Thanks to the massive surge in the amount of remittance being sent home, Nepal can easily afford to pay for imports for the next 10 months and 10 days.

In the past seven months, remittance income has increased by 38 per cent, due to which the foreign exchange reserve of Nepal increased by 22 per cent to Rs 650.54 billion by mid-February 2014, according to Nepal Rastra Bank’s macroeconomic report for seven months published today. Remittance is one of the largest components of foreign reserve, which as of mid-July 2013 stood at Rs 533.30 billion.

“On the basis of the trend of imports in the first seven months of the current fiscal year, the current level of reserves is sufficient for financing merchandise imports for 11.8 months, and merchandise and service imports for 10.3 months,” says the report.

During the review period, worker remittance surged by 38.6 per cent to Rs 311.91 billion as compared to increase of 19.6 per cent in the same period the previous year. In the seven months of fiscal year 2012-13, total remittance stood at Rs 225 billion.

The increased number of Nepalis going abroad and strengthening of US dollar have contributed to surge in remittance figures. In past seven months, the exchange rate of dollar vis-à-vis Nepali rupee surged by 4.5 per cent. In terms of the dollar also, remittance recorded growth of 21.5 per cent to $3.14 billion, indicating the total amount of money sent to Nepal through financial channels went up in the review period.

Thanks to the bulging remittance, the country’s balance of payments (BoP) recorded a surplus of Rs 95.78 billion by mid-February 2014. The growing BoP surplus is an indication that Nepal is earning more than it is paying for the transactions made with the rest of the world.

The current account posted a surplus of Rs 67.24 billion in the review period against a deficit of Rs 1.70 billion in the same period last year. As a result, the foreign exchange reserve of Nepal has grown by 22 per cent to Rs 650.54 billion in midFebruary 2014 from Rs 533.30 billion as of mid-July 2013.

The trade figures of the seven months are also encouraging as the rate of trade deficit growth seems to have shrunk a bit. Trade deficit — difference between country’s exports and imports — surged by 25.3 per cent to Rs 339.81 billion compared to an increase of 27.7 per cent in the same period last year.

Merchandise exports went up by 17.6 per cent to Rs 52.89 billion during seven months of 2013-14. It had increased by 5.6 per cent to Rs 44.98 billion during the same period in 2012-13. Likewise, merchandise imports surged by 24.2 per cent to Rs 392.69 billion, against a rise of 24 per cent to Rs 316.20 billion in the corresponding period of the previous year.

Published on: 14 March 2014 | The Himalayan Times