Although foreign exchange reserves, remittances, current accounts and other indicators are strong, there is no improvement in the stagnation of the economy.
The country's foreign exchange reserves have been continuously setting new records for the past 29 months (about 2 and a half years). Although the growth rate has decreased, remittances are increasing, imports did not increase as expected in the previous month, the expansion of tourism and other sectors is improving, so foreign exchange reserves have been making records every month for almost two and a half years.
The overall economic and financial report of last December published by the National Bank on Sunday showed that foreign currency (exchange) reserves increased by 2 trillion 75 billion 74 crore rupees only in 6 months of the current financial year. Along with this, the country's total foreign exchange reserves have reached 23 trillion 16 billion 84 billion rupees till last December. Compared to last June, foreign exchange reserves have increased by 13.5 percent till January. At the end of June 2081, the total foreign exchange reserves were 20 trillion 41 billion 10 million.
"Such reserves in US dollars were 15.27 billion at the end of June 2081 and increased by 10.3 percent to 16.84 billion at the end of January 2081," Nepal Rastra Bank's monthly report said. National Bank claims that if the import of up to 6 months of the current financial year is taken as the basis, the foreign exchange reserves held by the banking sector will be sufficient to support 17.3 months of goods imports and 14.4 months of goods and services imports. At the end of December 2081, the ratio of foreign exchange reserves to gross domestic product is 40.6%, total import is 120.3% and wide money supply is 32%.
Economist and ex-executive director of Nepal Rastra Bank Nar Bahadur Thapa says that even though indicators such as foreign exchange reserves, current account, and remittances continue to strengthen, the economy is still at a standstill. "It is confirmed that there is a stagnation in the economy due to the fact that internal credit has not increased as expected, there is no significant fluctuation in price inflation and the interest rate is under no pressure," he said. Will have to.'
Even when the external indicators are strengthening, Thapa said that the impasse of the economy has not ended because the government is unable to spend. Even now, about 3 trillion rupees have been deposited in the government's account in the National Bank. It belongs to all three levels of the government," he said. "The government is collecting money through various means including tax, public debt, but it has not spent it. In such a situation, the government should be able to end the stagnation of the economy by increasing spending.'
Credit flow to the private sector has been gradually increasing in recent months. It seems that the private sector wants to step out the door and expand investment, but they are not encouraged by the lack of government spending. In such a situation, Sarka should send more money to the market to encourage the private sector and make the economy viable, he said.
In the first 6 months of the current financial year, seven billion 63 billion rupees of remittances have entered Nepal. In the same period of the current financial year, compared to the month of January last year, the remittances in Nepal have increased by 4.1 percent. Remittances increased by 22.2 percent in the first six months of last financial year.
Remittance inflow in US dollars increased by 1.1 percent to 5.58 billion by December of this year. According to the data of Rashtra Bank, such flow increased by 19.5 percent last year. In the last 6 months, the number of Nepalis who took the final work permit (institutional and individual-new) for foreign employment is 230,439 and the number of those who took the work permit again is 162,628. During the same period last year, the number of Nepalis who took the final work permit (institutional and individual-new) was 2 lakh 6 thousand 390 and the number of those who got the work permit again was 1 lakh 33 thousand 940 respectively.
Average market price (consumer inflation) was 5.41 percent last December. This rate was 5.26 percent in the same month last year. The market price has been on the rise for the past few months, though at a normal rate. At the same time, it reached 5.41 percent last December. Last December, the price increase of food and beverages group was 7.67 percent and that of non-food and services group was 4.19 percent. During the same period last year, the price increase of these groups was 5.75 percent and 4.93 percent respectively.
Under the food and beverage group, the annual point consumer price index of vegetables sub-group has increased by 28.52, ghee and oil by 10.67, pulses and pulses by 9.48 and food and food products by 7.23 percent. But the annual point consumer price index of Maramsala sub-group has decreased by 3.12 percent.
Under the non-food and service group, the annual point consumer price index of miscellaneous goods and services sub-group increased by 9.35, alcoholic beverages by 7.01, clothing and footwear by 6.75 and furniture and household appliances by 5.29 percent. The bank's monthly report showed.
Nepal Rashtra Bank Research Department Head Gunakar Bhatt said that there has been some fluctuation in the inflation of food sub-group in recent months and the food supply system should be organized to solve this problem. Stability has been seen in the growth rate of remittances in US dollars. Therefore, the current liquidity situation may not be comfortable for a long time,' Bhatt said, 'The latest trend of import and remittance flow indicates that the current high liquidity situation in the banking system may not last for a long time. However, the interest rate is low and decreasing. This has given the government and the private sector a suitable opportunity to expand investment. This condition may not always be available. Therefore, he suggests that we should be able to take maximum advantage of this situation.
As of last December, the country's current account balance is 2 trillion 49 billion 26 billion in surplus. During the same period last year, the balance sheet was in surplus by 2.73 billion 52 crores. "In the same period of the previous year in US dollars, the balance sheet was in surplus of 2 billion 60 million, as of last January, it was in surplus of 1 billion 82 million," said the report. In the 6 months of the current financial year, a total of Rs 6.5 billion foreign direct investment (equity only) has been received. During the same period last year, such foreign investment was 4.54 billion.
At the end of December 2081, there is a cash balance of 2 trillion 97 billion 70 crores (including the amount in the accounts of the state government and local government) in the various accounts of the government in this bank. At the end of June 2081, such balance was 83.99 billion. The amount accumulated in the government's account till last December is almost two trillion more than the same period last year. Economists say that this confirms that the three governments have not been able to spend effectively.
