11 months of current fiscal year: BoP at surplus of Rs 228.98 billion

Balance of Payment (BOP) remained at a surplus of Rs.228.98 billion in the first eleven months of the current fiscal year 2022-23 that had begun on July 17, 2022 and is ending within a week.

According to the Current Macroeconomic and Financial Situation report released by the Nepal Rastra Bank today, during the eleven months of the fiscal year 2022-23 (July 17, 2022 - July 16, 2023), the BoP remained at a surplus of Rs. 228.98 billion. This is a significant improvement compared to the deficit of Rs. 269.81 billion recorded in the same period of the previous year. In terms of US Dollars, the BoP surplus for the review period amounted to 1.74 billion, contrasting with a deficit of 2.26 billion reported in the same period of the previous year.

Similarly, the gross foreign exchange reserves witnessed a significant increase of 21.8 percent, thus reaching Rs. 1480.87 billion in the review period compared to Rs. 1215.80 billion in the corresponding period last year. In terms of US dollars, the gross foreign exchange reserves experienced an 18.5 percent surge, amounting to 11.30 billion in the review period as it was calculated at 9.54 billion in the previous corresponding period.

In mid-June 2023, the foreign exchange reserves held by the Nepal Rastra Bank (NRB) increased by 25.1 percent, reaching Rs. 1321.25 billion compared to Rs. 1056.39 billion in mid-July 2022. Simultaneously, the reserves held by banks and financial institutions, excluding the NRB, experienced a slight increase of 0.1 percent, totaling Rs. 159.63 billion in mid-June 2023 compared to Rs. 159.41 billion in mid-July 2022. Additionally, the Indian currency accounted for 22.9 percent of the total reserves in mid-June 2023.

In mid-June 2023, the year-over-year consumer price inflation remained steady at 6.83 percent against 8.56 percent previous year. In the review period, the inflation rate for food and beverages was 5.66 percent, while it was 7.76 percent towards that non-food and service sector.

In this period, there was a 16 percent fall in imports while exports went by 22.7 percent, resulting in a 15.2 percent decrease in trade deficit compared to the corresponding period last year.

The report states that the foreign exchange reserves held by the banking sector are deemed sufficient to cover prospective merchandise imports for a period of 11.2 months, as well as merchandise and services imports for a period of 9.6 months.

Furthermore, the ratios of reserves-to-GDP, reserves-to-imports, and reserves-to-M2 were recorded at 27.5 percent, 80.3 percent, and 25.0 percent respectively in mid-June 2023. These ratios reflect an increase compared to the figures of mid-July 2022, which stood at 24.6 percent, 57.8 percent, and 22.1 percent respectively.

The data shows that expenditures of the federal government was amounted to Rs.1176.07 billion and revenue collection was Rs.836.85 billion till the end of the first eleven months of the current fiscal year.

Similarly, broad money (M2) rose by 7.8 percent and on year-over-year basis, M2 increased by 10.9 percent while deposits at BFIs went up by 8.8 percent and private sector credit increased by 3.4 percent. On year-over-year basis, deposits increased 12.2 percent and private sector credit increased 3 percent.

---