Inflation went down significantly, remittance increased

 Annual macroeconomic outlook 2020/21

 

Kathmandu, Aug 26

Average consumer price inflation has come down to 3.6 per cent in the last Fiscal Year 2020/21 from 6.15 per cent a year earlier.

The average consumer price inflation stood at 3.60 percent in 2020/21 compared to 6.15 percent in FY 2019/20, the Nepal Rastra Bank (NRB) said in its annual report on Macroeconomic Situation of the country published on Thursday.

The average consumer price of ghee and oil, pulses and legumes, tobacco products, and transportation sub-groups rose to 17.54 per cent, 10.65 per cent, 9.83 per cent and 6.41 per cent respectively on annual basis.

However, the year-on-year consumer price inflation stood at 4.19 per cent in mid-July 2021 compared to 4.78 per cent a year ago.

Food and beverage inflation stood at 5 per cent in 2020/21 compared to 8.16 percent a year ago while non-food and services inflation remained at 2.51 per cent last year compared to 4.61 per cent in 2019/20.

Regionwise, the Kathmandu Valley witnessed 3.33 per cent CPI based inflation, Terai 3.68 per cent, Hill 3.87 per cent and Mountain 2.87 per cent.

 Such inflation was 6.96 per cent, 6.29 per cent, 5.10 per cent and 4.91 per cent respectively in the previous fiscal year, reported the NRB.

But the average wholesale price inflation went up to 7.61 per cent in 2020/21 compared to 6.87 per cent a year ago.

In 2020/21, merchandise exports increased by 44.4 per cent to Rs.141.12 billion compared to an increase of 0.6 percent in the previous year. Destination-wise, exports to India and other countries increased by 51.7 per cent and 27.7 per cent respectively whereas exports to China decreased by 14.7 per cent.

Likewise, merchandise imports increased by 28.7 per cent to Rs.1539.84 billion against a decrease of 15.6 per cent a year ago. The increase in import has resulted in Rs. 1398.71 billion trade deficit.

Remittance up

Despite the decreased number of Nepali migrant workers going abroad for jobs, remittance inflows increased by 9.8 per cent to Rs. 961.05 billion in 2020/21 against a decrease of 0.5 per cent in the previous year.

Number of Nepali workers taking approval for foreign employment and renew entry went down by 62.8 per cent and 46.8 per cent last year.

Net transfer to Nepal increased by 9.1 per cent to Rs. 1071.35 billion.

Rs. 149 billion Refinancing mobilised

The central bank approved refinancing facility of Rs. 148.75 billion. The outstanding amount of refinance provided by the NRB remained at Rs.122.70 billion in mid-July 2021.

Likewise, the outstanding concessional loan is Rs.161.44 billion extended to 104,109 borrowers. Of which, Rs.106.98 billion has been extended to 46,057 borrowers for commercial agriculture and livestock businesses.

Likewise, Rs.50.98 billion loan was extended to 55,551 women entrepreneurs.

Business continuity loan of Rs. 956.7 billion has been extended to the COVID-19 affected tourism, cottage, small and medium industries for payment of salaries to workers and employees in line with 'Business Continuity Loan Procedure, 2077'.

Current account deficit soared

The current account remained at a deficit of Rs.333.67 billion in 2020/21 against Rs.33.76 billion in the previous year. Likewise, Balance of Payments (BOP) registered a surplus of Rs.1.23 billion in the review year compared to a surplus of Rs.282.41 billion in the previous year.

Gross foreign exchange reserves decreased 0.2 percent to Rs.1399.03 billion in mid-July 2021 from Rs.1401.84 billion in mid-July 2020.

Similarly, fiscal position of the government, based on banking transactions, remained at a deficit of Rs.267.97 billion in 2020/21 compared to a deficit of Rs.267.45 billion a year ago.

According to the report, three rural municipalities – Rubi Valley of Dhading, Junichande of Jajarkot and Saipal of Bajhang, do not have any branch of banks.

Published in The Rising Nepal daily on 27 August 2021.