The central bank has reported an improvement in economic activity up to the third quarter of the current fiscal year. Due to rising petroleum prices, imports have increased, and the foreign exchange reserves are sufficient to cover 18.4 months of imports. In the month of Chaitra alone, remittances amounted to NPR 20.9 billion, the highest recorded so far. Kathmandu, 28th Baishakh. Economic activity has shown signs of recovery by the third quarter of the ongoing fiscal year. The conflict involving the US, Israel, and Iran has led to an increase in petroleum prices, which in turn has driven up the country’s import bill and accelerated economic activity. Nepal is entirely dependent on imports for petroleum products. Approximately NPR 250 billion worth of petroleum products have been imported in the first nine months of the current fiscal year. Due to tensions in West Asia, prices have risen, and repatriation of foreign investment from India has weakened the US dollar alongside the Indian and Nepalese rupees. The exchange rates of the Nepalese and Indian rupees have weakened against the US dollar due to instability, impacting the foreign currency reserves. A stronger US dollar has also significantly boosted remittance inflows in Nepalese rupees. The central bank has noted that inflation has improved alongside increased economic output. Inflation reached 4.47 percent by the end of Chaitra in the current fiscal year. Additionally, foreign exchange reserves remain adequate to cover 18.4 months of import of goods and services. Remittances for Chaitra alone amounted to NPR 20.9 billion, a record for a single month. Foreign exchange reserves increased slightly from USD 2.38 billion at the end of Falgun to USD 2.355 billion by end of Chaitra. Although reserves were sufficient to cover 18.5 months of imports until Falgun, by Chaitra coverage slightly decreased to 18.4 months, due to the weakening of the Nepalese rupee relative to the US dollar. Remittances increased by 39.1 percent in Nepalese rupees and 31.9 percent in US dollars. According to the central bank, exports increased by 18.5 percent and imports by 13.8 percent over the first nine months of the fiscal year. Deposits and loans in banks and financial institutions grew by 8.5 percent and 5.7 percent respectively. On an annual basis, deposit growth was 15.5 percent while loan growth to the private sector stood at 6.9 percent. The weighted average interbank rate was 2.75 percent, and the weighted average interest rate for the 91-day treasury bills stood at 2.61 percent, the central bank stated. Commercial banks’ weighted average deposit interest rate was 3.40 percent, and the weighted average lending rate was 6.77 percent. By the end of Chaitra, loans disbursed to the private sector by banks and financial institutions increased by 4.4 percent to NPR 57.41 billion. Last fiscal year during the same period, loan growth was 6 percent. On an annual basis, loans to the private sector increased by 6.7 percent as of Falgun 2082 (Nepali calendar). Of the private sector loans as of Falgun 2082, 62.7 percent were allocated to the non-financial corporate sector and 37.3 percent to individuals and households. In comparison, during Chaitra of the previous fiscal year, the distribution was 63.2 percent and 36.8 percent respectively. By the end of Chaitra in the current fiscal year, loans to the private sector were disbursed with increases of 4.6 percent by commercial banks, 3.5 percent by development banks, and 1.9 percent by finance companies.
