Nepal's Current Account Balance Turns Positive, Showing Strong Recovery

Nepal's current account balance has made a remarkable turnaround over the past few fiscal years, reflecting a strengthening external sector. As per the latest mid-May 2024/25 figures, the current account recorded a surplus of Rs. 255.9 billion — a significant improvement from the peak deficit of Rs. -623.4 billion in 2021/22.

Historically, Nepal’s current account remained in deficit for several years, deepening particularly during the COVID-19 pandemic. The fiscal year 2019/20 recorded a deficit of Rs. -33.8 billion, which sharply worsened to Rs. -333.7 billion in 2020/21 and further deteriorated to Rs. -623.4 billion in 2021/22. These large deficits were driven by a surge in imports, subdued tourism income, and stagnating remittance inflows during global disruptions.

However, the situation began to stabilize in 2022/23 when the deficit narrowed substantially to Rs. -46.6 billion, indicating early signs of recovery. This positive trajectory was confirmed in 2023/24 when Nepal posted a surplus of Rs. 221.3 billion annually and Rs. 193.3 billion by mid-May of the same year.

The latest figure from mid-May 2024/25 shows a further strengthening of the current account position with a surplus of Rs. 255.9 billion. This consistent improvement can be attributed to a more balanced trade structure, improved remittance inflows, controlled imports, and gradual recovery in tourism.

This turnaround in the current account balance signals enhanced macroeconomic stability, offering policymakers greater room to focus on sustainable growth strategies. The trend also boosts investor confidence and contributes to foreign exchange reserve accumulation — both essential for Nepal’s long-term economic resilience.