The country's foreign exchange reserves have been continuously setting new records for the past 34 months (almost 3 years). Foreign exchange reserves have been making records every month for almost three years due to increasing remittances, increasing imports but increasing exports at a high rate, tourism and other sectors are gradually improving.

In October 2079, the total foreign exchange reserves were 12 trillion 46 billion rupees. Since then, the stock has been consistently setting new records every month. At the same time, it has reached 26 trillion 77 billion 68 million rupees till last June. Foreign exchange reserves have increased by 6 trillion 36 billion 58 crores in the last one year alone. At the end of June 2081, the total foreign exchange reserves were 20 trillion 41 billion 100 million rupees.

At the end of the last fiscal year, foreign exchange reserves in US dollars reached 19.5 billion. This was an increase of 27.7 percent compared to the previous June. Total foreign exchange reserves in June 2008 were $15.27 billion. The National Bank claims that if the import of the financial year 2081/82 is taken as a basis, the foreign exchange reserves held by the banking sector will be sufficient to support 18.2 months of goods imports and 15.4 months of goods and services imports. Rastra Bank has set a target of maintaining foreign exchange reserves of at least 7 months for the current financial year. 

As remittances are continuously increasing, the external indicators of the economy are very strong and the interest rates are low, so there is a golden opportunity for the government and private sector to expand investment now, says Prakash Kumar Shrestha, ex-executive director of Rashtra Bank and member of the National Planning Commission.

The government can also increase investment in the development and construction sector including infrastructure. However, instead of the government borrowing money from the market and giving it to public institutions, they can raise money from the market themselves by issuing bonds,'' he says. According to Shrestha, the government, public institutions and the private sector should make full use of the opportunities created by this. Export also has some contribution in the increase of foreign exchange reserves. In recent months exports have been increasing steadily. At the same time, exports have increased by 95.75 percent in last July alone. In the first month of the current fiscal year, goods worth 23 billion 93 million rupees have been exported. Goods worth 12.22 billion were exported in July last year.

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. The government is collecting money through taxes, public debt, etc. but it has not spent it. In such a situation, the government can end the stagnation of the economy by increasing spending, he says.

"Because there is no condition to make the economy viable by more liquidity, low interest rates and further reduction of interest rates, liquidity in the economy is in a trap at the moment," Thapa said, "Financial policy and monetary policy are expansionary." But the programs under the fiscal policy seem to be contractionary. For example, reduction in the interest subsidy limit on subsidized loans, reduction in the subsidy received by sugarcane farmers, non-payment of arrears owed by the government. Here the policy is expansive and the program is narrow, so there is no synergy.' 

In order to make full use of the foreign exchange reserves accumulated in the country, he says that the government should increase investment in infrastructure development and productive sectors as much as possible. With the aim of getting money into the hands of the citizens, the National Bank has made policy arrangements including incentives for cash dividend distribution to banks and financial institutions, flexibility in bad loans. The finance policy should also provide the same arrangement,' he said, 'If the government only increases the expenditure, there will be pressure on the government finances, the public debt will increase in proportion to the GDP, and the public institutions and the private sector can also withdraw money from the market and invest in large infrastructure and productive sectors.'

For this, the government should quickly implement the alternative financial fund policy. Remittances sent by Nepalis outside the country have also set a new record in the last financial year. In the last fiscal year 2081/82, 17 trillion 23 billion 27 billion rupees of remittances have entered the country, which has increased by 19.2 percent compared to the previous fiscal year. In the financial year 2080/81, remittance inflow increased by 16.5 percent and reached 14 trillion 45 billion.

Experts say that remittances have been continuously rising in the last few months due to the increase in the number of Nepalis who went abroad for employment last year and the increase in the value of the US dollar. Last June alone, 1 trillion 89 billion 11 billion rupees of remittances were received. On a monthly basis, this amount is the highest ever. In the same month of the previous year, such inflow was 1 trillion 17 billion 78 crores. Similarly, last May, 1 trillion 76 billion 300 million rupees of remittances were received. 

Before that, many remittances were received in last Baisakh 1 trillion 65 billion 30 billion rupees, in February 1 trillion 51 billion rupees and in October 1 trillion 44 billion rupees. By the end of last June, the remittance inflow in US dollars increased by 16.3 percent and reached 12.64 billion. In the previous year, such flow had increased by 14.5 percent.