Nepal now has foreign currency reserves sufficient to import goods and services for 6.8 months, down from the adequacy for 7.2 month in mid-November, due to massive drain out of the foreign currencies from the country.
The five month report on Current Macroeconomic and Financial Situation unveiled by Nepal Rastra Bank (NRB) on Thursday showed that the country’s capacity to import both goods and services went down by five percent in mid-December. The worsening balance of payments (BoP) has taken a toll on the country’s foreign currency reserves.
According to the NRB report, the BoP remained at a deficit of 195.01 billion in the first five months of the current fiscal year, way down from the deficit of Rs 150.38 billion in the first four month. This shows that the country faced a net loss of Rs 44.63 billion just in one month’s period of transaction with the rest of the world.
Similarly, the deficit of the current account, one of the main components of the BoP, also deepened further from Rs 223.19 billion to Rs 300.69 billion. This was caused largely due to the widening trade deficit and depleting inflow of remittance.
Over the period, the trade deficit soared by 54.7 percent to Rs 735.49 billion. During mid-November and mid-December, Nepal faced a net loss of Rs 167.32 billion from merchandise trade. Nepal earned an additional remittance of only Rs 76.16 billion in this one month period.