Macroeconomic Snapshot of 9 Months: Inflation at 3.39%; Foreign Reserves Reach USD 17.63 Billion; Remittance Surges 10%

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

Overall

Nepal Rastra Bank estimated that the inflation remained at 3.39 percent on a y-o-y basis. The gross foreign exchange reserves stood at 17.63 billion in USD terms, whereas the total imports and exports increased 12.2 percent and 65.2 percent, respectively.

The NEPSE index stood at 2662.08 in mid-April 2025 compared to 2025.71 in mid-April 2024.

Inflation

The y-o-y consumer price inflation stood at 3.39 percent in mid-April 2025 compared to 4.61 percent a year ago. 

The y-o-y wholesale price inflation stood at 4.20 percent in mid-April 2025 compared to 4.94 percent a year ago. The y-o-y wholesale price of consumption goods increased 9.83 percent while intermediate goods and capital goods increased 1.08 percent and 3.06 percent respectively. The y-o-y wholesale price of construction material increased 2.52 percent in the review month.

Import and Export

During the nine months of 2024/25, merchandise exports increased 65.2 percent to Rs.188.20 billion against a decrease of 3.7 percent in the same period of the previous year. Destinationwise, exports to India, China, and other countries increased 92.6 percent, 6.7 percent, and 5.8 percent, respectively. Exports of soybean oil, polyester yarn and thread, tea, jute goods, and rosin, among others increased, whereas exports of palm oil, zinc sheet, ginger, juice, and readymade garments, among others, decreased in the review period.

During the nine months of 2024/25, merchandise imports increased 12.2 percent to Rs.. 1309.53 billion against a decline of 2.8 percent a year ago. Destination-wise, imports from India, China, and other countries increased 7.7 percent, 14.4 percent, and 24.9 percent, respectively. Imports of crude soyabean oil, rice/paddy, transport equipment, vehicle and spare parts, edible oil, sponge iron, among others increased whereas imports of petroleum products, crude palm oil, aircraft spareparts, chemical fertilizer, and writing and printing paper, among others, decreased in the review period.

The total trade deficit increased 6.4 percent to Rs. 1121.34 billion during the nine months of 2024/25. Such a deficit had decreased 2.8 percent in the corresponding period of the previous year. The export-import ratio increased to 14.4 percent in the review period from 9.8 percent in the corresponding period of the previous year.

Services and Remittance

Net services income remained at a deficit of Rs.81.54 billion in the review period compared to a deficit of Rs.50.73 billion in the same period of the previous year.

Remittance inflows increased 10.0 percent to Rs.1191.31 billion in the review period compared to an increase of 17.2 percent in the same period of the previous year. In the US Dollar terms, remittance inflows increased 7.3 percent to 8.74 billion in the review period compared to an increase of 15.2 percent in the same period of the previous year.

Inter-bank Transaction

In the review period, BFIs' inter-bank transactions amounted Rs. 1512.12 billion on a turnover basis, including Rs.1363.81 billion inter-bank transactions among commercial banks, and Rs.148.31 billion among other financial institutions (excluding transactions among commercial banks). In the corresponding period of the previous year, such transaction was Rs.3508.04 billion, including Rs.3186.44 billion among commercial banks and Rs.321.6 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 28.23 percent to US dollar 66.83 per barrel in mid-April 2025 from US dollar 93.12 per barrel a year ago. The price of gold increased 34.52 percent to US dollar 3230.50 per ounce in mid-April 2025 from US dollar 2401.50 per ounce a year ago.

Foreign Exchange Reserves and Adequacy Indicator

Gross foreign exchange reserves increased 18.9 percent to Rs.2426.84 billion in mid-April 2025 from Rs.2041.10 billion in mid-July 2024. In the US dollar terms, the gross foreign exchange reserves increased 15.4 percent to 17.63 billion in mid-April 2025 from 15.27 billion in mid-July 2024.

Of the total foreign exchange reserves, the reserves held by NRB increased 15.6 percent to Rs.2136.46 billion in mid-April 2025 from Rs.1848.55 billion in mid-July 2024. Reserves held by banks and financial institutions (except NRB) increased 50.8 percent to Rs.290.38 billion in mid-April 2025 from Rs.192.55 billion in mid-July 2024. The share of Indian currency in total reserves stood at 20.4 percent in mid-April 2025.

Based on the imports of nine months of 2024/25, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 17.1 months, and merchandise and services imports of 14.2 months. The ratio of reserves-to-GDP, reserves-to-imports and reserves-to-M2 stood at 39.7 percent, 118.7 percent and 32.8 percent respectively in mid-April 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 2.92 percent in mid-April 2025 from mid-July 2024. It had depreciated 1.23 percent in the same period of the previous year. The buying exchange rate per US dollar stood at Rs.137.37 in mid-April 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.998.52 billion during the nine months of 2024/25. The recurrent expenditure, capital expenditure, and financial expenditure amounted to Rs.678.09 billion, Rs.102.90 billion, and Rs.217.53 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.831.40 billion. The total revenue comprises of tax revenue amounting Rs.744.15 billion and non-tax revenue Rs.87.25 billion in the review period.

Cash Balance of Government

The cash Balance at various accounts of the GoN maintained with NRB remained Rs.371.79 billion (including Provincial Government and Local Government Accounts) in mid-April 2025. Such balance was Rs.93.96 billion in mid-July 2024.

Banking

Domestic credit increased 2.5 percent in the review period compared to an increase of 1.8 percent in the corresponding period of the previous year. On y-o-y basis, domestic credit increased 6.8 percent in mid-April 2025.

Monetary Sector's claims on the private sector increased 7.2 percent in the review period compared to an increase of 5.2 percent in the corresponding period of the previous year. On y-o-y basis, such claims increased 8.1 percent in mid-April 2025.

Deposits at Banks and Financial Institutions (BFIs) increased Rs.368.47 billion (5.7 percent) in the review period compared to an increase of Rs.409.04 billion (7.2 percent) in the corresponding period of the previous year. On y-o-y basis, deposits at BFIs expanded 11.5 percent in mid-April 2025.

Private sector credit from BFIs increased Rs.361.03 billion (7.1 percent) in the review period compared to an increase of Rs.222.21 billion (4.6 percent) in the corresponding period of previous year. On y-o-y basis, credit to the private sector from BFIs increased 8.3 percent in mid-April 2025.

Interest Rates

The average base rates of commercial banks, development banks and finance companies stood 6.29 percent, 8.34 percent and 9.17 percent respectively in the ninth month of 2024/25. The average base rate of commercial banks, development banks and finance companies were 8.51 percent, 10.41 percent and 12.02 percent respectively in the corresponding month a year ago.

Balance of Payments

The Balance of Payments (BOP) remained at a surplus of Rs.346.23 billion in the review period compared to a surplus of Rs.365.16 billion in the same period of the previous year. In the US Dollar terms, the BOP remained at a surplus of 2.55 billion in the review period compared to a surplus of 2.75 billion in the same period of the previous year.