Macroeconomic Summary of 10 Months: Inflation at 5.04%, Remittances Rises by 41.2%, Foreign Currency Enough to Cover 19.2 Months Import

Nepal Rastra Bank, the central bank of Nepal, has unveiled the current macroeconomic and financial situation of Nepal based on Ten months of data for FY 2025/26.

Overall

Nepal Rastra Bank estimated that the consumer price inflation at 5.04 percent on a year-over-year basis, which is in increasing trend. The gross foreign exchange reserves stood at Rs. 3,704.55 billion. Such reserve remained 24.19 billion in USD terms. The reserve is sufficient to cover the prospective merchandise and services imports of 19.2 months.

The NEPSE index stood at 2,730.18 in mid-May 2026 compared to 2,620.27 in mid-May 2025.

Inflation

The y-o-y wholesale price inflation stood at 5.96 percent in mid-May 2026 compared to 3.95 percent a year ago. Inflation is in increasing trend, after lowest inflation rate was 1.11 percent in four months (mid - November 2025) of this fiscal year.  

The y-o-y wholesale price inflation stood at 5.96 percent in mid-May 2026 compared to 3.95 percent a year ago. The y-o-y wholesale price inflation of consumption goods decreased 8.63 percent while intermediate goods and capital goods stood at 15.59 percent and 4.61 percent respectively. The y o-y wholesale price index of construction material increased 2.47 percent in the review month.

Import and Export

During the ten months of 2025/26, merchandise exports increased 14.2 percent to Rs.248.96 compared to a growth of 72.7 percent in the same period of the previous year. Destination-wise, exports to India and other countries increased 16.1 percent and 9.5 respectively, whereas exports to China decreased 41.7 percent. Exports of soybean oil, cardamom, palm oil, noodles, and jute goods, among others, increased, whereas exports of zinc sheet, particle board, tea, woolen carpet, and handicraft goods, among others, decreased in the review period. 

Meanwhile, merchandise imports increased 14.8 percent to Rs.1692.64 billion compared to a growth of 13.1 percent a year ago. Destination-wise, imports from India, China, and other countries increased 10.6 percent, 21.4 percent, and 20.7 percent, respectively. Imports of petroleum products, chemical fertilizer, silver, transport equipment, vehicle and spare parts, and crude soyabean oil, among others, increased, whereas imports of hot rolled sheet in coil, edible oil, garlic, pulses, and M.S. wire rod, bars, coils, among others, decreased in the review period.

Total trade deficit increased 14.9 percent to Rs.1443.68 billion during the ten months of 2025/26. Such a deficit had increased 6.7 percent in the corresponding period of the previous year. The export-import ratio decreased to 14.7 percent in the review period from 14.8 percent in the corresponding period of the previous year.

Services and Remittance

Net services income remained at a deficit of Rs.68.22 billion during the review period. Such income had a deficit of Rs.72.18 billion in the same period of the previous year.

Remittance inflows increased 41.2 percent to Rs.1916.90 billion in the ten months of 2025/26 compared to an increase of 13.3 percent in the same period of the previous year. During mid- April to mid-May (Baisakh month), remittance inflows stood at Rs. 257.49 billion. In the same period of the previous year, such inflows were Rs. 165.30 billion.

Inter-bank Transaction

In the review period, interbank transactions of the BFIs amounted to Rs. 979.41 billion on a turnover basis, including Rs. 834.86 billion among commercial banks and Rs. 144.55 billion among other financial institutions (excluding transactions among commercial banks). In the corresponding period of the previous year, such transactions were Rs. 1,620.54 billion, including Rs. 1,470.86 billion among commercial banks and Rs. 149.68 billion among other financial institutions.

Price of Oil and Gold

The price of oil (Crude Oil Brent) in the international market increased 68.3 percent to US Dollar 110.91 per barrel in mid-May 2026 from US Dollar 65.91 per barrel a year ago. The price of gold increased 46.7 percent to US Dollar 4683.05 per ounce in mid-May 2026 from US Dollar 3191.95 per ounce a year ago.

Foreign Exchange Reserves and Adequacy Indicator

Gross foreign exchange reserves increased 38.3 percent to Rs.3704.55 billion in mid-May 2026 from Rs.2677.68 billion in mid-July 2025. In US Dollar terms, the gross foreign exchange reserves increased 24.0 percent to 24.19 billion in mid-May 2026 from 19.50 billion in mid-July 2025.

Of the total foreign exchange reserves, the reserves held by NRB increased 36.6 percent to Rs.3298.38 billion in mid-May 2026 from Rs. 2414.64 billion in mid July 2025. Reserves held banks and financial institutions (except NRB) increased 54.4 percent to Rs.406.17 billion in mid-April 2026 from Rs.263.04 billion in mid-July 2025. The share of Indian currency in total reserves stood at 20.6 percent in mid-May 2026.

Based on the imports of the ten months of 2025/26, the foreign exchange reserves of the banking sector are sufficient to cover the prospective merchandise imports of 22.6 months, and merchandise and services imports of 19.2 months. The ratio of reserves-to-GDP, reserves-to-imports and reserves-to-M2 stood at 60.7 percent, 159.7 percent, and 43.3 percent respectively in mid-May 2026. Such ratios were 43.8 percent, 128.1 percent, and 34.1 percent respectively in mid-July 2025.

Exchange Rate

Nepalese currency vis-à-vis the US Dollar depreciated 10.4 percent in mid-May 2026 from mid-July 2025. It had depreciated 2.1 percent in the same period of the previous year. The buying exchange rate per US Dollar stood at Rs. 152.84 in mid-May 2026, compared to Rs. 137 in mid-July 2025.

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. 1173.52 billion during the ten months of 2025/26. Recurrent expenditure, capital expenditure, and financial expenditure amounted to Rs. 814.66 billion, Rs. 113.85 billion, and Rs. 245.02 billion, respectively, during 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. 988.55 billion. The tax revenue amounted to Rs. 893.56 billion and non-tax revenue to Rs. 94.99 billion in the review period.

Cash Balance of Government

Cash Balance at various accounts of the GoN maintained with NRB remained at Rs. 416.36 billion (including Provincial Governments and Local Government Account) in mid-May 2026. Such a balance was Rs. 137.78 billion in mid-July 2025.

Banking

Domestic credit decreased 0.03 percent in the review period compared to an increase of 2.1 percent in the corresponding period of the previous year. On y-o-y basis, domestic credit increased 3.8 percent in mid-May 2026.

Monetary sector's net claims on government decreased 32.8 percent in the review period compared to a decrease of 24.1 percent in the corresponding period of the previous year. On y-o-y basis, such claims decreased 15.0 percent in mid-May 2026.

Deposits at Banks and Financial Institutions (BFIs) increased 9.4 percent (Rs.685.41 billion) reaching Rs.7,949.28 billion in the review period compared to an increase of 6.2 percent (Rs.399.81 billion) in the corresponding period of the previous year. On y-o-y basis, deposits at BFIs expanded 16.0 percent in mid-May 2026.

Private sector credit from the BFIs increased 5.7 percent (Rs. 312.00 billion) to Rs. 5,809.71 billion in the review period compared to an increase of 7.3 percent (Rs. 368.68 billion) in the corresponding period of the previous year. On y o-y basis, credit to the private sector from the BFIs increased 6.7 percent in mid-May 2026. 

Interest Rates

The average base rate of commercial banks, development banks and finance companies stood at 4.97 percent, 6.95 percent, and 7.30 percent, respectively, in mid-May 2026. The average base rate of commercial banks, development banks and finance companies were 6.17 percent, 8.24 percent, and 9.11 percent respectively, in the corresponding month a year ago.

Balance of Payments

Balance of Payments (BoP) remained at a surplus of Rs. 863.56 billion in the review period. Such surplus was Rs. 438.52 billion in the previous year. In US Dollar terms, the BoP remained in surplus Rs. 5.98 billion in the review period, compared to Rs. 3.23 billion in the same period of the previous year.