Nepal’s Current Account Surplus Hits Rs. 78 Billion: What’s Driving the BoP Improvement?

Nepal’s external sector has shown a remarkable turnaround as the current account surplus soared to Rs. 78.1 billion in the first month of FY 2025/26, according to Nepal Rastra Bank’s latest Balance of Payments (BoP) report. This marks a significant improvement compared to Rs. 33.0 billion surplus in the same period last year, reflecting a stronger external position.

The surplus is primarily driven by rising remittance inflows and higher secondary income, which reached nearly Rs. 194 billion this year. Workers’ remittances alone surged to Rs. 177.4 billion, a sharp increase compared to Rs. 136.6 billion in the previous year. These inflows have cushioned Nepal’s economy against widening trade deficits.

On the trade side, Nepal continues to face a massive goods trade deficit of over Rs. 109.5 billion in just one month, as imports outpace exports. However, the burden has been offset by robust remittance inflows and growing foreign currency reserves.

Reserve assets also registered a sharp jump, rising by Rs. 93.5 billion, further strengthening Nepal’s external buffer. Analysts note that stable remittances, coupled with lower capital outflows and cautious government borrowing, have improved the BoP outlook.

Still, vulnerabilities remain. High dependency on remittances makes the economy vulnerable to global shocks, while sluggish export growth highlights the structural weakness in Nepal’s productive capacity.