This macroeconomic report is prepared based on annual data of FY 2018/19 published by NRB. The key macro-economic indicators and variables are highlighted in the table below, and explained in further section:

A. NEPSE and Ratio of Market Cap to GDP

The NEPSE index as at Mid-July 2019 inclined by 3.85% to close at 1,259.02 points, compared to 1,212.36 points in the same period last year. The market capitalization of NEPSE as well increased from NPR 1,435.14 billion in Mid-July 2018 to NPR 1,567.50 billion in Mid-July 2019.

On the other hand, the ratio of market capitalization of NEPSE to GDP as at Mid-July 2019 has also dropped down to 45.25% compared to 47.35% in the last year during the same review period.


To evaluate the current scenario of interest rate in the economy, interbank rate and base rate of commercial banks are taken into consideration.

Interbank Rate

The interbank rate of commercial banks which reached a year-high of 6.91% in Mid-June 2019 has dropped down significantly to 4.52% in Mid-July 2019 indicating some ease in liquidity in the banking system, mainly due to gain in pace in the government expenditure at the end of the fiscal year. The interbank rate during the same period a year ago was at 2.96% only.

Base Rate

The base rate of commercial banks stands at 9.57% in Mid-July 2019 compared to 10.47% a year ago. This has set the weighted average lending rate at 12.13%. On the other hand, the weighted average deposit rate stands at 6.60%. Such rates were 12.47% and 6.49% respectively in the corresponding month of the previous year.


The consumer price inflation which was 4.60% a year ago significantly inclined to 6.00% in Mid-July 2019. On the other hand, the average consumer price inflation stood at 4.6 percent in FY 2018/19 compared to 4.2 percent in FY 2017/18. Moreover, the ongoing market interest rate on fixed deposits or, government bond and corporate debentures could beat the annual average inflation rate.

Real Interest Rate

Considering nominal interest rate as weighted average deposit rate of 6.60% (as at Mid-July 2019) and average inflation rate of 4.6% in FY 2018/19, the real interest rate via Fisher equation is 2% only.


Deposit Growth: The deposits of BFI’s as at Mid-July 2019 increased by 18.24% to NPR 3,353.93 billion, compared to NPR 2,836.65 billion in Mid-July 2018. The growth during the same period last year was 19.43%. The share of demand, saving and fixed deposits in total deposits stood at 9.70 percent, 32.80 percent and 46.30 percent respectively in Mid-July 2019. Such shares were 9.3 percent, 34.5 percent and 44.80 percent respectively a year ago. And the share of institutional deposits in total deposit of BFIs stood at 45.30 percent in Mid-July 2019. Such share was 45 percent a year ago.

Credit Growth: The credit disbursement of BFI’s as at Mid-July 2019 increased to NPR 2,911.90 billion by 20.19%, compared to NPR 2,422.78 billion in Mid-July 2018. The growth during the same period last year was 21.98%. Of the total outstanding credit of BFIs in Mid-July 2019, 64.4 percent is against the collateral of land and building and 13.5 percent against the collateral of current assets (such as agricultural and non-agricultural products). Such ratios were 61.7 percent and 14.40 percent respectively a year ago.

In the review period, the loan of BFIs to agriculture sector increased 42.5 percent, industrial production sector increased 20.3 percent, construction sector increased 22.2 percent, transportation, communication and public sector increased 32.8 percent, wholesale and retail sector increased 15.7 percent and service industry sector increased 24.3 percent in the review year.

Though the liquidity situation is at some ease as of now after the rise in government expenditure at the end of the fiscal year; however, if we compare the credit growth rate of 20.19% with the deposit growth rate of 18.24%, then the credit crunch is likely to reoccur again if the deposit growth rate couldn’t matchup with the credit demand.


In the review period, NRB mopped up NPR 100.35 billion through open market operations. Of which, NPR 79.65 billion was mopped up under deposit collection auction and NPR 20.70 billion through reverse repo auction on a cumulative basis.

On the other hand, NRB injected NPR 168.16 billion through open market operations (Repo) in the review period. Moreover, NRB injected net liquidity of NPR 360.91 billion through the net purchase of USD 3.19 billion from foreign exchange market. BFIs have also utilized standing liquidity facility (SLF) of Rs. 154.33 billion in the review period.


In comparison to twelve months of FY 2017/18, the expenditure of federal government declined by 3.28% to reach at NPR 1,031.15 billion. On the other hand, the revenue of the government witnessed a growth of 17.39% compared to corresponding period of the last fiscal year. The government revenue for twelve months in this fiscal year stood at NPR 859.60 billion compared to NPR 732.23 billion in twelve months of the last fiscal year.


The country’s BOP position is in deficit in the twelve months of FY 2018/19 by NPR 67.40 billion, mainly due to huge deficit seen in current account by NPR 265.37 billion. During the corresponding period in last year, BOP was at surplus by NPR 0.96 billion, whereas the current account was at deficit by NPR 247.57 billion. In the review period, capital transfer and net foreign direct investment (FDI) amounted to Rs.15.46 billion and Rs.13.07 billion respectively in 2018/19. In the previous year, capital transfer and FDI stood at Rs.17.72 billion and Rs.17.51 billion respectively.


The workers’ remittance growth rate is subject to differ in terms of US Dollar and Nepalese Currency based on exchange rate of NPR with US Dollar. Hence, the workers’ remittance growth in terms of US Dollar and NPR has been presented below:

Remittance in Dollar Terms

In US Dollar terms, the annual data of FY 2018/19 shows that worker’s remittance growth has witnessed an increment of 7.84% to reach at $7,790 million compared to 10.18% growth in 2017/18.

Remittance in NPR terms

On the other hand, in NPR terms, the workers’ remittance increased by 16.45% to NPR 879.27 billion during twelve months in FY 2018/19 compared to a growth of 8.57% during the same period in FY 2017/18.

Net transfer receipt increased 15.0 percent to NPR 994.79 billion in the review year. Such receipt had increased 1.5 percent in the previous year. As per the data of Department of Foreign Employment, the number of Nepalese workers (institutional and individual-new and legalized) migrated for foreign employment decreased 32.6 percent in the review year. It had decreased 9.3 percent in the previous year. The number of Nepalese workers migrated for foreign employment based on renew entry however increased 5.4 percent in the review year. It had decreased 0.6 percent in the previous year.