Nepal’s Trade deficit doubles in first 4 mthsNepal’s trade deficit doubled in the first four months of the current fiscal year, as imports surged following a significant jump in consumer demand after the end of the Indian blockade.
Nepal’s trade deficit doubled in the first four months of the current fiscal year, as imports surged following a significant jump in consumer demand after the end of the Indian blockade.
Nepal’s trade deficit widened to a startling Rs277.13 billion in the period under review, as against Rs140.03 billion in the same period a year ago, shows the latest macroeconomic report of the Nepal Rastra Bank, the central bank. “Following the end of Indian economic blockade, the massive rise in import of consumers items, including vehicles, aggravated the country’s trade situation,” said Purushottam Ojha, a trade expert.
Increasing imports, along with a slow rise in exports, led to the widening trade deficit. Over the review period, the country’s imports jumped 87.4 percent to Rs301.65 billion. However, exports underwent a slow growth of 17 percent, with export earnings standing at mere Rs24.52 billion.
Ojha blamed the government’s inability to boost exports for the deficit. “Despite the introduction of trade and industrial policies, the government has failed to implement them effectively to boost exports,” he said.
He said the government was relying heavily on import duties for revenue. “Almost every year, the government raises the revenue collection target on the basis of VAT and customs duty collection from the imported goods,” he said.
Ojha, however, attributed the low base rate of last year’s trade balance for the whopping rise in trade deficit. Due to Indian blockade, Nepal witnessed a fall in both import and export by 36.8 percent and 29.1 percent, respectively, in the first four months last year. This led to narrowing of trade deficit to Rs140.03 billion from Rs703.48 billion of the previous year.
The official statistics show Nepal’s trade dependence on India has increased in recent days. Nepal imported goods worth Rs195.15 billion from India, more than double of last year’s figure. However, Nepal’s exports to India increased by a mere 23.2 percent to Rs13.6 billion.
Similarly, imports from China increased by 72.7 percent, and export earnings rose by 36.6 percent to Rs519.7 million.