11 Months Macro Economic Indicators of FY 2022/23: Remittance Inflows Risen by 22.7%, Inflation at 6.83%
Nepal Rastra Bank (NRB), the central bank of Nepal, has unveiled the current macroeconomic and financial situation of Nepal based on eleven months’ data ending mid-June, 2022/23.
Overall
Nepal Rastra Bank estimated that the inflation remained at 6.83 percent on a y-o-y basis. The gross foreign exchange reserves stood at USD 11.30 billion, whereas, the total imports and exports decreased by 16 percent and 22.7 percent respectively and the trade deficit decreased by 15.2 percent during the mentioned period.
As of mid-June 2023, the outstanding concessional loan remained at Rs. 203.10 billion extended to 147,510 borrowers. Of this, Rs.139.68 billion has been extended to 61,235 borrowers for selected commercial agriculture and livestock businesses. Likewise, Rs.60.46 billion loan has been extended to 83,455 women entrepreneurs. A total of 2,820 borrowers have availed of Rs.2.97 billion in concessional loans in other specified sectors.
NEPSE index stood at 2042.07 in mid-Jun 2023 compared to 1996.26 in mid-Jun 2022.
Inflation
The y-o-y consumer price inflation remained at 6.83 percent in mid-June 2023 compared to 8.56 percent a year ago.
The y-o-y wholesale price inflation increased by 3.10 percent in the review month compared to 14.77 percent a year ago. The y-o-y wholesale price of consumption goods, intermediate goods, and capital goods increased by 1.03 percent, 4.09 percent, and 4.15 percent respectively. The wholesale price of construction materials increased by 1.04 percent in the review month.
Import and Export
During the eleven months of 2022/23, merchandise exports decreased 22.7 percent to Rs.143.59 billion against an increase of 53.3 percent in the same period of the previous year. Destination-wise, exports to India decreased by 32.2 percent whereas exports to China and other countries increased by 106.7 percent and 9.9 percent respectively. Exports of zinc sheets, particle board, cardamom, woolen carpets, and readymade garments, among others, increased whereas exports of soyabean oil, palm oil, oil cakes, textiles, silverware, and jewelry, among others, decreased in the review period.
During the eleven months of 2022/23, merchandise imports decreased 16 percent to Rs.1480.98 billion against an increase of 27.5 percent a year ago. Destination-wise, imports from India, China, and other countries decreased by 14.8 percent, 17.1 percent, and 18.5 percent respectively. Imports of chemical fertilizer, sponge iron, gold, paper, and other stationeries, among others, increased whereas imports of transport equipment & parts, M.S. billet, medicine, crude soyabean oil, other machinery and parts, among others, decreased in the review period.
The total trade deficit decreased 15.2 percent to Rs.1337.39 billion during the eleven months of 2022/23. Such a deficit had increased by 25 percent in the corresponding period of the previous year. The export-import ratio decreased to 9.7 percent in the review period from 10.5 percent in the corresponding period of the previous year.
Services and Remittance
Net services income remained at a deficit of Rs.67.68 billion in the review period compared to a deficit of Rs.99.50 billion in the same period of the previous year.
Remittance inflows increased 22.7 percent to Rs.1112.52 billion in the review period compared to an increase of 4.1 percent in the same period of the previous year. In US Dollar terms, remittance inflows increased 13.0 percent to 8.51 billion in the review period compared to an increase of 1.8 percent in the same period of the previous year.
Inter-bank Transaction
In the review period, BFIs interbank transactions amounted to Rs. 3961.38 billion on a turnover basis including Rs. 3640.21 billion inter-bank transactions among commercial banks and Rs.321.17 billion among other financial institutions (excluding transactions among commercial banks). In the corresponding period of the previous year, such transactions were Rs.2875.51 billion including Rs.2576.60 billion among commercial banks and Rs.298.91 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 40.4 percent to US dollar 75.75 per barrel in mid-June 2023 from US dollar 127.02 per barrel a year ago. The price of gold increased 7.4 percent to US dollar 1952.35 per ounce in mid-June 2023 from US dollar 1818.30 per ounce a year ago.
Foreign Exchange Reserves and Adequacy Indicators
Gross foreign exchange reserves increased 21.8 percent to Rs.1480.87 billion in mid-June 2023 from Rs.1215.80 billion in mid-July 2022. In US dollar terms, the gross foreign exchange reserves increased 18.5 percent to 11.30 billion in mid-June 2023 from 9.54 billion in mid-July 2022.
Of the total foreign exchange reserves, reserves held by NRB increased 25.1 percent to Rs.1321.25 billion in mid-June 2023 from Rs.1056.39 billion in mid-July 2022. Reserves held by banks and financial institutions (except NRB) increased 0.1 percent to Rs.159.63 billion in mid-June 2023 from Rs.159.41 billion in mid-July 2022. The share of Indian currency in total reserves stood at 22.9 percent in mid-June 2023.
Based on the imports of eleven months of 2022/23, the foreign exchange reserves of the banking sector are sufficient to cover the prospective merchandise imports of 11.2 months and merchandise and services imports of 9.6 months. The ratio of reserves-to-GDP, reserves-to-imports, and reserves-to-M2 stood at 27.5 percent, 80.3 percent, and 25.0 percent respectively in mid-June 2023. Such ratios were 24.6 percent, 57.8 percent, and 22.1 percent respectively in mid-July 2022.
Exchange Rate
Nepalese currency vis-à-vis the US dollar depreciated 2.71 percent in mid-June 2023 from mid-July 2022. It had depreciated 4.43% in the same period of the previous year. The buying exchange rate per US dollar stood at Rs.131.06 in mid-June 2023 compared to Rs.127.51 in mid-July 2022
According to data from the Financial Comptroller General Office (FCGO), the Ministry of Finance stood at Rs.1176.07. The recurrent expenditure, capital expenditure, and financial management expenditure amounted to Rs.877.39 billion, Rs.153.08 billion, and Rs.145.59 billion respectively in the review period.
In the review period, the total revenue mobilization of the Federal Government (including the amount to be transferred to provincial and local governments) stood at Rs.836.85 billion. The tax revenue amounted to Rs.759 billion and the non-tax revenue Rs.77.85 billion in the review period.
Banking
Domestic credit increased by 6.9 percent in the review period compared to an increase of 12.4 percent in the corresponding period of the previous year. On a y-o-y basis, domestic credit increased 8.8 percent in mid-June 2023.
Monetary Sector's claims on the private sector increased by 5.1 percent in the review period compared to an increase of 15.0 percent in the corresponding period of the previous year. On a y-o-y basis, such claims increased by 3.6 percent in mid-June 2023.
Interest Rates
The average base rate of commercial banks stood at 10.18 percent in the eleventh month of 2022/23 compared to 9.39 percent a year ago. The weighted average deposit rate and lending rate of commercial banks stood at 7.99 percent and 12.53 percent respectively in the review month. Such rates were 7.34 percent and 11.54 percent respectively a year ago.
Balance of Payments
Balance of Payments (BOP) remained at a surplus of Rs.228.98 billion in the review period compared to a deficit of Rs.269.81 billion in the same period of the previous year. In US Dollar terms, the BOP remained at a surplus of 1.74 billion in the review period against a deficit of 2.26 billion in the same period of the previous year.
