With the surge in the inflow of remittances during the first month of the fiscal year, the current account has recorded a whopping surplus after 33 months of recession caused by the outbreak of COV- ID-19 and the war in Ukraine. As per Nepal Rastra Bank's monthly macroeconomic update unveiled on Sunday, in the first month of 2023-24 (mid-July to mid-August), the current account recorded a surplus of Rs 12.99 billion, making a significant turnaround from a deficit of Rs 15.13 billion in the same period of the previous year. Remittance inflows have witnessed significant growth by 25.8 per cent to Rs 116 billion in the first month of the current fiscal year. This is the highest amount of remittance that has ever entered the country. However, the number of Nepali workers (institutional and individual-new) taking approval for foreign employment decreased by 12 per cent to 39,152 in the review period, and the number of Nepali workers (renew entry) taking approval for foreign jobs decreased by 19.5 per cent to 16,423 during the review period.
The balance of payment (BoP) - the difference between all money flowing into the country in a particular period of time and the outflow of money to the rest of the world - was at a surplus of Rs 32.90 billion in the review period, compared to a deficit of Rs 19.76 billion in the corresponding months of the previous year. It indicates that the country's macroeconomic condition is on the safeside compared to the past 33 months. The gross foreign exchange reserves have also increased by 1.2 per cent to US$11.85 billion in mid-August 2023 from US$11.71 billion in mid-July. It means the country is in a position to cover prospective merchandise imports of 12.5 months, and merchandise and services importsof 10.3 months.
The central bank has said in its report that the total trade deficit has narrowed down by 0.7 per cent to Rs 115.71 billion during the first month of the current fiscal. Merchandise imports have also decreased by 1.6 per cent to Rs 129.24 billion during the same period.
The bank has said this is a positive development compared to the 12.9 per cent increase witnessed a year ago. However, the most worrying part is that there has been a sharp decline in merchandise exports that dropped by 8.7 per cent year-on-year to merely Rs 13.53 billion, which is not enough even to purchase fossil fuels. It is not a good sign that a country of almost 30 million people produces exportable goods of just Rs 13 billion in a month. This shows that the country has sustained financially mainly because of the remittances sent by millions of Nepalis. As the remittance-based economy is fragile, the country's economy could collapse anytime unless the government and private sector come up with robust plans in giving a boost to the industrial and agricultural growth. As the country has now become self-sufficient in energy, the government must encourage the private sector to make huge investments in manufacturing, industrial and agricultural sectors that can not only generate job opportunities to thousands of youths within the country but also contribute to exports.
We must switch to an export-based economy from the existing remittance-based one.
Nepal Medical Association (NMA), which had halted all services barring emergency services throughout the country on Sunday, has withdrawn its protest after reaching a deal with the government.
Health service is a sensitive sector, and even stopping medical services for an hour can severely impact a person's life, not to mention their right to health. Doctors refused to attend work on Sunday after two doctors employed by Sancho Hospital in Hetauda were recently beaten up by some people while on duty. According to the deal, the government will book all nine people involved in beating the two doctors.
Incidents of manhandling of doctors and nurses in the hospitals and clinics has been rising in Nepal, posing security risks to the health professionals. Of course, action should be taken against the health professionals if they have been negligent in their duty. However, manhandling of health professionals by the patient's relatives and friends cannot be tolerated, and any complaint against them should be directed to the NMA. At a time when doctors and nurses are leaving the country in droves, inability to provide security to them at the workplace or home will cause irreparable loss to the nation.
Published on: 20 September 2023 | The Himalayan Times