How Did We Perform As a Nation in The First Six Months of This Fiscal Year? A Quick Summary

The central bank has published macro-economic data based on the first six month's data of FY 2077/78. The report covers major details on inflation, trade, services, remittance, BOP position, foreign exchange reserves, fiscal deficit, surplus, expenditure, revenue, money supply, deposit, credit liquidity, interest rates, and the capital market.

Some of the major highlights from the reports are:

Inflation: The y-o-y consumer price inflation stood at 3.56 percent in the sixth month of 2020/21 compared to 6.82 percent a year ago. Food and beverage inflation stood at 4.27 percent whereas non-food and service inflation stood at 2.99 percent in the review month.

Nonetheless, the price of ghee and oil; fruit; pulses and legumes; and meat and fish sub-groups rose 17.01 percent, 16.58 percent, 11.48 percent, and 10.68 percent respectively on a y-o-y basis.

Import and export: In six months of 2020/21, merchandise exports increased 6.1 percent to Rs.60.80 billion compared to an increase of 26.1 percent in the same period of the previous year. Destination-wise, exports to India and other countries increased 8.4 percent and 4.0 percent respectively whereas exports to China decreased 50.0 percent. Exports of cardamom, polyester yarn, and threads, jute goods, pashmina, noodles, among others, increased whereas exports of palm oil, pulses, zinc sheet, juice, wire, among others, decreased in the review period.

Meanwhile, merchandise imports decreased 4.8 percent to Rs.661.25 billion compared to a decrease of 4.0 percent a year ago. Destination-wise, imports from India, increased 3.5 percent whereas imports from China and other countries decreased 18.5 percent, and 17.4 percent respectively. Imports of rice, crude soyabean oil, M.S. billet, gold, telecommunication equipment, and parts, among others, increased whereas imports of petroleum products, aircraft spare parts, crude palm oil, other machinery and parts, silver, among others, decreased in the review period. The total trade deficit narrowed down 10.9 percent to Rs.475.44 billion in five months of 2020/21. Such deficit had contracted 6.3 percent in the same period of the previous year. The export-import ratio increased to 9.5 percent in the review period from 8.2 percent in the same period of the previous year.

Services: Net services income remained at a deficit of Rs.25.67 billion in the review period compared to a deficit of Rs.3.73 billion in the same period of the previous year.

Remittance: Remittance inflows increased 11.1 percent to Rs.495.31 billion in the review period compared to an increase of 0.6 percent in the same period of the previous year. In the US Dollar terms, remittance inflows increased 6.7 percent to 4.19 billion in the review period compared to an increase of 0.9 percent in the same period of the previous year.

The number of Nepali workers (institutional and individual-new and legalized) taking approval for foreign employment decreased 77.6 percent in the review period. It had increased 17.7 percent in the same period of the previous year. The number of Nepali workers (Renew entry) taking approval for foreign employment decreased 68.9 percent in the review period. It had increased 0.5 percent in the same period of the previous year.

BOP position: Balance of Payments (BOP) registered a surplus of Rs.124.92 billion in the review period as compared to a surplus of Rs.26.65 billion in the same period of the previous year. In the US Dollar terms, the BOP recorded a surplus of 1.05 billion in the review period compared to a surplus of 235.3 million in the same period of the previous year.

Exchange rate: Nepalese currency vis-à-vis the US Dollar appreciated 3.0 percent in mid-January 2021 from mid-July 2020. It had depreciated 3.3 percent in the same period of the previous year. The buying exchange rate per US Dollar stood at Rs.116.92 in mid-January 2021 compared to Rs.120.37 in mid-July 2020.

Government expenditure and revenue: In the review period, the total expenditure of the federal government according to the Financial Comptroller General Office (FCGO), Ministry of Finance, stood at Rs.415.75 billion. The recurrent expenditure, capital expenditure, and financing expenditure stood at Rs.342.36 billion, Rs. 50.82 billion and Rs. 22.57 billion respectively in the review period.

In the review period, revenue mobilization (including the amount to be transferred to provincial and local governments) stood at Rs.422.24 billion. The tax revenue and non-tax revenue amounted to Rs.386.53 billion and Rs.35.70 billion in the review period

Banking:

-Deposit collection and Credit distribution: Deposits at Banks and Financial Institutions (BFIs) increased 9.2 percent in the review period compared to a growth of 6.2 percent in the corresponding period of the previous year. On a y-o-y basis, deposits at BFIs expanded 22.0 percent in mid-January 2021.

Private sector credit from BFIs increased 11.4 percent in the review period compared to a growth of 8.6 percent in the corresponding period of the previous year. On a y-o-y basis, credit to the private sector from BFIs increased 14.9 percent in mid-January 2021.

-Liquidity management: In the review period, NRB mopped up Rs.241.34 billion liquidity of which Rs.89.54 billion is through reverse repo auction and Rs.151.80 billion through deposit collection. Rs.58 billion liquidity consisting of Rs.28 billion reverse repo auction and Rs.30 billion deposit collection was mopped up in the corresponding period of the previous year. Rs.92.07 billion liquidity was injected including Rs.39.52 billion through repo and Rs.52.55 billion through standing liquidity facility (SLF) in the corresponding period of the previous year.

In the review period, NRB injected liquidity of Rs.251.02 billion through the net purchase of USD 2.12 billion from the foreign exchange market. Liquidity of Rs.193.40 billion was injected through the net purchase of USD 1.70 billion in the corresponding period of the previous year.

Furthermore, the NRB purchased Indian currency (INR) equivalent to Rs.241.31 billion through the sale of USD 2.04 billion in the review period. INR equivalent to Rs.229.55 billion was purchased through the sale of USD 2.02 billion in the corresponding period of the previous year.

-Interest rates: The average base rate of commercial banks decreased to 7.18 percent in mid-January 2021 from 9.43 percent a year ago. The weighted average deposit rate and lending rate of commercial banks stood at 5.0 percent and 9.09 percent respectively in mid-January 2021. Such rates were 6.79 percent and 11.94percent respectively a year ago.