Nepal Rastra Bank: Report on Macroeconomic and Financial Situation (Based on Eleven Months' Data up to Mid-July of the Current Year)

Key Chapter Title List

1. Inflation Situation
2. Consumer Price Inflation
3. Wholesale Price Inflation
4. External Sector
5. Merchandise Trade
6. Composition of Foreign Trade
7. Services Account and Remittances
8. Current Account and Balance of Payments
9. Foreign Exchange Reserves
10. Fiscal Situation
11. Monetary Situation
12. Credit Deployment and Performance of Financial Institutions

Document Introduction

This Macroeconomic and Financial Situation Report released by the Nepal Rastra Bank (Central Bank of Nepal) provides a systematic assessment of the country's overall economic performance for the current fiscal year, based on eleven months of data up to mid-June 2025. Grounded in rigorous data analysis, the report serves as an authoritative reference for evaluating Nepal's economic resilience, policy effectiveness, and adaptability under external shocks.

The report begins by focusing on price stability. Data shows that the annual inflation rate, measured by the Consumer Price Index, has decreased to 2.72%, significantly lower than the 4.17% recorded in the same period last year. This moderation is primarily attributed to a substantial decline in food and beverage inflation, while non-food and service inflation has seen a slight increase. Regional inflation disparities are evident, with Koshi Province and the Hilly region experiencing relatively higher inflation rates. Concurrently, wholesale price inflation has also shown a significant slowing trend, reflecting reduced price pressures at the production level.

Foreign trade and external balance form another core focus of the report. Merchandise exports achieved a remarkable growth of 77.8%, while imports grew by 13.1%, leading to a widening trade deficit, although the export-to-import ratio has improved. Remittance inflows continue to exhibit strong growth and remain a key factor supporting the balance of payments. Benefiting from the remittance surplus and capital inflows, Nepal's balance of payments maintains a substantial surplus, with foreign exchange reserves significantly increasing to USD 18.65 billion. This level of reserves is sufficient to cover more than 17 months of potential merchandise imports, providing a solid buffer for national economic security.

Regarding domestic economic management, the report details the government's fiscal revenue and expenditure as well as the central bank's monetary policy operations. Government expenditures exceed revenues, indicating some fiscal pressure. On the monetary policy front, broad money supply (M2) has grown steadily, and credit deployment by the banking system to the private sector has accelerated, demonstrating enhanced support from the financial system to the real economy. Meanwhile, various interest rates (including treasury bill rates, interbank rates, deposit and lending rates) generally show a declining trend compared to the same period last year, reflecting a relatively accommodative monetary environment.

Finally, the report examines financial deepening and capital market development. The deposit structure of banks and financial institutions has changed, with the share of savings deposits increasing. In the capital market, the Nepal Stock Exchange (NEPSE) index has risen significantly, market capitalization has expanded, and the number of listed companies has increased slightly, with banks, financial institutions, and insurance companies still dominating the market. Overall, the report paints a picture of the Nepali economy characterized by controlled inflation, a strong external sector but internal fiscal challenges, and a steadily operating financial system. It provides indispensable data and analytical foundations for policymakers, investors, and regional economic researchers.