As Nepal’s import continues to decline due to lockdown, Balance of Payments (BOP) has recorded at a surplus of Rs.282.41 billion in the review year. There was a deficit of Rs.67.4 billion in the previous year.
Gross foreign exchange reserves increased by 34.9 per cent to Rs.1401.84 billion in mid-July 2020 from Rs.1038.92 billion in mid-July 2019.
According to annual macroeconomic update of fiscal year 2019-20 Nepal Rastra Bank, domestic credit expanded by 13.6 per cent in the review year compared to a growth of 21.1 per cent in the previous year. Claims on private sector increased by 12.6 per cent in the review year compared to a growth of 19.1 per cent the previous year.
According to the NRB report, the current account deficit — a measurement of a country’s trade where the value of the goods and services it imports exceeds the value of the products it exports — decreased 87.9 per cent to Rs 32.06 billion in the review year from Rs 265.36 billion in the previous year.
In the external sector, merchandise exports inched up by 0.6 per cent to Rs 97.71 billion in fiscal 2019-20 compared to an increase of 19.4 per cent in 2018- 19. Meanwhile, merchandise imports decreased by 15.6 per cent to Rs 1,196.80 billion against an increase of 13.9 per cent in the previous fiscal.
Consequently, the trade deficit narrowed down 16.8 per cent to Rs 1,099.09 billion in the review year. Such deficit had expanded 13.5 per cent in the previous year.
Capital transfer decreased by 8.1 per cent to Rs.14.21 billion and net foreign direct investment (FDI) increased by 49.1 per cent to Rs.19.48 billion. In the previous year, capital transfer and net FDI amounted to Rs.15.46 billion and Rs.13.06 billion respectively.