Nepal’s current account surplus has continued for seven months in the current fiscal year. The surplus reached Rs. 166.80 billion, which is slightly higher than the Rs. 162.52 billion surplus during the same period last year. According to Nepal Rastra Bank’s (NRB) report, this shows positive trends in Nepal’s economy.
Growth in US Dollar Terms
In terms of US Dollars, the current account surplus stood at 1.24 billion dollars during the review period. This was a slight increase compared to 1.22 billion dollars last year. The surplus highlights the stability of Nepal’s foreign financial position.
Increase in Net Capital Transfers
Net capital transfers have also increased. During the review period, Nepal received Rs. 5.83 billion. In the same period last year, it was Rs. 3.80 billion. This rise indicates an inflow of financial aid and other forms of capital that support Nepal’s economy.
Higher Foreign Direct Investment (FDI)
Foreign direct investment (FDI) equity also saw growth. Nepal received Rs. 7.45 billion in FDI during the review period, which is up from Rs. 5.19 billion last year. This shows more investor confidence in Nepal’s potential for growth.
Balance of Payments Surplus
Nepal’s balance of payments (BOP) recorded a surplus of Rs. 284.41 billion, which is slightly lower than Rs. 297.72 billion last year. In US Dollars, the BOP surplus stood at 2.11 billion dollars in the review period, compared to 2.24 billion dollars last year. Despite a small decrease, the surplus still reflects a strong financial position.
Foreign Exchange Reserves Grow
Nepal’s foreign exchange reserves have increased by 16.1%. The reserves reached Rs. 2,369.08 billion by mid-February 2025, up from Rs. 2,041.10 billion in mid-July 2024. In US Dollar terms, the reserves increased by 11.7% to 17.05 billion dollars. This shows strong economic growth and greater financial security for Nepal.
Reserves Held by NRB and Other Institutions
Most of the reserves are held by Nepal Rastra Bank (NRB). NRB’s reserves increased by 13.9% to Rs. 2,105.14 billion in mid-February 2025, up from Rs. 1,848.55 billion in mid-July 2024. Reserves held by banks and financial institutions (except NRB) also rose by 37.1%, reaching Rs. 263.93 billion in mid-February 2025. The share of Indian currency in the total reserves stood at 22.0%.
Foreign Exchange Reserves Adequate for Imports
The reserves held by the banking sector are sufficient to cover merchandise imports for 17.2 months. For both merchandise and services imports, the reserves can cover 14.4 months. This indicates that Nepal is well-equipped to manage external financial needs and imports.
Improvement in Foreign Exchange Indicators
Several foreign exchange indicators have improved. The reserves-to-GDP ratio increased to 41.5% from 35.8% in mid-July 2024. The reserves-to-imports ratio also improved, reaching 120.3% from 108.6% last year. The reserves-to-M2 ratio grew to 32.5% from 29.3%. These increases show a healthier foreign exchange position.
Economic Outlook for Nepal
Nepal’s current account surplus, increased foreign direct investment, and growing foreign exchange reserves all signal positive economic growth. These developments show that Nepal is becoming increasingly stable financially. The strong reserves and adequate coverage for imports will help maintain economic security in the future.
The steady growth in capital transfers and foreign investments reflects confidence in Nepal’s potential. The rise in foreign exchange reserves further solidifies Nepal’s economic position.
Overall, Nepal’s economic situation remains positive with continuous growth in reserves, a surplus in the current account, and a manageable balance of payments. With the support of increasing foreign direct investment and capital inflows, Nepal is on track to maintain economic stability.
