Figure 1. Nepal: Recent Macro-Economic Developments

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Aug- Aug- Aug- Aug- Aug- Aug- Aug- Aug- Aug- Aug- Aug- Aug- Aug- Aug- Aug- Aug- Aug- Figure. : Recent Macro-Economic Developments Real GDP growth is estimated at. percent in /. Growth rebounded to. percent in /, after a slump due to the earthquakes and trade disruptions. Real GDP Growth (Percent change) Real GDP, Other Real GDP, Agriculture Real GDP (at market prices) / / / / Source: Central Bureau of Statistics. / / / / Remittances amounted to US$ million in August. For / as a whole, remittances were US$. billion, up percent from a year ago. - Remittances Monthly flow (in millions of U.S. dollars, RHS) Y/Y change in mma (in percent) Y/Y change in HP filtered series (in percent) - Headline inflation amounted to. percent (y/y) in August. Non-food inflation printed at. percent. s inflation has moved broadly in line with s inflation since early. Consumer Price Inflation (Percent change, year-on-year) Non-food items (contribution to headline CPI) Food items (contribution to headline CPI) Non-food CPI (y/y) Headline CPI (y/y) - - Consumer Prices in and (Percent change, year on year) : Headline CPI (y/y) : Headline CPI (y/y) Aug- Aug- Aug- Aug- Sources: i authorities, Haver analytics; and IMF staff estimates. The U.S. dollar has strengthened against the i rupee as well as against other currencies. The real effective exchange rate of the i rupee remains about percent above the - average. Central bank reserves (including gold and SDR holdings) amounted to US$. billion in mid-august, covering about months of prospective imports. Exchange Rates (+) Appreciation REER index (=) NEER index (=) USD per NRs (RHS)... Central Bank Gross Reserves and Commercial Banks NFA Reserves in billions of U.S. dollars Reserves in months of prospective imports Commercial banks' NFA (US$bn)... (-) Depreciation..

Aug- Aug- Aug- Aug- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- / / / / / / / / / / / / / / / / / / / / / / / / Figure. : Recent Fiscal Developments Spending expanded more rapidly than revenue, causing the deficit (based on above-the-line data) to rise by. percent of GDP to. percent of GDP in /. - - - - Fiscal Performance Revenue Capital expenditure Current expenditure Overall balance - - - - As a result, public debt rose to. percent of GDP in /. Public debt net of government deposits also rose by ½ percent of GDP, to. percent of GDP. - Public Debt Central bank overdraft ((-) indicates deposit) Domestic debt External debt Net public debt - Note: Overall balance calculated as total revenue and grants minus expenditure. Sources: i authorities; and IMF staff estimates FCGO data indicates that revenues rose by percent (year-on-year) during the last months. In fiscal year /, revenue was up percent. Government Revenue - - - Total revenue (annual average change) Total revenue (y/y change in mma) - - - Central government spending fell percent (y/y) during the last months. In fiscal year /, central government spending (incl. transfers to local govs.) rose percent. Government Spending - Current and capital spending (annual average change) Current and capital spending (y/y change in mma) - Gross domestic debt amounts to about NR bn. Large variations in government deposits at the central bank lead to large variations in net domestic public debt. Government Gross and Net Domestic Debt Gross domestic public debt Net domestic public debt Government deposit at the central bank

Figure. : Recent External and Monetary Sector Developments Imports and exports are up by and percent (y/y, on a mma basis), respectively, from a year ago. Private credit growth firmed to percent in August (y/y). - - - Trade and Private Sector Credit (Growth, in percent) Aug- Exports (y/y change in mma) Imports (y/y change in mma) Private Sector Credit (y/y) Aug- Reserve money expanded by. percent (y/y) in August. Banks lending interest rates have stabilized at. percent. Interbank rates had stabilizing at percent, in the interest rate corridor, but have recently fallen. - - - - - Central Bank Balance Sheet (In percent, contribution to reserve money growth) Net claims on government Net foreign assets Aug- Aug- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Aug- Other net domestic assets Reserve money growth (y/y) : Interest Rates (Percent) Weighted Average Lending Rate (Commercial Banks) Weighted Average Deposit Rate (Commercial Banks) Interbank Rate of Commercial Banks Aug- Aug- Aug- - - - - - - - - Strong imports are raising the trade deficit. This contributed to a current account deficit of US$. billion in / (. percent of GDP), despite firming remittances., - - Current Account Balance (In millions of US dollars) Trade Deficit (mma) Remittances (mma) Current Account Balance (mma) Aug- Aug- Amid firming private sector credit growth, M growth amounted to percent (y/y) in August. - - Aug- Net claims on government Net foreign assets M growth Aug- Stock prices remain volatile. By end-september, they were down about percent from a year ago. Broad Money Growth (In percent, contribution to broad money growth) Aug- Aug- Other net domestic assets Private sector credit Stock Market Performance in and (Mid-July =) NEPSE Index NEPSE index, commercial banks Bombay Stock Exchange (SENSEX index) Aug- Aug-, - - - - Source: NRB Sources: i authorities; and IMF staff estimates

Lao P.D.R. PNG Mongolia Lao P.D.R. Myanmar China LIC median Figure. and its Peers: Growth, Exports, FDI, Remittances and Human Development s growth has lagged peers and per capita GDP remains lower than in other Asian countries.,,,,,, Per Capita GDP (PPP) (In current international dollars),,,,,, s exports have been growing slower than GDP and are lower than in most peers. Exports of Goods and Services - average - average,, Source: World Bank, WDI Database. Sources: IMF, World Economic Outlook; and IMF staff estimates. Inflows of foreign direct investment (FDI) in remain small. As a result, the stock of FDI is much smaller than in peer countries. FDI Stocks in (US$ per capita),,, On the other hand, compared to other countries, has high remittances. Inflows of Remittances, Selected Countries, Philippines Indonesia China Source: UNCTAD data Sources: World Bank, Remittances Data; IMF, World Economic Outlook. Poverty declined to percent of the population in /, thanks in part to the growth of remittances. Poverty is higher in rural and mountainous areas. Poverty rate, /-/ (In percent of the population) National Urban Rural Mountainous The decline in poverty is reflected in an improvement in s UNDP Human Development Index. Human Development Index (HDI) (Index number).......... HDI, Average HDI (-)......... / / / Source: Central Bureau of Statistics. Source: UNDP, Human Development Report.

Aug- Aug- Aug- Aug- Aug- Aug- Aug- Aug- Aug- - Bank Deposits, Credit and Remittances (year-on-year change, in percent) / credit crunch Bank deposits Remittances (annual average growth) Credit to private sector - Sources: i Authorities, IMF staff calculations.