December 16: Economic indicators have further improved in the fourth month of the current fiscal year in the country.
Restrictive policies adopted by Nepal Rastra Bank and the government following the depletion of foreign currency reserve and high deficit in balance of payment have yielded positive results.
As per the report published by Nepal Rastra Bank on Current Macroeconomic and Financial Situation on Thursday, inflation has slightly dropped while condition of balance of payment, remittance inflow, and foreign currency reserve have improved.
Inflation stood at 8.8 per cent in the fourth month of the current fiscal year while country recorded inflation at 8.26 per cent in the third month of the same fiscal year.
Nepal Rasrta Bank and the government have set the target to keep inflation within 7 per cent this fiscal. The fourth month has witnessed improvement in the balance of payment (difference in inflow and outflow of money from the country).
Balance of payment incurring loss for 14 months had started seeing surplus from the third month of the current fiscal year. BOP surplus that stood at Rs 12,43,0000000 in the same month increased to Rs 20,030000000 in the fourth month.
Due to COVID-19 and lockdowns imposed to contain the virus had plummeted the import, causing the BOP surplus.
However, high import since last year had led to the deficit in balance of payment. After the high import reduced the foreign currency reserve rapidly, Nepal Rastra Bank had started provision of keeping 50 per cash margin when opening the letter of credit (LC) to import the luxurious goods from the fourth month of last fiscal year.
Later, the government had banned the import of 10 luxurious good in May. The ban has resulted into BOP surplus.
Remittance inflow rate that started rising since the first month of the current fiscal year increased by 20.4 per cent in the fourth month. Country has received a total of Rs 3,780,40000000 remittance in the first four months of the current fiscal.
Remittance amount country received in the fourth month was at Rs 96,990000000. Last year, the remittance inflow had dropped by 7 per cent in the same month.
In the US Dollar terms, the remittance inflow has increased by 10.8 per cent and reached 2, 93,0000000. Remittance in the US Dollar had dropped by 7.3 per cent in the same period last year.
Rise in the number of people going for foreign employment and sharp increase in the price of US Dollar have led to the rise of remittance inflow inside the country.
The number of people receiving labour agreement to work in foreign countries in the first four months increased by 102 per cent and reached 1,95,196. A total of 87,428 migrant workers renewed their labour contract during the same period this fiscal.
Tourism income has also improved. Income received from tourists increased by 137 per cent and stood at Rs 17, 96,0000000 in the first four months of the current fiscal. Tourism income was just Rs 7,580000000 during the same period last year.
Trade deficit has also dropped in the first four months of the current fiscal. In the review period, import fell by 18 per cent and stood at Rs 5,32,690000000. In the same period, country’s export stood at Rs 54,77,0000000. The total trade deficit decreased by 9.4 per cent and stood at Rs 4,77, 920000000 during the same period.
Status of foreign current reserve has also improved during the review period. The total foreign currency reserve stood in the US Dollar stood at 9,63,0000000 in the fourth month of the current fiscal year. The third month had foreign currency reserve of US Dollar 9,48,0000000.
The current reserve of the foreign currency is enough to import goods for 9.7 months and goods and services for 8.4 months.