Bishnu Rimal’s claim about foreign currency reserve is manipulated, lacks context

On July 31, Bishnu Rimal, a CPN-UML leader and chief political advisor to former Prime Minister KP Oli, posted a sleek infographic on his Twitter account claiming that the Oli government maintained a bigger foreign currency reserve than the current administration headed by Prime Minister Sher Bahadur Deuba has maintained. “Who increased the foreign currency reserves?” Rimal asked, presenting two bubbles depicting the central bank’s total foreign currency reserves under the Oli government (“14 Kharba”) and that under the current ruling alliance (“11 Kharba”).

Rimal added a piece of text to his tweet sent to his 130,000 followers saying: “Not much needs to be done to make the country economically bankrupt. It’s just enough if you make the existing situation worse. This is exactly what the [ruling] alliance is doing. Let’s look at the facts.”

Rimal shared the same content on his Facebook page with 61,000 followers. This was part of a series of social media posts he made in late July comparing economic figures and indicators from the period when the Oli government was in power with the latest ones, as Nepal heads to parliamentary elections in November. His posts were widely shared on social media.

आर्थिक रूपमा
मुलुकलाई खोक्रो पार्न केही गर्नै पर्दैन,
भएको विगार्दै गए पुग्छ।
गठबन्धन अहिले त्यहि गरिरहेछ-तथ्य हेरौं! pic.twitter.com/io8p3Ows0f

— Bishnu Rimal (@BishnuRimal) July 31, 2022

Nepal Check already fact-checked one of Rimal’s claims that the Deuba government was responsible for the Nepali Rupee’s weak show against the US dollar. [Read here: UML politician Bishnu Rimal’s claim about Nepali Rupee’s fall against dollar is misleading or डलरसँगको रुपैयाँको विनिमय सम्बन्धमा एमाले नेता विष्णु रिमालको दाबी भ्रामक]

Nepal Check now fact-checks Rimal’s other claim that the country’s foreign currency reserve was bigger by three kharba (trillion) rupees under the Oli government compared to that under the current coalition government led by Sher Bahadur Deuba.

First, let’s look at the timeline for the two governments along with their corresponding foreign currency reserves.

The most recent NRB report available to the public when Rimal posted the infographic was that of the end of the month of Jestha 2079 BS (mid-June 2022). At that point the central bank’s foreign currency reserve was worth Rs 11 Kharba 76 Arba (11.76 trillion rupees).

Rimal shaves off nearly Rs 76 billion of that figure to round it off to Rs 11 trillion against standard rounding rules. This can be dubbed as manipulation of data.

Just as we fact-checked Rimal’s claim on August 18, the NRB released its most recent report covering the end of Asar (until mid-July) on August 16. According to the report, the foreign currency reserve is now worth Rs 12 Kharba 15 Arba (12.15 trillion rupees).

It is clear from NRB data that Rimal is correct in claiming that the central bank’s foreign currency reserve was equivalent to Rs 14 trillion (rounded) when Prime Minister Oli left office. But Rimal manipulated the numbers for the Deuba government to project the ruling alliance in a negative light as part of his misleading election-centric narrative. 

Full context

It is true that the country’s foreign currency reserves depleted by 15.9% to Rs. 1,176.84 billion by mid-June 2022 (according to latest publicly available data when Rimal tweeted) from Rs. 1,399.03 billion in mid-July 2021 (when Oli left office).

But we need to consider the broader political, social and economic context to understand how that number dropped and to what extent the Deuba-led coalition is responsible for it.

A number of internal and external factors play a role in determining Nepal’s foreign currency reserves. Some key determinants are: the price of petroleum products in the international market, the Rupee’s exchange rate with the US dollar, volume of goods and services imported, and the inflow of remittances. Most of these factors are beyond the control of the government, regardless of who is in power.

In February 2018 when Oli assumed his office, the price of Brent crude hovered around $65 per barrel in the international market. By December that year, it went below $50. With the world-wide outbreak of COVID-19 in early 2020, it plummeted further, reaching as low as $20 per barrel in April 2020.

However, prices shot up at the end of 2020. When Oli left office on 12 July 2021, it stood at $74 per barrel. It crossed $100 per barrel in March 2022 following the Russian invasion of Ukraine.

Also, during Oli’s tenure in 2020, Nepal imported a lower volume of petroleum products due to coronavirus-related nationwide lockdowns and halts in industrial and construction works. This was reflected in the import bill of petroleum products which steadily rose as economic activities resumed gradually.

According to the NRB data, Nepal imported petroleum products worth Rs 161.48 billion in the FY 2019/20, Rs 172.59 billion in the FY 2020/21 and Rs 292.77 billion in the first 11 month of current FY 2021/22, all of these 11 months of the last fiscal year fall under the Deuba’s tenure which began on July 13, 2021– two days before the start of the new FY 2021/2022. 

That Nepal spent far less foreign currency than the previous years under the Oli government also coincided with a rather surprising increase in remittances. The amount of money Nepali workers sent home surged by 9.8% in the fiscal year 2020/21 to Rs 961.05 billion. But the rate of increase was limited to 3.8% (to Rs 904.18 billion) in the first 11 months of the FY 2021/22, according to NRB’s macroeconomic data.

With almost all major economic activities coming to a standstill due to the pandemic, the import of machines and their parts and raw materials for infrastructure projects was down during the fiscal year 2020/21 to Rs 11.11 billion. However, the figure swelled by 31.97% in the fiscal year 2021/22 to Rs 14.66 billion as a result of economic recovery following COVID-19 pandemic. According to the NRB data, fossil fuel and iron/steel remained the top imported items.

Popular education destinations for Nepali students such as the US, Australia, the UK and Canada were closed starting in March 2020 during the tenure of the Oli-led government to contain coronavirus. This also contributed to shortening the country’s import bills. However, the outflow of students increased significantly after the COVID-19 restrictions were gradually lifted after July 2021. 

NRB allows each student to exchange Nepali currency worth US $1,500. In the first 11 months of the FY 2021/22, 102,873 students sought no objection certificates (NOC), which are mandatory for Nepali students to travel abroad for higher studies, according to the Ministry of Education. Although not all of those obtaining NOC fly abroad for studies, the data clearly shows that the number of Nepali students going abroad has gone up significantly, impacting the country’s foreign exchange reserve.

Conclusion

Rimal’s claim that the Oli-led government maintained a bigger foreign currency reserve (Rs 14 trillion) compared to Rs 11 trillion under the Deuba government is half-true as he provides the correct figure for Oli but manipulates the number corresponding to  the Deuba government. Rimal’s claim is also misleading as he hides the context key to understanding the reasons for the difference.

Rimal’s claim that the [ruling] “alliance” has made the “existing situation worse” because the foreign exchange reserve has gone down under the Deuba government misses important contextual information. It is important to see if the foreign currency reserves are depleted by the government’s mismanagement or as a result of factors beyond the government’s control. Major factors that contributed to the decline in foreign currency reserve in the past year were beyond the Nepali government’s control.

Rimal’s claim is partially accurate, but leaves out important contextual information. Therefore, it is half-true.

Claim	Claimed by	Nepal Check Verdict
Country’s foreign currency reserve was bigger when Oli was in power	Bishnu Rimal, a top official from the main opposition party	Half-true