Current Macroeconomic and Financial Situation of Nepal
(Based on One Month’s Data Ending Mid-Aug, 2021/22- First month of Fiscal Year 2078/79)
Major Highlights
> CPI-based Inflation remained 4.35 percent on y-o-y basis.
> Imports increased 75.7 percent and exports increased 115.9 percent.
> Remittances decreased 18.1 percent in NPR terms and 17.5 percent in USD terms.
> Balance of Payments remained at a deficit of Rs.38.75 billion.
> Gross foreign exchange reserves stood at USD 11.42 billion.
> Federal Government spending amounted to Rs.10.49 billion and revenue collection Rs.93.26 billion.
> Broad money (M2) contracted 1.6 percent. On y-o-y basis, M2 expanded 19.5 percent.
> Deposits at BFIs decreased 1.6 percent and claims on the private sector increased 1.6 percent. On y-o-y basis, deposits increased 19.6 percent and claims on the private sector 28.4 percent.
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Consumer Price Inflation
The y-o-y consumer price inflation stood at 4.35 percent in the first month of 2021/22 compared to 3.49 percent a year ago. Food and beverage inflation stood at 3.86 percent whereas non-food and service inflation stood at 4.74 percent in the review month.
Wholesale Price Inflation
The y-o-y wholesale price inflation stood at 4.25 percent in the review month compared to 7.33 percent a year ago.
Salary and Wage Rate Index
The y-o-y salary and wage rate index increased 5.05 percent in the review month. Such a growth rate was 1.34 percent a year ago. In the review month, salary index and wage rate index increased 9.44 and 3.80 percent, respectively.
Inflation in Nepal and India
The y-o-y consumer price inflation in Nepal in the first month of 2020/21 remained 4.35 percent. Such inflation in India was 5.30 percent in August 2021.
Merchandise Trade
During the first month of 2021/22, merchandise exports increased 115.9 percent to Rs.20.76 billion compared to an increase of 8.9 percent in the same period of the previous year.
During the first month of 2021/22, merchandise imports increased 75.7 percent to Rs.150.73 billion against a decrease of 19.6 percent a year ago.
Total trade deficit increased 70.6 percent to Rs.129.97 billion during the first month of 2021/22. Such a deficit had decreased 22.2 percent in the same period of the previous year. The export-import ratio increased to 13.8 percent in the review period from 11.2 percent in the same period of the previous year.
Remittances
Remittance inflows decreased 18.1 percent to Rs.75.96 billion in the review period in contrast to an increase of 23.0 percent in the same period of the previous year.
Number of Nepali workers taking approval for foreign employment increased significantly to 13,800 in the review period. It had decreased 99.2 percent in the same period of the previous year.
Current Account and Balance of Payments
The current account remained at a deficit of Rs.47.90 billion in the review period compared to a surplus of Rs.24.89 billion in the same period of the previous year.
Balance of Payments (BOP) registered a deficit of Rs.38.75 billion in the review period against a surplus of Rs.51.46 billion in the same period of the previous year.
Foreign Exchange Reserves
Gross foreign exchange reserves decreased 3.2 percent to Rs.1353.82 billion in mid-August 2021 from Rs.1399.03 billion in mid-July 2021.
Domestic Credit
Domestic credit decreased 0.5 percent in the review period compared to a decrease of 1.4 percent in the corresponding period of the previous year. On y-o-y basis, domestic credit increased 27.9 percent in mid-August 2021.
Deposit Mobilization
Deposits at Banks and Financial Institutions (BFIs) decreased 1.6 percent in the review period compared to a decrease of 0.1 percent in the corresponding period of the previous year. On y-o-y basis, deposits at BFIs expanded 19.6 percent in mid-August 2021.
Credit Disbursement
Private sector credit from BFIs increased 1.2 percent in the review period compared to a decrease of 0.5 percent in the corresponding period of previous year. On y-o-y basis, credit to the private sector from BFIs increased 29.4 percent in mid August 2021.
Interest Rates
The weighted average inter-bank transaction rate among commercial banks, which was 0.02 percent a year ago, increased to 2.13 percent in the review month.
The average base rate of commercial banks decreased to 6.71 percent in the first month of 2021/22 from 8.08 percent a year ago. Weighted average deposit rate and lending rate of commercial banks stood at 4.76 percent and 8.48 percent respectively in the review month. Such rates were 5.77 percent and 10.47 percent respectively a year ago.
Financial Access
Of the total 753 local levels, commercial banks extended their branches at 750 levels as of mid-August 2021. The number of local levels having commercial bank branches was 747 a year ago.
The total number of BFIs licensed by NRB remained 133 in mid-August 2021. As of mid-August 2021, 27 commercial banks, 18 development banks, 17 finance companies, 70 microfinance financial institutions and 1 infrastructure development bank are in operation. The number of BFIs branches reached 10,720 in mid-August 2021 from 10,683 in mid-July 2021.
Source: NRB, 2021
Click Here to View Macroeconomic Indicators of Nepal - Up to Bhadra 2078
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