Foreign exchange reserves have been setting records every month for the past three years as remittances are increasing, exports are growing at a high rate despite increasing imports, and sectors including tourism are improving.
What you should know
As the external sector of the economy continues to strengthen, the government has a good opportunity to confidently invest in infrastructure construction, reconstruction, and development spending.
Experts say that as the government increases spending, imports will increase and the country has sufficient foreign exchange reserves for imports, so it should spend more.
The country's foreign exchange reserves have reached 3055.52 billion rupees as of last Kartik, according to a report by Nepal Rastra Bank. This is an increase of 14.1 percent compared to last Ashar. In last Ashar, the total foreign exchange reserves were 2677.68 billion rupees. 'Such reserves were 19.5 billion dollars in mid-Ashar 2082, but have increased by 10.3 percent to 21.52 billion rupees in mid-Kartik 2082,' the Rastra Bank said.
Based on imports up to the fourth month of the fiscal year 2082/83, the foreign exchange reserves held by the banking sector are sufficient to cover 20.8 months of goods imports and 17.4 months of goods and services imports, the Rastra Bank claims. Of the total foreign exchange reserves, the reserves held by the Nepal Rastra Bank increased by 12.8 percent to Rs 272.66 billion in mid-Ashar 2082, from Rs 2414.64 billion in mid-Kartik 2082, according to the data of the Nepal Rastra Bank.
The country's foreign exchange reserves have been setting new records for the past 38 months. As remittances are increasing, imports are increasing but exports are increasing at a high rate, and sectors including tourism are improving, foreign exchange reserves have been setting records every month for the past three years.
The continuous strengthening of external indicators of the economy has given the government an opportunity to spend on infrastructure, among other things, said Prakash Kumar Shrestha, newly appointed to the National Planning Commission. He said that although it is not easy to increase spending in the current situation, the government has an opportunity to confidently expand investment in large infrastructure.
The average market price of goods and services purchased by the general public (consumer price increase rate) was found to be 1.11 percent in last Kartik. This is 4.49 percentage points lower than the same period of the previous fiscal year. In Kartik of the previous fiscal year, such price increase was 5.60 percent.
The report shows an average price increase of 1.53 percent for the four months of 2082/83. The average inflation for the same period of the previous year was 4.59 percent. Although the report shows a market price increase of just over one percent, the market price of all goods and services may not have decreased in a way that is felt by the citizens. The Rastra Bank has been collecting daily prices of goods and services that are used frequently by consumers. Based on that, it determines whether the average price has increased or decreased. The Rastra Bank has stated that the average price increase in Kartik of the previous year was 1.11 percent. This is an increase compared to Kartik of the previous year. The average price increase in Kartik of the previous year was 5.60 percent. This does not mean that the price increase of 5.60 percent in Kartik of the previous year has now decreased to 1.11 percent. Rather, it means that the price increase of 5.60 percent in Kartik of the previous year has now increased by an additional 1.11 percentage points.
Ram Sharan Kharel, Head of the Research Department of the National Bank, said that the price increase rate has decreased for three main reasons. First, the price increase rate was higher last year compared to the previous year due to floods and landslides. Therefore, it has been lower this year because the base was higher last year. The price increase in this year's Kartik is much higher compared to the Kartik of two years ago. Second, the price increase rate in India has also been continuously decreasing to less than one percent. Since we import many goods and services from there, even though the price increase rate has decreased there, its impact has been seen in Nepal as well. Third, the price of petroleum products has decreased comparatively. After the price decrease, the cost of transportation, industrial production, etc. has decreased.
The price increase rate in Nepal has fallen below three percent since last Baisakh. Accordingly, this growth rate has been below two percent since last Shrawan. The average price increase rate in Shrawan has been 1.68 percent, 1.87 percent in Bhadra, 1.47 percent in Asoj, and 1.11 percent in Kartik. According to the report, the inflation rate of the food and beverage group in Kartik was negative by 3.32 percent. The inflation rate of the non-food and services group was 3.69 percent. In the same period of the last fiscal year, the inflation rates of these groups were 9.10 and 3.65 percent, respectively.
‘In November, the annual point-wise consumer price index of the ghee and oil subgroup under the food and beverage group increased by 5.25 percent, that of non-alcoholic beverages by 3.61 percent, and that of dairy products and eggs by 1.97 percent,’ the Rastra Bank said, ‘the annual point-wise consumer price index of the vegetable subgroup decreased by 14.43 percent, that of spices by 7.85 percent, and that of pulses and legumes by 5.36 percent.’
The report showed that the annual point-wise consumer price index of the miscellaneous goods and services subgroup under the non-food and service group increased by 15.17 percent, that of education by 7.56 percent, that of clothing and footwear by 6.29 percent, that of tobacco products by 4.84 percent, and that of furnishing and household appliances by 4.55 percent.
In November, the annual point-wise consumer price index of the rural area increased by 0.66 percent and that of the urban area by 1.26 percent. ‘In terms of provinces, the annual point consumer inflation in the review month was 1.80 percent in Koshi Province, 1.73 percent in Madhesh Province, 0.81 percent in Bagmati Province, 0.37 percent in Gandaki Province, 1.27 percent in Lumbini Province, 1.08 percent in Karnali Province and 0.26 percent in Sudurpaschim Province,’ the report said.
In the Shrawan-Kartik period of the current fiscal year, Rs 687.13 billion in remittances have been received through remittances. This year, remittances are 31.4 percent higher than the same period of the previous fiscal year. In the same period of the previous year, remittance inflows had increased by 9.4 percent. According to the data of the National Bank, Rs 133.82 billion in remittances have been received in Kartik 2082 alone. In Kartik of the previous fiscal year, Rs 114.31 billion in remittances were received.
