Kathmandu. According to the government’s report, although there are some positive signs in the country’s economy, structural challenges still remain.

The survey shows that Nepal’s external sector is strengthening, inflation is under control and remittances have increased significantly. However, weak capital expenditure, widening trade deficit, expansion of public debt and sluggish private sector credit are the major challenges to the economy.

According to the Economic Survey 2082/83, the government has prepared the basis for the upcoming budget by presenting a holistic picture of social infrastructure, good governance, public finance, monetary situation and external sector.

Nepal’s economy is expected to expand by 3.85 percent in the current fiscal year. Likewise, the size of Nepal’s economy is expected to reach Rs 6.6 trillion and per capita national income will reach $ 1,535.

The contribution of agriculture sector to the GDP is estimated to be 24 per cent and the contribution of non-agriculture sector to 76 per cent. Bagmati Province’s contribution is estimated to be the highest at 36.7 per cent.

As of mid-March of the current fiscal year, the average consumer price inflation stood at 2.13 percent, which is considered to be relatively under control.

Although federal revenue grew by 3.2 percent, capital expenditure has not improved as expected. As of mid-March of the current fiscal year, the government has mobilized public debt worth around three trillion rupees through internal and external loans. During the period, the fiscal balance was Rs 59 billion and the primary balance was Rs 9 billion.

Public debt has increased to Rs 2.878 trillion by mid-March, which is 43.6 percent of the GDP.

Nepal’s trade deficit has increased by 11.2 percent to reach Rs 1098 billion. Likewise, the remittance inflow has increased by 37.7 per cent and reached Rs 1.45 trillion. This has strengthened the external sector.

The balance of payment position stands at Rs 658 billion in savings and Rs 553 billion in current account. The foreign exchange reserves have reached Rs 3.414 trillion. According to the survey, it has the capacity to sustain the import of goods and services for 18.5 months.

Although there is sufficient liquidity in the banking sector, credit expansion to the private sector is limited to only 6.7 percent. This indicates that private investment and economic activity are still slowing.