NRB Data: Net Foreign Assets Increase by Rs 153.68 Billion While Domestic Assets Decline

According to the latest Monetary Survey released by Nepal Rastra Bank (NRB), Nepal’s Net Foreign Assets (NFA) rose sharply by Rs 153.68 billion (5.8%) during the first two months of FY 2025/26, reaching Rs 2.88 trillionby mid-September 2025. The rise reflects continued accumulation of foreign exchange reserves and strong remittance inflows, while the domestic economy witnessed a decline in net domestic assets (NDA), indicating reduced liquidity expansion from the internal banking sector.

Foreign Assets Strengthen External Position

The NRB report shows that gross foreign assets climbed to Rs 3.04 trillion, an increase of Rs 217.98 billion (7.7%)over the period. This growth was mainly supported by improved reserves held by the central bank and commercial banks, alongside stable foreign deposits. Meanwhile, foreign liabilities rose slightly by Rs 484.3 million, remaining at Rs 157.5 billion, reflecting a stable external debt position. The expansion of NFA demonstrates Nepal’s strengthened external sector and sustained inflow of remittances, exports, and tourism receipts following the post-pandemic recovery.

Domestic Assets Show Contraction

In contrast, Net Domestic Assets (NDA) fell by Rs 126.99 billion (–2.5%), signaling tighter liquidity conditions in the domestic banking system. The decline was primarily driven by a 12.9% fall in net claims on the government, as fiscal spending slowed and government deposits increased.

• Private sector credit, however, maintained a modest rise of 1.6%, reaching Rs 5.71 trillion, reflecting cautious lending behavior by banks amid weak credit demand.

• Claims on non-financial public enterprises rose by 33.5%, while claims on other financial institutionsdecreased by 4.4%, pointing to selective lending adjustments within the financial system.

Monetary Stability and Liquidity Trends

Despite the fall in domestic assets, Nepal’s overall broad money supply (M2) increased slightly by 0.3%, reaching Rs 7.87 trillion. This moderate rise was underpinned by foreign sector inflows rather than domestic credit creation. The money multiplier for M2 improved to 7.16, indicating efficient liquidity management, while the M1 multiplierslightly declined, showing limited short-term spending activity.

Economic Outlook

Economists interpret the divergence between rising foreign assets and contracting domestic assets as a reflection of macro stabilization efforts—the NRB’s cautious monetary stance is ensuring external strength and inflation controlwhile moderating internal liquidity. The data suggest that Nepal’s economy remains externally resilient but domestically constrained, with limited private-sector credit acceleration.