FDI inflow increases by 60%

Kathmandu, April 27: Foreign Direct Investment (FDI) inflow has been up by 60 per cent in the first eight months of the current fiscal year (FY) in comparison to the same period of the previous FY.

According to the Current Macroeconomic and Financial Situation report released by Nepal Rastra Bank (NRB), net FDI has amounted to Rs. 16.30 billion up from Rs 10.18 billion in the same period of the previous FY.

At the time of the widening the balance of payment (BoP) deficit, the rapid inflow on FDI has become a cushion in the current FY. In the first eight months of the current FY, the FDI jumped by 60 per cent in comparison to the previous FY. In contrast, the net FDI inflow had slid by 33 per in the same period of the previous FY.

In the current FY, FDI accounted for a record high of Rs. 16.7 billion, breaking previous three years' records. In the first eight months of the FY 2019/20, 2020/21, 2021/22, the FDI was Rs. 15.7 billion, Rs. 10.58 billion, Rs. 16.7 billion respectively.

NRB survey report, released in September 2021 showed that FDI stock in Nepal went up by 8.5 per cent to Rs. 198.52 billion at the end of 2019/20. The report showed that FDI is mainly attracted by hydropower in Nepal. The survey showed that 27.5 per cent of FDI alone diverted to hydropower in recent years.

The report showed that the manufacturing, mining and quarrying industries together constitute 28.3 per cent while the electricity sector alone comprises 27.5 per cent of total FDI stock.

Out of 43.9 per cent of total FDI stock in the service sector, investment in financial intermediation comprises 27.3 per cent and hotels & restaurants comprise 6 per cent of the total FDI stock.