Remittances Continue To Slump, BOP Deficit Rises: Nepal Rastra Bank

Remittances Continue To Slump, BOP Deficit Rises: Nepal Rastra Bank

April 13, 2022, 7:59 a.m.

Remittance inflows decreased by 1.7 per cent to Rs. 631.19 billion by the end of the eighth month of the fiscal year against an increase of 8.7 per cent of the previous year according to the Current Macroeconomic and Financial Situation report of the Nepal Rastra Bank (NRB).

According to The Rising Nepal, the Number of Nepali workers taking approval for foreign employment increased significantly to 227,900 in the review period. It had decreased by 82.9 per cent in the same period of the previous year. The number of Nepali workers taking approval for making re-entry for foreign employment increased by 240.9 per cent to 178,262. It had decreased by 70.2 per cent in the same period of the previous year.

Net transfer decreased by 2.0 per cent to Rs. 704.33 billion in the review period. Such a transfer had increased by 7.2 per cent last year.

The report states that the current account remained at a deficit of Rs. 462.93 billion in the eighth month of this year compared to a deficit of Rs. 151.42 billion in the same period of the previous year.

BOP deficit continues to grow

Balance of Payments (BOP) remained at a deficit of Rs. 258.64 billion against a surplus of Rs. 68.01 billion of the previous year.

Similarly, gross foreign exchange reserves decreased by 16.3 per cent to Rs. 1171 billion in mid-March 2022 from Rs. 1399.03 billion in mid-July 2021.

The central bank said that based on the imports of eight months of 2021/22, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 7.4 months, and merchandise and services imports of 6.7 months.

Similarly, deposits at Banks and Financial Institutions (BFIs) increased by 4.1 per cent in the review period compared to an increase of 11.0 per cent in the corresponding period of the previous year.

Private sector credit from BFIs increased by 12.8 per cent this year compared to an increase of 17.4 per cent last year.

Likewise, capital transfer decreased by 41.2 per cent to Rs. 7 billion and net foreign direct investment (FDI) increased by 60.0 per cent to Rs. 16.30 billion. In the same period of the previous year, capital transfer and net FDI amounted to Rs. 11.91 billion and Rs. 10.18 billion respectively.

In the review month, hill area experienced the highest inflation of 7.69 per cent. The Kathmandu Valley, Terai and Mountain witnessed inflation of 6.31 per cent, 7.36 per cent and 7.56 per cent respectively. Inflation in these regions was 2.50 per cent, 3.25 per cent, 3.40 per cent and 1.31 per cent respectively in mid-March 2021 reports RSS.

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