Nepal received Rs 481.69 billion worth of remittances in the first nine months of Fiscal Year 2015/16.

 

According to the Current Macroeconomic and Financial Situation of Nepal (Based on Nine Months' Data of 2015/16) unveiled by Nepal Rastra Bank (NRB) on Tuesday, remittance inflow to the country jumped by 13 percent compared to workers' transfer in the same period of 2014/15. Such growth was 7.1 percent in the corresponding period of 2014/15 when the country had received Rs 426.19 billion worth of remittances.

Growth in remittance flow continued in the current fiscal year despite decline in the number of Nepalis going abroad for foreign employment and headwinds that the Gulf countries are facing in the wake of collapse in crude oil prices.

 

The continued slide in global oil prices is expected to hit remittance inflow of countries like Nepal due to possible layoff and other cost cutting measures of the oil-exporting countries whose revenue source is directly tied up with the crude oil. However, remittance inflow has been rising continuously as migrant workers continue to send their hard-earned money back home. The decline in the number of workers in the last few months also has not slowed down remittance flow yet.

 

The number of workers going abroad for foreign employment, which directly affects remittance flow, fell in the review period. According to Department of Foreign Employment, the number of Nepali workers seeking foreign employment, based on final approval for foreign employment, decreased by 25.2 percent in the first nine months of 2015/16 to 311,850.

 

It had increased by 16.7 percent in the same period of the previous fiscal year.

 

The rise in remittance flow coupled with shrunk import bill has helped to boost foreign exchange reserve and balance of payment position of the country. According to the data, gross foreign exchange reserves stood at Rs 1007.61 billion as at mid-April 2016, an increase of 22.3 percent from Rs. 824.06 billion in mid-July 2015. Similarly, BoP remained at a surplus of Rs 163.81 billion in the review period compared to a surplus of Rs 49.40 billion in the same period of the previous year.

 

 

Meanwhile, inflation has moderated further to 9.7 percent in mid-April 2016 from the peak of 12.1 percent in mid-January 2016. The inflation, as measured in consumer price index, continued to show a falling trend since mid-January 2016, according to the monthly report of the central bank.

 

The central bank has said that inflation started going down on account of improved supply of fuel and other consumable items after southern customs points resumed normal operation after the blockade. While food and beverage group price index saw a rise of 9.3 percent, non-food and services group price index logged a growth of 10 percent in mid-April 2016.

 

 

Similarly, total trade deficit, which was rising at an alarming rate in the previous years, narrowed down in the first nine months of the current fiscal year due to blockade imposed by India -- the largest trading partner -- for nearly five months beginning from the third week of September last year.

 

According to data, trade imbalance contracted by 8.2 percent to Rs 470.73 billion compared to an expansion of 12.9 percent in the same period of the previous fiscal year. Country's merchandise imports fell by 9.9 percent to Rs 519.97 billion in the review period as against a growth of 10.5 percent in the same period of the previous year. While imports from India fell by 14.3 percent, merchandise imports from China increased by 2.8 percent.