 2024/25, merchandise exports increased 77.8 percent to Rs. 247.57 billion against a decrease of 3.0 percent in the same period of the previous year. Destinationwise, exports to India, China, and other countries increased 112.6 percent, 3.0 percent, and 4.4 percent, respectively. Exports of soyabean oil, polyster yarn and thread, jute goods, tea, and rosin, among others, increased, whereas exports of palm oil, zinc sheet, juice, readymade garments, and cardamom, among others, decreased in the review period.

During the eleven months of 2024/25, merchandise imports increased 13.1 percent to Rs. 1644.80 billion against a decline of 1.8 percent a year ago. Destination-wise, imports from India, China, and other countries increased 7.6 percent, 15.3 percent, and 29.5 percent, respectively. Imports of crude soybean oil, rice/paddy, transport equipment, vehicle and spare parts, edible oil, and sponge iron, among others, increased, whereas imports of petroleum products, gold, electrical equipment, chemical fertilizer, and coal, among others, decreased in the review period.

The total trade deficit increased 6.3 percent to Rs. 1397.23 billion during the eleven months of 2024/25. Such a deficit had decreased by 1.7 percent in the corresponding period of the previous year. The export-import ratio increased to 15.1 percent in the review period from 9.6 percent in the corresponding period of the previous year.

Services and Remittance

Net services income remained at a deficit of Rs. 97.33 billion in the review period compared to a deficit of Rs. 56.36 billion in the same period of the previous year.

Remittance inflows increased 15.5 percent to Rs. 1532.93 billion in the review period compared to an increase of 17.2 percent in the same period of the previous year. During mid-May to mid-June 2025 (Jestha month), remittance inflows stood at Rs. 176.32 billion. In the same period, such inflows were Rs. 128.91 billion.

Inter-bank Transaction

In the review period, BFIs' inter-bank transactions amounted Rs. 1681.54 billion on a turnover basis, including Rs. 1531.21 billion inter-bank transactions among commercial banks, and Rs. 150.33 billion among other financial institutions (excluding transactions among commercial banks). In the corresponding period of the previous year, such transaction was Rs. 4060.98 billion, including Rs. 3701.43 billion among commercial banks and Rs. 359.55 billion among other financial institutions (excluding transactions among commercial banks).

Price of Oil and Gold

The price of oil (Crude Oil Brent) in the international market decreased 12.52 percent to US dollar 71.29 per barrel in mid-June 2025 from US dollar 81.49 per barrel a year ago. The price of gold increased 47.41 percent to US dollar 3435.35 per ounce in mid-June 2025 from US dollar 2330.45 per ounce a year ago.

Foreign Exchange Reserves and Adequacy Indicator

Gross foreign exchange reserves increased 25.9 percent to Rs. 2569.38 billion in mid-June 2025 from Rs. 2041.10 billion in mid-July 2024. In US dollar terms, the gross foreign exchange reserves increased 22.2 percent to 18.65 billion in mid-June 2025 from 15.27 billion in mid-July 2024.

 Based on the imports of eleven months of 2024/25, the foreign exchange reserves of the banking sector are sufficient to  cover the prospective merchandise imports of 17.6 months, and merchandise and services imports of 14.7 months. The ratio  of reserves-to-GDP, reserves-to-imports, and reserves-to-M2 stood at 42.1 percent, 122.9 percent, and 34.1 percent,  respectively, in mid-June 2025. Such ratios were 35.8 percent, 108.6 percent, and 29.3 percent, respectively, in mid-July  2024.

Exchange Rate

Nepalese currency vis-à-vis the US dollar depreciated 2.97 percent in mid-June 2025 from mid-July 2024. It had depreciated 1.66 percent in the same period of the previous year. The buying exchange rate per US dollar stood at Rs. 137.44 in mid-June 2025 compared to Rs. 133.36 in mid-July 2024.

Nepal Government Expenditure and Revenue

According to the Ministry of Finance, Financial Comptroller General Office (FCGO), the total expenditure of the Government of Nepal stood at Rs. 1282.94 billion during the eleven months of 2024/25. The recurrent expenditure, capital expenditure, and financial expenditure amounted to Rs. 851.58 billion, Rs. 143.39 billion, and Rs. 287.97 billion, respectively, in the review period.

In the review period, total revenue mobilization of the Government of Nepal (including the amount to be transferred to provincial and local governments) stood at Rs. 1016.09 billion. The total revenue comprises tax revenue amounting to Rs. 918 billion and non-tax revenue of Rs. 98.08 billion in the review period.

Cash Balance of Government

Cash Balance at various accounts of the GoN maintained with NRB remained Rs. 339.98 billion (including Provincial Government and Local Government Accounts) in mid-June 2025. Such a balance was Rs. 93.96 billion in mid-July 2024.

Banking

Domestic credit increased 3.4 percent in the review period compared to an increase of 3.5 percent in the corresponding period of the previous year. On a y-o-y basis, domestic credit increased 6.0 percent in mid-June 2025.

Monetary Sector's claims on the private sector increased 8.7 percent in the review period compared to an increase of 6.6 percent in the corresponding period of the previous year. On a y-o-y basis, such claims increased 8.2 percent in mid-June 2025.

Deposits at Banks and Financial Institutions (BFIs) increased Rs. 517.60 billion (8.0 percent) in the review period compared to an increase of Rs. 514.57 billion (9.0 percent) in the corresponding period of the previous year. On a y-o-y basis, deposits at BFIs expanded 12.0 percent in mid-June 2025.

Private sector credit from BFIs increased Rs. 407.62 billion (8.0 percent) in the review period compared to an increase of Rs. 246.80 billion (5.1 percent) in the corresponding period of the previous year. On a y-o-y basis, credit to the private sector from BFIs increased 8.7 percent in mid-June 2025.

Interest Rates

The average base rates of commercial banks, development banks, and finance companies stood at 6.09 percent, 8.29 percent, and 9.02 percent, respectively, in the eleventh month of 2024/25. The average base rate of commercial banks, development banks, and finance companies was 8.17 percent, 9.96 percent, and 11.46 percent, respectively, in the corresponding month a year ago.

Balance of Payments

Balance of Payments (BOP) remained at a surplus of Rs. 491.44 billion in the review period compared to a surplus of Rs. 425.67 billion in the same period of the previous year. In US Dollar terms, the BOP remained at a surplus of 3.62 billion in the review period compared to a surplus of 3.2 billion in the same period of the previous year.