Kathmandu: The external sector has seen growth in the national economy in the past seven months of the current fiscal year.
According to National News Agency Nepal, the Current Macroeconomic and Financial Situation of Nepal report issued by Nepal Rastra Bank indicates significant improvements in various economic indicators, including remittances, foreign exchange reserves, and the overall balance of payments.
In the past seven months, remittance inflows increased by 7.3 percent, reaching Rs.900.58 billion, compared to an 18.8 percent increase during the same period last year. In U.S. Dollar terms, remittances grew by 5.3 percent to 6.65 billion, down from a 16.4 percent increase in the previous year. The rise in remittance inflows is complemented by a substantial number of Nepali workers seeking employment abroad, with 274,622 individuals obtaining first-time approval and 190,886 renewing their entry permits.
The current account surplus rose to Rs.166.80 billion from Rs.162.52 billion in the previous year. In U.S. Dollar terms, the surplus amounted to 1.24 billion, slightly higher than the 1.22 billion recorded last year. Net capital transfers also increased, reaching Rs.5.83 billion compared to Rs.3.80 billion during the same period last year. Foreign direct investment saw an inflow of Rs.7.45 billion, surpassing the previous year’s Rs.5.19 billion.
The Balance of Payments (BOP) recorded a surplus of Rs.284.41 billion, though slightly lower than the Rs.297.72 billion surplus from the previous year. In U.S. Dollar terms, the BOP surplus was 2.11 billion, compared to 2.24 billion last year. Gross foreign exchange reserves rose by 16.1 percent to Rs.2369.08 billion as of mid-February 2025, up from Rs.2041.10 billion in mid-July 2024. In U.S. Dollar terms, reserves increased by 11.7 percent to 17.05 billion.
Of the total foreign exchange reserves, those held by Nepal Rastra Bank increased by 13.9 percent to Rs.2105.14 billion, while reserves held by other banks and financial institutions rose by 37.1 percent to Rs.263.93 billion. The proportion of Indian currency in the total reserves stood at 22.0 percent. The reserves are sufficient to cover 17.2 months of prospective merchandise imports and 14.4 months of merchandise and services imports.
Furthermore, the ratio of reserves-to-GDP, reserves-to-imports, and reserves-to-M2 improved to 41.5 percent, 120.3 percent, and 32.5 percent respectively in mid-February 2025, compared to 35.8 percent, 108.6 percent, and 29.3 percent in mid-July 2024. These indicators reflect a strengthened external sector, contributing positively to Nepal’s national economy.