Nepal reported the record high foreign exchange reserves in the last fiscal year 2019-20 that ended in mid-July as the country's import slumped amid Covid-19 and less-than-estimated decrease in remittance inflow, Nepal Rastra Bank said.
According to the central bank's statistics, the foreign exchange reserves of the country stood at 11.65 billion US dollar as of mid-July which is a record high, reports Xinhua.
"The available foreign exchange is enough for importing goods and services for 12.7 months," the Nepal Rastra Bank said in a report released on Monday.
"Reduced imports and inflow of remittance close to amount received in the previous fiscal year 2018-19 are major reasons behind the comfortable level of foreign exchange reserves," Gunakar Bhatta, spokesperson at the Nepali central bank, said.
According to the Nepal Rastra Bank's statistics, Nepal's merchandise imports in the last fiscal year 2019-20 decreased 15.6 per cent to $9.96 billion.
The central bank had estimated remittance, the biggest source of foreign exchange earnings for Nepal, will decrease over 15 per cent in the last fiscal.
But, according to the central bank's report, Nepal witnessed a decrease in remittance by just 3.3 per cent despite the impact of COVID-19 on countries that host most of the Nepali migrant workers.
India, Gulf countries and Malaysia are major destinations for Nepali migrant workers.
However, Bhatta said whether the Himalayan country would receive remittance in the current fiscal year 2020-21 would depend on how the economic recovery takes place in the countries from where Nepal receives the large volume of remittances.
Bhatta said increased borrowing of external loans by the Nepali government and growing inflow of foreign direct investment (FDI) in the last fiscal year also helped to maintain comfortable foreign exchange reserves.
According to the Nepali central bank, the Himalayan country received $1.35 billion in external loans in the last fiscal year compared to $675 million in the previous fiscal.
Likewise, the inflow of FDI also jumped to $171 million in the last fiscal from $147 million in the previous fiscal.
"These factors helped to offset the losses in tourism and export incomes due to pandemic," Bhatta said.
Due to reduced outflow of money from the country during the pandemic, Nepal's balance of payment also remained positive $by 2.34 billion in the 2019-20 fiscal year, according to the central bank.
"At the moment, Nepal's external sector of the economy is strong enough to withstand any external shock," said Bhatta.