The improvement in the country's external sector has continued in the eight months of the current fiscal year. The latest macroeconomic report published by the Nepal Rastra Bank (NRB) on Tuesday shows noticeable improvements in the country's forex reserves, balance of payment (BOP), tourism income, and remittance inflow. According to the report, Nepal's BOP is at a surplus of Rs 148.10 billion in the eight months of FY 2022/23 compared to a deficit of Rs 258.64 billion in the same period of FY 2021/22. The BoP had turned surplus in mid-October 2022 after a gap of 14 months. In US Dollar terms, the BOP is at a surplus of 1.12 billion in this fiscal year compared to a deficit of 2.17 billion in the same period of the last fiscal year. The country's forex reserves increased by 15.2 percent in the first eight months of the current fiscal year. Nepal's forex reserves stood at Rs 1401.21 billion in mid-March 2023 (Falgun) from Rs 1215.80 billion in mid-July 2022. In US dollar terms, the gross foreign exchange reserves increased by 12.1 percent to Rs 10.69 billion in mid-March 2023 from Rs 9.54 billion in mid-July 2022.

The central bank said that the foreign exchange reserves of the banking sector are sufficient to cover merchandise imports for 10.8 months, and merchandise and services imports for 9.4 months.

According to the report, remittance inflows have increased by 25.3 percent to Rs 794.32 billion in the review period. The inflow of remittances had decreased by 1.3 percent in the same period of the last fiscal year. In US Dollar terms, remittance inflows increased by 14.8 percent to 6.09 billion in the review period against a decrease of 2.6 percent in the same period of the previous year. Meanwhile. current account deficit (CAD) has also narrowed significantly in the last eight months. As per the report, CAD has now come down to Rs 44.31 billion which was Rs 460.72 billion in the same period of the previous year. NRB Executive Director Prakash Shrestha said that the improvement in the external sector is due to the slowdown of credit disbursement. "The economy has plunged into trouble mainly due to a lack of credit investment in the productive sector," said Shrestha at a press meet organized by the central bank on Tuesday. "If the loans to be invested in the future do not help to increase domestic production, the economy will face problems again." According to him, the country's economy has faced problems when loans were invested in the real estate and stock markets in the past. "If the credit flow to these sectors increases in the future, this cycle will get repeated." Inflation slows down slightly The NRB report shows consumer inflation has declined slightly in Falgun (mid-February to mid-March) compared to Magh (mid-January to mid-February). Consumer inflation stood at 7.44 percent in mid-March compared to 7.88 percent in mid-February. Food and beverage inflation stood at 5.64 percent whereas non-food and service inflation rose to 8.87 percent. Under the food and beverage category, the price of cereal grains and their products sub-category increased by 14.35 percent, the restaurant and hotel sub-category increased by 14.09 percent, spices by 10.88 percent, tobacco products by 10.83 percent, and alcoholic drinks by 8.78 percent. Under the non-food and services category, the price of transportation sub-category increased by 13.23 percent, health by 10.39 percent, housing and utilities by 9.72 percent, recreation and culture by 8.81 percent, and furnishing and household equipment by 8.79 percent. According to NRB, the rate of inflation in the Kathmandu valley, Terai, hills, and mountainous regions surged to 7.95 percent, 7.50 percent, 6.67 percent, and 8.07 percent, respectively.