Finance Ministry Releases Mid-Year Budget Review
Kathmandu, Nepal, 2082 Magh 27 - The Ministry of Finance has published the mid-year evaluation report of the budget for the current fiscal year 2082/83.
According to the released details, the country’s external sector appears very strong, and signs of improvement are also visible in the domestic economy.
In particular, a surge in remittances from abroad, along with declines in bank interest rates and inflation, have provided relief to the economy, government data show.
Remittances Strengthen External Indicators
Remittance inflows, considered the backbone of the national economy, have shown a sharp improvement this year.
During the review period, remittances sent to Nepal by Nepalis abroad increased by 39.1 percent, reaching NPR 1,062.93 billion.
This rise in remittances has also had a positive impact on the country’s foreign exchange reserves and balance of payments position.
Key external indicators reported:
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Foreign exchange reserves: USD 22.47 billion
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Balance of payments position: surplus of NPR 501.24 billion
These figures confirm that the external sector is in a very strong and stable position.
Inflation and Lending Rates Decline
For the general public and the business community, a notable development is the significant decline in both inflation and bank interest rates.
In the first six months of the current fiscal year, average consumer inflation declined and remained limited to 1.7 percent.
On the interest rate side, the average lending rate charged by commercial banks fell into single digits and stood at 7.12 percent. The decline from previously double-digit levels has provided relief to investors.
Other interest-rate indicators reported:
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Average deposit rate: 3.56 percent
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Interbank rate: 2.75 percent
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91-day treasury bill rate: 2.35 percent
The fall in the 91-day treasury bill rate indicates adequate liquidity in the financial system. Data showing that Nepal Rastra Bank absorbed more than NPR 286 billion in liquidity from the market also suggest that banks have accumulated investable funds.
Growth Outlook and Sector Performance
While projections indicate global economic growth of 3.3 percent, with India projected at 7.3 percent and China at 5.0 percent, Nepal’s economic growth rate is expected to remain moderate.
The Ministry has made a preliminary estimate that Nepal’s economic growth rate in the first quarter of the fiscal year will be 3.0 percent.
Sector-wise estimates show mixed performance:
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Industrial sector: expected to expand by 5.44 percent, driven by increased activity in energy and construction
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Services sector: growth of 3.03 percent, supported by improvements in tourism and trade
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Agriculture sector: expected to contract to 1.36 percent due to a decline in paddy production
Although production of crops such as maize, millet, and buckwheat increased, reduced paddy output affected overall agricultural performance.
Trade, Capital Market, and Banking Indicators
On foreign trade, exports showed strong growth. Total goods exports increased by 43.8 percent, exceeding NPR 142.0 billion.
However, imports also increased by 14.2 percent, and the trade deficit continued to widen. During the review period, the trade deficit rose by 10.1 percent, reaching NPR 797.0 billion.
In the capital market, signs of improvement were also reported:
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NEPSE index: 2,641.44 points
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Total market capitalization: NPR 4,435.0 billion
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Number of listed companies in the securities market: 284
In the banking sector:
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Credit to the private sector increased by 6.7 percent, reaching nearly NPR 5,700.0 billion
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Deposit collection increased by 5.7 percent, exceeding NPR 7,681.0 billion
Overall, the Ministry of Finance’s mid-year review indicates that while the external sector and financial indicators appear strong, domestic production and the pace of economic growth remain slow.
