November 17:  The Current Macroeconomic and Financial Situation Report of the country published by Nepal Rastra Bank  (NRB) paints a mixed picture of the economy. The report which has provided data of the first three months of the current fiscal year, shows some indicators improving while some others deteriorating. 

According to the report, foreign exchange reserves have further declined while the current account deficit has increased significantly. Similarly, inflation has increased and remittance inflow has declined further.

The gross foreign exchange reserves decreased 5.7 percent to Rs.1319.32 billion in mid-October 2021 from Rs.1399.02 billion in mid-July 2021. In the US Dollar terms, the gross foreign exchange reserves decreased 6.5 percent to 10.98 billion in mid-October 2021 from 11.75 billion in mid-July 2021.

Even at the peak of the festive season, the inflow of remittance declined this year. According to the report, the remittance inflow has declined by 7.6% in September. In the review period of the last fiscal year, the remittance inflow had increased by 12.7%. The remittance inflow has been declining since the beginning of the current fiscal year. Remittance inflow has dropped to Rs 239 billion in the first three months of the current fiscal year against Rs 258 billion in corresponding period of the last fiscacl year. 

The current account remained at a deficit of Rs.151.70 billion in the review period against a surplus of Rs.33.38 billion in the same period of the previous year. Likewise, Balance of Payments (BOP) remained at a deficit of Rs.76.14 billion in the review period against a surplus of Rs.101.09 billion in the same period of the previous year.

The year-on-year consumer price inflation stood at 4.24 percent in the third month of 2021/22 compared to 3.79 percent a year ago. Food and beverage inflation stood at 3.63 percent whereas non-food and service inflation stood at 4.72 percent in the review month. According to the NRB report, the price of ghee and oil; meat and fish; pulses and legumes; tobacco products and non-alcoholic drinks sub-categories rose 31.68 percent, 11.93 percent, 10.71 percent, 10.12 percent and 9.63 respectively on y-o-y basis.

Meanwhile, the economy has witnessed increase in the pledges of foreign direct investment (FDI). It has increased by 73.5% to Rs 5.07 billion in the review period. In the same period of the last year, FDI pledges amounted to Rs 2.92 billion.

 Dev Kumar Dhakal, Spokesperson of central bank said that the overall economy has witnessed improvement. The central bank is taking initiatives to make tangible reforms in the economy. It is preparing to take strict measures in importing gold and other luxury items.