Economic Survey 2082/83: Nepal’s Economy Grows by Only 3.85%, Foreign Currency Reserves Reach Record High
Image source, Nepal Photo Library
According to the Economic Survey presented by Finance Minister Swarnim Wagle in the House of Representatives on Wednesday, Nepal’s economy is estimated to have grown by only 3.85 percent in the current fiscal year.
“Due to global economic instability, trade disruptions, and ongoing conflicts in the Middle East and Asia, the global economic growth rate for 2083 BS is expected to be limited to 3.1 percent,” Finance Minister Wagle stated while presenting the survey. “Nepal’s economy is projected to expand by 3.85 percent in the current fiscal year.”
In the previous fiscal year, Nepal’s economic growth rate was 4.43 percent.
According to the Public Financial Administration and Financial Accountability Act passed in 2076 BS, the economic survey of the current fiscal year must be presented to Parliament before submitting revenue and expenditure estimates for the upcoming fiscal year.
The government is constitutionally obligated to present the budget for the new fiscal year to Parliament by Jestha 15 each year.
Finance Minister Swarnim Wagle Adds
Finance Minister Wagle described the economic survey as a comprehensive overview of the country’s overall economic condition, covering real, public finance, monetary, financial, and external sectors.
While preparing the upcoming budget, the government gains an opportunity to understand its financial health through this economic survey report; however, Wagle’s details were not particularly encouraging.
Although indicators in external sectors such as foreign currency reserves and balance of payments have strengthened, capital expenditure and revenue collection figures of the government remain unsatisfactory.
“While overall economic stability, external sector resilience, and social indicators have improved, challenges such as low economic growth rate, slow credit flow, increasing trade deficit, weak capital expenditure, and climate risks persist,” Minister Wagle stated.
“The government is actively working to institutionalize and strengthen successes in economic and social sectors. I commit to addressing the issues raised in this survey through budgets, programs, and regional policies.”
Key Economic Indicators
- Economic Growth Rate: 3.85%
- Gross Domestic Product (GDP): NPR 66 trillion
- Total Public Debt: NPR 28.78 trillion
- Trade Deficit: NPR 10.98 trillion
- Foreign Currency Reserves: NPR 34.14 trillion
- Balance of Payments: Surplus of NPR 6.58 trillion
- Remittance Inflow: NPR 14.50 trillion
- Inflation Rate: 2.13%
- Paddy Production: 5.7 million metric tons (4.2% decreased)
- Installed Electricity Capacity: 4,105 MW
- Electricity Access: 99.1% of population
- Average Life Expectancy: 71.3 years
- Digital Transactions: NPR 125 billion
Declining Contribution of Agriculture Sector, Increasing Share of Service Sector
Image source, Reuters
Finance Minister Wagle projected that Nepal’s economy will reach NPR 66 trillion in the current fiscal year, with per capita Gross National Income of 1,535 US dollars.
The economic survey highlighted the high share of consumption in Nepal. “In the current fiscal year, consumption’s share in total GDP is estimated at 90.3 percent,” it stated.
According to trends shown in surveys over the last decade, the contribution of the agriculture sector to GDP is decreasing, while the service sector’s share is increasing. “The contributions of agriculture and non-agriculture sectors are estimated to be 24.0 percent and 76.0 percent respectively.”
Public financial indicators reveal mixed results. “Up to Falgun of the current fiscal year, federal expenditure has grown by 10.4 percent and federal revenue by 3.2 percent.”
Total public debt has reached NPR 28 trillion 78 billion 30 million by Falgun, with 46.8 percent internal debt and 53.2 percent external debt.
Inflation Status
Finance Minister Wagle reported that inflation remains within satisfactory limits. The average consumer inflation rate up to Falgun is 2.13 percent.
During the same period last year, the inflation rate was 4.72 percent.
The total goods trade deficit has increased by 11.2 percent, reaching NPR 10 trillion 98 billion 14 million by Falgun.
Last year in the same period, the trade deficit increased by 6.2 percent.
Robust Increase in Remittances from Nepali Workers Abroad
Image source, Getty Images
Despite the rising trade deficit, remittances from Nepali workers abroad have shown remarkable growth.
Remittances sent up to Falgun increased by 37.7 percent, reaching NPR 14 trillion 49 billion 70 million, resulting in a surplus of NPR 6.58 trillion in the balance of payments.
The survey shows foreign currency reserves have reached their highest level ever.
“Total reserves up to Falgun 2082 have reached NPR 34 trillion 13 billion 77 million, sufficient for 18.5 months of goods and services imports.”
Remarkable progress has also been observed in digital payment systems. “QR code-based transactions have exceeded NPR 125 billion up to Falgun 2082.”
Electricity consumption has increased while petroleum product consumption has slightly decreased. Imports of petrol and diesel have dropped by 10 percent and 9.9 percent respectively by Falgun.
Signs of recovery have appeared in the tourism sector. In 2082 BS, Nepal welcomed 1,162,000 tourists, who stayed on average 16.34 days.
Reports indicate tourists spend an average of 33.08 US dollars per day in Nepal.
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