Nepal’s trade deficit declines 19.15 percent during mid-July and mid-January of the current FY

Published On: January 24, 2023 10:15 AM NPT By: Republica | @RepublicaNepal

Central bank lifting completely the restriction on imported goods has feared the country to face further widened trade deficit in future

KATHMANDU, Jan 24: Nepal’s trade deficit declined 19.15 percent in the first six months of the current fiscal year due to a notable fall in the import expenses.

The records with the Department of Customs (DoC) show that the country faced a negative trade balance of Rs 711.85 billion during mid-July and mid-January this year. During the same period in the last fiscal year, the trade deficit amount stood at Rs 880.49 billion.

The government had enforced import restrictions for almost nine months before it was lifted last month. Citing the depleting foreign currency reserves, the government had imposed a complete ban on import of goods under the 10 selected categories, while a number of others were mandated for maintaining up to cent percent cash margin while importing from abroad. The government action helped take down the country’s import expense by 20.68 percent.

The government’s latest action has created a risk over the landlocked country again for the possible decline in the foreign currency reserves. According to an official at Nepal Rastra Bank, the central bank has annulled its own decision only due to the pressure from the private sector and the International Monetary Fund.

Although the country lost around Rs 38 billion from its exports, the import expenditure was also down by Rs 206.68 billion. Compared to imports of Rs 999.34 billion in the review period last year, the figure was just Rs 792.66 billion this year.

The petroleum products hit the list of top imported goods. The country imported diesel, petrol, cooking gas and aviation turbine fuel worth Rs 143.07 billion, including the purchase cost of Rs 70.10 billion for diesel alone. Similarly, more than Rs 40 billion was spent to import crude soybean oil and crude palm oil.

Nepal had the highest trade deficit of Rs 428.48 billion with India, which was followebd by Rs 109.63 billion with China. Overall, Nepal witnessed a trade deficit with 116 countries.

On the other hand, Nepal recorded a trade surplus with 30 countries. Nepal earned a net amount of Rs 136.31 million, the largest, by trading with the USA.