Current Account and Balance of Payments Record Strong Surplus, Backed by Remittance Inflows

Nepal’s external sector strengthened significantly in the first four months of fiscal year 2082/83 (up to mid-November 2025), with both the current account and the balance of payments posting substantially higher surpluses than last year. Latest figures released by Nepal Rastra Bank indicate that strong remittance inflows and higher secondary income have outweighed pressures from trade and service deficits, improving the country’s overall external position.

During the review period, the current account recorded a surplus of Rs 279.65 billion, almost double the Rs 147.78 billion surplus seen in the same period last year. In US dollar terms, the current account surplus widened from USD 1.10 billion to USD 1.99 billion. Economists view this sharp improvement as a reflection of robust foreign currency inflows, particularly from migrant workers, at a time when import demand remains high.

Despite this improvement, analysts caution that the current account surplus has not been driven by a structural rise in exports or service earnings. Instead, it largely reflects transfer income, highlighting Nepal’s continued reliance on external labor markets rather than domestic production capacity.

The capital account also showed some improvement. Net capital transfers rose to Rs 6.21 billion, compared to Rs 2.47 billion in the corresponding period last year. This increase suggests a modest rise in foreign grants and capital inflows linked to development support. However, the trend in foreign investment remained weak.

During the review period, foreign direct investment (equity only) stood at Rs 2.49 billion, down sharply from Rs 5.76 billion a year earlier. The decline in FDI has raised concerns among analysts, who point to policy uncertainty, regulatory bottlenecks and slow project implementation as key deterrents to long-term investment.

Alongside the current account, the overall balance of payments (BoP) recorded a surplus of Rs 318.40 billion, up from Rs 205.83 billion in the same period last year. In dollar terms, the BoP surplus increased from USD 1.53 billion to USD 2.26 billion. The stronger BoP position has helped support foreign exchange reserves and ease external liquidity risks.

Economists note that the widening BoP surplus has provided Nepal with short-term macroeconomic comfort, including greater stability in foreign exchange reserves and improved capacity to finance imports. However, they warn that the quality of the surplus matters as much as its size.

Overall, the latest data point to a remittance-driven improvement in Nepal’s external sector, rather than a broad-based strengthening of exports, services or investment inflows. Analysts stress that while the current surplus offers breathing space, long-term external stability will depend on expanding productive exports, boosting service earnings and restoring investor confidence to attract sustainable foreign investment.