Remittances Drive Record 17.8-Month Import Cover as NRB Unveils Two-Month Data for 2026/27

Nepal’s external economy has displayed extraordinary resilience during the first two months of the 2026/27 fiscal year, anchored by soaring remittances and massive foreign exchange reserves. However, a parallel look at domestic metrics reveals a more cautious economic landscape marked by subdued private sector credit growth.

According to figures released by Nepal Rastra Bank for the period ending mid-September, the country’s gross foreign exchange reserves climbed to an imposing Rs. 4,065.78 billion (USD 26.48 billion). This financial buffer gives Nepal a rare cushion, capable of covering prospective merchandise and services imports for an impressive 17.8 months.

The external sector's strength is heavily propped up by overseas workers. Remittance inflows surged by 23.9 percent in NPR terms—reaching Rs. 221.31 billion between mid-August and mid-September alone. This steady influx propelled both the current account and the balance of payments into healthy surpluses of Rs. 169.04 billion and Rs. 187.68 billion, respectively. Meanwhile, external trade saw a sharp rebound, with exports jumping by 61.9 percent and imports growing by 31.6 percent. Consumer price inflation remained stable at 6.34 percent year-on-year.

Despite the robust external health, domestic economic activity showed signs of sluggishness. Government expenditure for the two-month period totaled Rs. 199.84 billion, outpacing revenue mobilization, which stood at Rs. 183.21 billion.

In the financial sector, broad money (M2) expanded by 1.7 percent, registering a 14.9 percent growth year-on-year. While deposits at Banks and Financial Institutions (BFIs) rose by 0.9 percent, credit extension to the private sector crept up by just 1.6 percent, pointing to continued caution among businesses and lenders.

Reflecting high liquidity across the banking system, interest rates remained low. The weighted average interbank rate among BFIs settled at 2.75 percent, while 91-day Treasury bills yielded 1.35 percent. Commercial banks reported a weighted average deposit rate of 3.11 percent and a lending rate of 6.38 percent.