April 13: A day after the Ministry of Finance claimed that the country’s economy was not deteriorating as much as it had been hyped, Nepal Rastra Bank on Tuesday published data to back the claim. The reports of both the ministry and the central bank show that the economy is under stress but the situation has not gone out of control.

According to NRB, although inflation has increased of late other indicators are under control.

The latest data of the central bank shows that the country’s gross foreign exchange reserves decreased 16.3 percent to Rs 1171 billion in mid-March 2022 from Rs 1399.03 billion in mid-July 2021.

According to the Current Macroeconomic and Financial Situation Report of NRB, of the total foreign exchange reserves, reserves held by NRB decreased 18.2 percent to Rs 1018.05 billion in mid-March 2022 from Rs 1244.63 billion in mid-July 2021. Likewise, reserves held by banks and financial institutions (except NRB) decreased 0.9 percent to Rs 152.95 billion in mid-March 2022 from Rs 154.39 billion in mid-July 2021.

Based on the imports of eight months of 2021/22, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 7.4 months, and merchandise and services imports of 6.7 months, the report further states.

Former NRB Governor Dr Chiranjivi Nepal believes that the situation has not gone out of control. Speaking at an interaction in the capital on Tuesday, Dr Nepal said that the situation will normalize soon.

On the other hand, the consumer price inflation stood at 7.14 percent in the eighth month of the current fiscal year.

According to economist Chandra Mani Bhandari, price hike is the result of both internal and external factors. He says that the impact of Russia-Ukraine war has increased prices of petroleum products across the world resulting in inflation which has also affected Nepal.

According to the NRB report, Nepal’s current account remained at a deficit of Rs 462.93 billion in the first eight months of the current fiscal year. Such a deficit was Rs 151.42 billion in the corresponding period of the previous fiscal year.

During the review period, capital transfer decreased 41.2 percent to Rs 7 billion and net foreign direct investment (FDI) increased 60.0 percent to Rs 16.30 billion, the report said. In the same period of the previous year, capital transfer and net FDI amounted to Rs 11.91 billion and Rs 10.18 billion respectively.

Likewise, the Balance of Payments (BOP) remained at a deficit of Rs 258.64 billion in the review period against a surplus of Rs 68.01 billion in the same period of the previous year. In the US Dollar terms, the BOP remained at a deficit of 2.17 billion in the review period against a surplus of 565.8 million in the same period of the previous year.

According to the central bank’s report, total trade deficit increased 34.5 percent to Rs 1160.99 billion during the eight months of 2021/22. Such a deficit had increased 1.6 percent in the corresponding period of the previous year.