Here are interesting charts showing total convertible foreign exchange income of Nepal over the past six years. The total convertible foreign exchange income of Nepal in fiscal year 2010/11 was Rs 312 billion, up from Rs 157 billion in 2005/06 (a whooping 98 percent increase between the two periods). The share of convertible foreign exchange income from merchandise trade and services trade (consider exports earning in convertible currency only as some of the income from exports to India is in Indian rupee) is 12.34 percent and 87.66 percent respectively. The convertible foreign exchange income from services trade overshadows the one from merchandise trade.
Don’t confuse total convertible foreign exchange income with gross foreign exchange reserves, which is the one you have been hearing about in the media and reading in the central bank’s periodic statements. For comparison, total convertible foreign exchange income in 2010/11 was Rs 311.66 billion, and gross foreign exchange reserves was Rs 263.13 billion (the total fiscal budget was around Rs 384 billion). Similarly, don’t confuse with total convertible forex income from merchandise trade, service trade and remittances with total value of merchandise trade, service trade, and remittance inflows.
The biggest contributor to total convertible foreign exchange income is remittances, which comes under the services trade heading. In 2010/11, the share of remittances, tourism and investment in total convertible foreign exchange income of services trade was 85.27 percent, 11.35 percent, and 3.38 percent respectively. In numbers, these translate to Rs Rs 214 billion, Rs 29.39 billion, and Rs 5.42 billion respectively. The total convertible foreign exchange income of merchandise trade and services trade was Rs 38.45 billion and Rs 248.80 billion respectively. Now, these are different from the total value of total merchandise export and total services exports (Rs 64.33 billion and Rs 53.01 billion respectively—see the table).
|Convertible forex income in 2010/11 (Rs billion)|
|Total convertible forex income||311.66|
|Convertible forex income from merchandise trade||38.45|
|Convertible forex income from service trade||248.80|
|Convertible forex income from remittances||214.00|
|Convertible forex income from tourism||29.39|
|Convertible forex income from investment||5.42|
|Total value in 2010/11 (Rs billion)|
|Gross forex reserves (provisional)||263.13|
|Total merchandise export||64.33|
|Total services export (BOP)||53.01|
|Total remittance income (provisional)||253.55|
|Total budget for fiscal year||385.00|
The total share of remittances, tourism and investment in total convertible forex income was 74.75 percent, 9.95 percent, and 2.97 percent respectively. The income from tourism was 2.1 percent of GDP in 2010// and that from remittances was 20 percent of GDP.
[The data source is MoF and NRB. Computation and charts are done by myself].