By all indications, the Nepalese economy is slowly heading towards a crisis. The Nepal Rastra Bank (NRB) recently released the country’s current macroeconomic and financial situation based on data for the first nine months of the 2021/22 financial year. It indicates that consumer inflation at that time soared to 7.28%, imports increased by 32% while exports increased by 69.4% (from a much lower base).

Similarly, remittances fell by 0.6%, the balance of payments remained in deficit by 268.26 billion rupees and gross foreign exchange reserves amounted to 9.61 billion dollars. Federal government expenditure amounted to Rs 794.26 billion and revenue collection amounted to Rs 789.26 billion. Here are the details:

Inflation


  • Consumer price inflation stood at 7.28% in March/April against 3.10% in the same period a year ago. Food and beverage inflation was 7.40%, while non-food and services inflation was 7.18% in the months under review. The average inflation was 5.62%.


  • In the Food & Beverages category, prices for Ghee & Oil, Dairy & Eggs, Pulses & Pulses, and Tobacco Products subcategories increased by 28.36%, 11, 56%, 10.53 and 8.91% on an annual basis. Similarly, under the non-food and services category, the prices of the transport, education and miscellaneous goods and services sub-categories increased by 20.16%, 8.79% and 8.17% respectively.

Trade


  • Intermediate and final consumer goods accounted for 47.2% and 52.7% of total exports respectively, while the ratio of capital goods to total exports remained negligible during the period under review. In the same period of the previous year, the ratio of intermediate consumer goods, capital goods and final consumption amounted respectively to 31.8%, 0.5% and 67.7% of total exports.


  • On the import side, the share of intermediate goods stood at 53.2%, capital goods at 10.5% and final consumer goods at 36.3% during the period under review. The respective ratios were 53.4%, 11.7% and 34.8% in the same period the previous year.


  • The export price unit value index increased by 9.9% and the import price index increased by 17.6%. The terms of trade index fell by 6.5% during the months under review, compared to a drop of 3.2% a year ago.


  • Remittances declined by 0.6% to 724.74 billion rupees during the review period, compared to an increase of 16.5% during the same period of the previous year.


  • Net transfer decreased by 0.7% to Rs 808.92 billion during the reporting period. Such transfer had increased by 14.4% in the same period of the previous year.

Foreign exchange reserves


  • Gross foreign exchange reserves declined by 16.5% to 1.16 trillion rupees in mid-April 2022 from 1.39 trillion rupees in mid-July 2021.


  • Of total foreign exchange reserves, reserves held by the NRB decreased by 17.9% to 1.02 trillion rupees in mid-April 2022 from 1.24 trillion rupees in mid-April 2022. July 2021. Reserves held by banks and financial institutions (excluding NRB) decreased by 5.1% to Rs 146.48 billion in mid-April 2022 from Rs 154.39 billion at the end of July 2021. mid-July 2021. The share of Indian currency in total reserves stood at 24.3% as of mid-April 2022.

Expenses and revenue


  • The total expenditure of the federal government amounted to Rs 794.26 billion. Recurrent expenditure, capital expenditure and financial expenditure amounted to Rs 625.5 billion, Rs 103.79 billion and Rs 64.97 billion respectively during the reporting period.


  • During the reporting period, revenue mobilization (including the amount to be transferred to provincial and local governments) amounted to Rs 789.26 billion. Tax revenue and non-tax revenue amounted to Rs 727.79 billion and Rs 61.47 billion respectively.


  • The federal government has mobilized Rs 105.47 billion in domestic debt, including Rs 50 billion in treasury bonds, Rs 54.5 billion in development bonds and Rs 0.97 billion in citizen savings certificates.


  • The balance of various government accounts maintained with the NRB was Rs 333.08 billion (including the provincial government and local authorities account) as of mid-April 2022, compared to Rs 200.18 billion as of mid- July 2021.

Mobilization of deposits


  • Deposits with banks and financial institutions (BFI) increased by 5.1% during the period under review, compared to an increase of 13.7% during the corresponding period of the previous year. Deposits with CIBs increased by 12.2% in mid-April 2022.


  • The share of sight, savings and term deposits in total deposits amounted to 8.7%, 28.7% and 56.1% respectively as of mid-April 2022. These shares were respectively 8 .5%, 35.1% and 48.2% a year ago.


  • The share of institutional deposits in total CIB deposits stood at 38.6% in mid-April 2022. This share was 41.7% in mid-April 2021.

Refinance


  • The amount of refinancing provided by the NRB stood at Rs 116.9 billion as of mid-April 2022.


  • As of mid-April 2022, the concessional loan is Rs 216.06 billion granted to 145,693 borrowers. Of which Rs. 138.84 billion was extended to 59,931 borrowers for certain commercial agriculture and livestock enterprises.

Interest rate


  • The weighted average rate for 91-day Treasury bills was 7.58%, down from 2.76% a year ago. The weighted average rate of interbank transactions between commercial banks, which was 2.03% a year ago, increased to 6.99% during the period under review. The IBF’s weighted average interbank rate, which is considered the operational target for monetary policy, stood at 7% during the review period. Such a rate was 2.03% a year ago.


  • The average commercial bank base rate stood at 9.17%, down from 6.90% a year ago. The weighted average commercial bank deposit rate and lending rate stood at 7.11% and 10.78% respectively during the review period. These rates were respectively 4.79% and 8.61% a year ago.

Capital market


  • The NEPSE index reached 2415.3 in mid-April 2022 against 2714.8 in mid-April 2021.


  • Market capitalization as of mid-April 2022 stood at 3.42 trillion rupees compared to 3.75 trillion rupees as of mid-April 2021.


  • The paid-up value of 6.68 billion NEPSE-listed shares stood at Rs 658.33 billion as of mid-April 2022.


  • Securities worth Rs 182.76 billion were listed on the NEPSE. These securities include government bonds worth Rs 54.5 billion, a debenture worth Rs 49.16 billion, free shares worth Rs 47.96 billion, an ordinary share of worth Rs 18.09 billion, a right share worth Rs 9.31 billion and a mutual fund worth Rs 3.75 billion.


  • The Securities Board of Nepal approved the total public issue of securities worth Rs 15.05 billion during the reporting period, which includes a debenture worth Rs 4.8 billion, an ordinary share worth Rs 3.79 billion, a right share worth Rs 3.46 billion and a mutual fund worth Rs 3 billion.

Source of all data: Nepal Rastra Bank
Based on nine months data ending mid-April 2021/22