Nepal’s trade deficit widened 71 percent in first two months of current FY

KATHMANDU, Sept 27: Nepal’s trade deficit surged by a whopping 70.75 percent in the first two months of the current fiscal year on the back of the country’s soaring import expense.

The records with the Department of Customs (DoC) show that the gap between exports and imports of the country stood at a negative Rs 270.47 billion during mid-July and mid-September. In the review period last year, the trade balance was a negative Rs 158.40 billion.

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According to the DoC, Nepal imported goods worth Rs 314.51 billion in two months’ period, an increase of 75.86 percent. On the other hand, exports jumped from Rs 20.44 billion to Rs 44.03 billion. Having a low base of export earnings, Nepal has been unable to benefit from the cross-border trade although the export earnings soared more than double during the period.

After Nepal stepped into economic recovery out of the risk of the coronavirus, the country has been facing a notable rise in import expenses. The situation has been aggravated further with a fall in remittance inflow in recent days. This has created a threat of massive drain of foreign currencies from the country.

As a result, Nepal has started facing a negative balance of payments (BoP) in the past few months. As of the first month of the current fiscal year, Nepal recorded a negative BoP worth Rs 38.75 billion during mid-July and mid-August, in contrast to a surplus of Rs 51.46 billion in the review period last year.