Nepal Rastra Bank (NRB) recently published its latest report on the country’s economic and financial status, highlighting several positive indicators that point to Nepal’s economy exhibiting resilience in the face of the global economic crisis and recession. According to the NRB Report, Nepal’s economy shows a surplus of Rs. 180.17 billion in the balance of payments.
- The inflation rate based on the Consumer Price Index (CPI) stood at 7.76% on a year-on-year basis.
- Imports decreased by 18.1%, exports declined by 26.3%, and the trade deficit narrowed by 17.1%
- Remittances increased by 24.2% in Nepali Rupee terms and 13.9% in US Dollar terms.
Gross foreign exchange reserves remained robust at NPR 1433.73 billion, sufficient to cover the costs of essential imports for over 7 months. The report stated federal government spending reached Rs.943.05 billion while revenue collection stood at Rs.683.81 billion.
- Broad money supply (M2) rose by 6.6%
- Deposits at BFIs expanded by 7%
- Private sector credit growth picked up to 3.5%.
- On a year-on-year basis, M2, deposits and private sector credit growth stood at 9.9%, 11% and 3.2% respectively.
“The latest report highlights the resilience shown by Nepal’s economy despite the adverse impact of the global economic crisis and recession,” NRB Governor Maha Prasad Adhikari said. “Effective policies and targeted measures undertaken by NRB and the Government have contributed to the strength of the economy. Overall, major economic indicators signal a rebound in economic activity.”
While uncertainties remain due to the ongoing crisis, major economic indicators show the Nepali economy is on the path to revival, according to the NRB. With remittances recovering, growth in money supply and credit to the private sector picking up, and satisfactory management of fiscal and monetary policy, the country’s economic fundamentals remain solid, the report concluded.
Some of the measures taken to support businesses and citizens during this time include reduced bank rates and interest rates.“NRB reduced the policy rates by 1.5 percentage points and lowered interest rate corridor by 1 percentage point to ease the interest rates and encourage businesses to borrow which has supported the economy,” Governor Adhikari said. The Government also introduced refinancing schemes at subsidized interest rates for businesses, provided tax breaks, and increased spending on healthcare and social protection.
While Nepal’s economy contracted for the first time in four decades due to the impact of the global economic crisis and recession, latest indicators show it is well on the path to recovery. Analysts say normal monsoon, resilient remittance inflows, effective control of the crisis and Government policies can support the revival of economic activities in Nepal. Overall, the latest NRB report highlights Nepal’s strong fundamentals which can help the economy bounce back at a healthy pace.