BoP Outlook 2025/26: Can Nepal Sustain Current Account Gains Amid Rising Imports?

Nepal’s external sector is off to a strong start in FY 2025/26, with the current account posting a Rs. 78 billion surplusin the first month — a sharp improvement from Rs. 33 billion during the same period last year. However, analysts warn that rising imports and capital outflows could erode these early gains unless structural reforms and export growth follow through.

According to Nepal Rastra Bank’s Balance of Payments (BoP) data, the trade deficit still exceeds Rs. 109 billion, despite modest export growth. The improvement in the current account has been powered almost entirely by record remittance inflows (Rs. 177 billion) and growing foreign reserve accumulation (Rs. 93.5 billion).

While these inflows have strengthened the BoP, they also reveal Nepal’s persistent dependence on remittances rather than productive exports or FDI inflows. The financial account surplus of Rs. 80 billion came primarily from reserve buildup, masking weak investment inflows and high loan repayments.

Economists caution that such short-term gains can quickly reverse if import demand accelerates with post-festival consumption, public spending, and rising global oil prices. Moreover, with FDI posting a net outflow of Rs. 611 millionand loan repayments crossing Rs. 5.8 billion, the sustainability of the BoP surplus remains in question.

To sustain external stability, experts stress the need for a strategic policy mix — boosting exports through industrial competitiveness, diversifying trade partners, facilitating FDI in productive sectors, and improving domestic savings. They also call for prudent fiscal discipline to avoid excessive import-driven growth that could pressure the reserves.