The economy has come out of the prolonged recession that plagued the business and financial sector in the aftermath of the COVID-19 pandemic.
According to the annual statistics of the Fiscal Year 2023/24 published by the Nepal Rastra Bank (NRB) on Sunday, foreign exchange reserves, current account, remittance and private sector lending witnessed impressive growth while inflation significantly lowered.
Gross foreign exchange reserves increased by 32.6 per cent to Rs. 2041.10 billion by the end of the last fiscal, in mid-July 2024 from Rs. 1539.36 billion in mid-July 2023.
Of the total foreign exchange reserves, reserves held by the NRB increased 37.4 per cent to Rs. 1848.55 billion in mid-July 2024 from Rs. 1345.78 billion in mid-July 2023. Reserves held by the Banks and Financial Institutions (BFIs) decreased by 0.5 per cent to Rs. 192.55 billion in mid-July 2024 from Rs. 193.59 billion in mid-July 2023.
Based on the imports of 2023/24, the foreign exchange reserves of the banking sector are sufficient to cover the prospective merchandise imports of 15.6 months, and merchandise and services imports of 13 months, the NRB said in its annual report on macroeconomic and financial situation of the country.
The ratio of reserves-to-GDP and reserves-to-imports stood at 35.8 per cent and 108.6 per cent respectively at the end of 2023/24.
A year before, such ratios were 28.8 per cent and 83 per cent.
While the export trade of the country remained negligible, remittance backed the foreign exchange reserves. Remittance inflows increased by 16.5 per cent to Rs. 1445.32 billion during 2023/24 compared to an increase of 23.2 per cent in the previous year. The number of Nepali workers, both institutional and individual, taking first-time approval for foreign employment stood at 460,103 and taking approval for renewed entry stood at 281,199.
Likewise, consumer price inflation has dropped to 3.57 per cent in mid-July from 7.44 per cent a year ago while the annual average consumer price inflation last year stood at 5.44 per cent.
“The annual average food and beverage inflation stood at 6.47 per cent in FY 2023/24 compared to 6.62 per cent a year ago. Such inflation came down to 4.10 per cent in mid-July compared to 7.38 per cent on a year-on-year basis,” said the central bank.
The annual average non-food and services category inflation stood at 4.64 per cent in FY 2023/24 compared to 8.62 per cent a year ago.
Current account in surplus
The current account remained at a surplus of Rs. 221.34 billion last year to a deficit of Rs. 46.57 billion in FY 2022/23. Last year, capital transfer decreased by 22.9 per cent to Rs.5.81 billion and net Foreign Direct Investment (FDI) remained Rs. 8.40 billion.
A year earlier, capital transfer and net FDI amounted Rs. 7.54 billion and Rs. 6.17 billion respectively.
Likewise, Balance of Payments (BOP) remained at a surplus of Rs. 502.49 billion in 203/24 compared to a surplus of Rs. 285.82 billion in 2022/23.
Meanwhile, Nepali currency vis-à-vis the US dollar depreciated by 1.64 per cent in mid-July 2024 from mid-July 2023. It had depreciated 2.79 per cent in the previous year, informed the NRB.
The government of Nepal mobilised domestic debt of Rs. 234.42 billion and made principal repayment of Rs. 182.62 billion thereby mobilising net domestic debt of Rs. 51.80 billion in 2023/24.
Net domestic debt mobilization stood at 0.9 per cent of GDP. The GoN mobilised external loan of Rs. 123.61 billion in the review period. The outstanding public debt amounted Rs. 2433.24 billion in mid-July 2024. Out of it, Rs. 1252.34 billion was foreign and Rs. 1180.90 billion domestic loan. The ratio of total outstanding public debt to GDP came down to 42.65 per cent last year which was 42.99 per cent in 2022/23.
Deposits, credits go up
Deposits at the BFIs increased by Rs. 742.37 billion (13.0 per cent) in the review year compared to an increase of Rs. 627.25 billion (12.3 per cent) in the previous year.
The share of demand, saving, and fixed deposits in total deposits stood at 5.8 per cent, 30.3 per cent and 56.4 per cent respectively in mid-July 2024. Such shares were 7.7 per cent, 26.6 per cent and 58.9 per cent respectively a year ago.
Private sector credit from BFIs increased to Rs. 276.94 billion (5.8 per cent) last year compared to an increase of Rs. 175.94 billion (3.8 per cent) in FY 2022/23. Share of private sector credit from BFIs to non-financial corporations and households stood at 63.3 per cent and 36.7 per cent in mid-July 2024, up from 62.7 per cent and 37.3 per cent respectively a year ago.
Similarly, interest-subsidised loan facility was extended to 120,274 borrowers with the mobilization of Rs. 126.82 billion in mid-July 2024. From that amount, Rs. 86.90 billion has been extended to 46,356 borrowers for commercial agriculture and livestock businesses, and Rs. 38.29 billion loan has been extended to 71,883 women entrepreneurs.
Base rate moderated
According to the NRB, base rate of BFIs has come down significantly.
The average base rate of commercial banks, development banks and finance companies stood at 8.00 per cent, 9.71 per cent and 11.21 per cent respectively in the last month of 2023/24. Such rates were 10.03 per cent, 12.15 per cent and 13.41 per cent respectively in the corresponding month a year ago.
Weighted average deposit rate of commercial banks, development banks and finance companies stood 5.77 per cent, 6.63 per cent and 7.93 per cent respectively in the last month of 2023/24. Such rates were 7.86 per cent, 9.14 per cent and 9.79 per cent respectively in 2022/23.
Likewise, weighted average lending rate of commercial banks, development banks and finance companies stood at 9.93 per cent, 11.34 per cent and 12.55 per cent respectively in the last month of 2023/24. Such rates were 12.30 per cent, 14.10 per cent and 14.82 per cent respectively in the corresponding month a year ago.
