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Latest economic data coming from the central bank should provide some succor to the government, though the situation on the ground remains pretty dire. 

According to the recently-published report about the Current Macroeconomic and Financial Situation of Nepal, as of mid-May of the current fiscal (2024-25), the CPI-based Inflation remained within expectations while balance of payment remained at a surplus even as foreign exchange reserves surged.  

Per the report, CPI-based inflation remained 4.61 percent on a year-to-year basis compared to 7.76 percent in the corresponding period last year.  Food and beverage inflation stood at 5.21 percent whereas non-food and service inflation stood at 4.14 percent in the review month.

Under the food and beverage category, year-on-year (y-o-y) price index of spices increased 22.64 percent, vegetable 16.99 percent, pulses and legumes 10.94 percent, cereal grains and their products 7.59 percent and non-alcoholic drinks 6.06 percent in the review month. The y-o-y price index of ghee and oil decreased 10.10 percent. 

Under the non-food and services category, the y-o-y price index of miscellaneous goods and services sub-category increased 12.81 percent, recreation and culture 12.61 percent and education 7.31 percent whereas the y-o-y price index of transportation sub-category decreased 0.33 percent.

The y-o-y consumer price inflation in the Kathmandu Valley, Tarai, Hills and Mountains stood at 4.06 percent, 4.58 percent, 5.33 percent and 4.32 percent against 8.57 percent, 7.68 percent, 7.01 percent and 7.47 percent, respectively a year ago.

A remittance surge

Remittance inflows increased 19.8 percent to Rs 1082.62bn in the review period compared to an increase of 24.2 percent in the same period of the previous year. In US dollar terms, remittance inflows increased 17.7 percent to 8.15bn in the review period compared to an increase of 13.9 percent in the corresponding period of the previous year.

The number of Nepali workers (both institutional and individual) taking first time approval for foreign employment reached 329,422 while the number of those taking approval for renewed entry reached 212,721 against 387,839 and 217,959, respectively in the previous year.

The current account remained at a surplus of Rs 179.48bn in the review period against a deficit of Rs 60.43bn in the same period of the previous year. In US dollar terms, the current account registered a surplus of 1.35bn in the review period against a deficit of 468.3m in the same period last year.

Capital transfer decreased 19.2 percent to Rs 4.78bn and net foreign direct investment (FDI) remained a positive of Rs 6.48bn in the review period against Rs 5.91bn and Rs 2.62bn, respectively in the corresponding period last year.

BoP in surplus

Balance of payments (BoP) did a fine balancing act, remaining at a surplus of Rs 365.16bn in the review period against a surplus of Rs 174.28bn in the same period of the previous year. In US dollar terms, BoP remained at a surplus of 2.75bn in the review period against a surplus of 1.32bn in the same period of the previous year.

Another vital indicator, gross foreign exchange reserves witnessed a healthy growth, increasing 24.2 percent to Rs 1911.86bn  in mid-April 2024 from Rs 1539.36bn in mid-July 2023. In US dollar terms, gross foreign exchange reserves increased 22.7 percent to 14.36bn in mid-April 2024 from 11.71bn in mid-July 2023. 

Of the total foreign exchange reserves, reserves held by NRB increased 25.4 percent to Rs 1688.21bn in mid-April 2024 from Rs 1345.78bn in mid-July 2023. Reserves held by banks and financial institutions (except for NRB) increased 15.5 percent to Rs 223.65bn in mid-April 2024 from
Rs 193.59bn in mid-July 2023. 

The share of Indian currency in total reserves stood at 21.6 percent in mid-April 2024. 

Based on the imports of nine months of 2023-24, the foreign exchange reserves of the banking sector are sufficient to cover the prospective merchandise imports of 15 months, and merchandise and services imports of 12.5 months. The ratio of reserves-to-GDP, reserves-to-imports and reserves-to-M2 stood at 33.5 percent, 104 percent and 28.9 percent, respectively in mid-April 2024. Such ratios were 28.8 percent, 83 percent and 25 percent, respectively in mid-July 2023.

Government expenditure up 

Government’s expenditure amounted to Rs 909.39bn and revenue collection Rs 748.04bn during the review period. Compared to a surge of 18.7 percent in the last fiscal, government expenditure decreased 3.6 percent in the review period. The recurrent expenditure, capital expenditure and financial expenditure amounted to Rs 644.03bn, Rs 97.38bn and Rs 167.99bn in the review period. 

Total revenue mobilization of the government (including the amount to be transferred to provincial and local governments) stood at Rs 748.04bn.  Revenue mobilization recorded a growth of 9.4 percent in the review period in contrast to a decrease of 13.4 percent in the same period of the last fiscal. Tax revenue reached Rs 671.12bn while non-tax revenue stood at Rs 76.93bn. 

Broad money (M2) increased 7.5 percent in the review period compared to an increase of 6.4 percent in the corresponding period of the previous year. On a y-o-y basis, M2 expanded 12.3 percent in mid-April 2024. Net foreign assets (NFA, after adjusting foreign exchange valuation gain/loss) increased Rs 365.16bn  (25.1 percent) in the review period compared to an increase of Rs 174.28 bn (15.1 percent) in the corresponding period of the previous year.  

During the review period, reserve money increased 6.4 percent compared to an increment of 2.5 percent in the corresponding period of the previous year. On a y-o-y basis, the reserves increased 14.6 percent in mid-April 2024.

The total trade deficit decreased 2.8 percent to Rs 1053.42bn during the review period, a dismal figure compared to a decrease of 17.1 percent in the corresponding period of the previous year. The export-import ratio remained at 9.8 percent in the review period like in the corresponding period of the previous year.

Prime Minister Pushpa Kamal Dahal has to take a vote of confidence for the fourth time.

He had to seek a vote of confidence for the fourth time after the Janata Samajbadi Party Nepal-led by Upendra Yadav withdrew support extended to the government.

The Janata Samajbadi Party Nepal decided to withdraw support to the government as the party was feeling uncomfortable to work together with the ruling coalition parties remaining in the government, JSPN spokesperson Manish Suman said.

Deputy Prime Minister and Minister for Health and Population Upendra Yadav and Minister of State for Health and Population Deepak Karki resigned from their post on Monday morning.

There is a constitutional provision that the prime minister should seek a vote of confidence within 30 days if the party participating in the government withdraws the support.

Prime Minister Dahal sought a vote of confidence for the time on January 10, 2023, second time on March 20, 2023 and third time on March 13, 2024.

He was appointed as the Prime Minister on December 25, 2022.

The Janata Samajbadi Party Nepal has withdrawn support extended to the Pushpa Kamal Dahal-led government.

A Central Committee meeting of the party held on Monday decided to withdraw support to the Dahal-led government, leader Deepak Karki informed.

Deputy Prime Minister and Minister for Health and Population Upendra Yadav and Minister of State for Health and Population Deepak Karki resigned from their post on Monday morning.

Yadav mentioned in his resignation letter that he decided to resign  as he could not work efficiently together with the ruling coalition parties remaining in the government in the developing political situation. 

The Chairman Janata Samajbadi Party Nepal told Annapurna Post, the sister publication of The Annapurna Express, that he resigned as he was not feeling comfortable coordinating with the CPN-UML and CPN (Maoist Center).

“The major parties of the incumbent government have played a crucial role in splitting the Janata Samajbadi Party Nepal.  I have serious dissatisfaction over the working style of the UML-Maoist Center,” he said.

The price of gold has dropped by Rs 300 per tola in the domestic market on Monday.

According to the Federation of Nepal Gold and Silver Dealers’ Association, the yellow metal is being traded at Rs 138, 100 per tola today. It was traded at Rs 138, 400 per tola on Sunday.

Similarly, tejabi gold is being traded at Rs 137, 450 per tola. It was traded at Rs 137, 750 per tola.

Meanwhile, the silver is being traded at Rs 1,715 per tola today.

Deputy Prime Minister and Minister for Health and Population Upendra Yadav resigned from his post on Monday.

 He submitted resignation to Prime Minister Pushpa Kamal Dahal this morning. 

Yadav, also the Chairman of the Janata Samajbadi Party Nepal, mentioned in his resignation letter that he decided to resign as he was not feeling comfortable to work together with the ruling coalition parties staying in the government in the evolving political situation.

He also thanked the Prime Minister for providing the opportunity to work in the government.

Similarly, Minister of State for Health and Population Deepak Karki representing the government from the same party also resigned from the post today itself.

Prime Minister Pushpa Kamal Dahal and Speaker Dev Raj Ghimire held a telephone conversation on Monday to discuss the ways to create an environment for running the Parliament.

During the conversation, they also discussed the government’s policies and programs, the Speaker's press advisor Shekhar Adhikari informed.

He said that the Prime Minister has decided to take initiatives to forge political consensus.

On the occasion, Prime Minister Dahal informed the Speaker that he had held a meeting with the main opposition party Nepali Congress to forge political consensus and also discussed the demands of the party with the ruling coalition partners. He said that they would reach the conclusion by this evening.

Prime Minister Dahal said that he would start consultations again with the Congress soon after he returned to Kathmandu from Chitwan.

He also informed the Speaker about the meeting held with the President.

The Nepali Congress has been obstructing both the Houses of the federal Parliament—House of Representatives and National Assembly—demanding formation of a parliamentary committee to investigate fraud charges against Deputy Prime Minister and Home Minister Rabi Lamichhane.

Earlier on Sunday, Speaker Ghimire held a meeting with the minister for Law, Justice and Parliamentary Affairs and chief whips of major political parties.

The Parliamentary Party meeting of the Nepali Congress scheduled for this afternoon has been postponed for Tuesday morning.

Congress Chief Whip Ramesh Lekhak said that they will continue the discussions within the party on contemporary political issues today and the Parliamentary Party meeting will be held at 8 am tomorrow.

According to him, they will have an intense discussion in the meeting to be held on Tuesday morning and decide on how to present themselves in the next meeting of the Parliament.

The Congress has been obstructing the meetings of both the Houses of federal Parliament–House of Representatives and National Assembly–demanding the formation of a parliamentary probe committee to investigate fraud charges against Deputy Prime Minister and Home Minister Rabi Lamichhane.

The main opposition Nepali Congress obstructed even the first meeting of the budget session held on Friday demanding the formation of a parliamentary committee.

The party has been saying that it would not allow the House of function until the parliamentary committee is formed to investigate Lamichhane’s alleged involvement in misusing the cooperative funds.

Amid sloganeering by the Congress lawmakers, Speaker Dev Raj Ghimire postponed the Parliament meeting till Tuesday.

Light rain is occurring in some places of Gandaki, Koshi and Bagmati Provinces.

Presently, Nepal is under the influence of local wind, westerly wind as well as a low-pressure system formed around Bihar, India.

According to the Meteorological Forecasting Division of the Department of Hydrology and Meteorology, the weather will be partly to generally cloudy in the hilly regions and partly cloudy in the rest of the country today.

The weather will be partly to generally cloudy throughout the country during the day. Light to moderate rain with thunder and lightning is likely to occur at a few places of the hilly region and at a few places of the Tarai region, the Division said.

There is a possibility of light snowfall in some places of the high hilly and mountainous region of the country.

The weather will be partly to generally cloudy in the hilly regions of Koshi, Bagmati, Gandaki, Lumbini and Karnali Provinces and partly cloudy in the rest of the country tonight.

According to the Division, light rain accompanied by thunder and lightning is likely to occur at one or two places of the hilly regions of Bagmati, Gandaki and Lumbini Provinces.