Trade deficit jumps 22 percent to over Rs 990b in first nine monthsNepal’s trade deficit in the first nine months of the fiscal year jumped almost 22 percent year-on-year due to a spike in imports of oil, bitumen, aircraft parts and cereal. The deficit reached Rs991.78 billion at the end of the third quarter.
Nepal’s trade deficit in the first nine months of the fiscal year jumped almost 22 percent year-on-year due to a spike in imports of oil, bitumen, aircraft parts and cereal. The deficit reached Rs991.78 billion at the end of the third quarter.
The trade deficit represents the gap between the value of goods and services imported into the country and exported out of the country. According to the Department of Customs, Nepal spent Rs1.06 trillion on importing goods, up 21.73 percent year-on-year, while export earnings from merchandise trade increased 16.88 percent to Rs69.82 billion.
The ever swelling trade deficit prompted stakeholders to urge the government to formulate policies to address the yawning gap as it is preparing the budget for the next fiscal year.
Officials said that the government was planning to restrict imports of a number of luxury items through the annual budget statement.
Navaraj Dhakal, joint secretary of the Ministry of Industry, Commerce and Supplies, confirmed that the ministry had prepared a list of such items and sent it to the Finance Ministry. The Finance Ministry has also formed a committee under Revenue Secretary Lal Shankar Ghimire to identify products whose import would be curtailed in a bid to narrow the trade deficit.
Bhisma Raj Dhungana, executive director of Nepal Rastra Bank, who is also a member of the committee, said they had advised the government to impose import restrictions on luxury goods without going against the norms of the World Trade Organisation.
Oil topped the list of imports in the first nine months of this fiscal year. Nepal bought Rs182.43 billion worth of petroleum products, up 35 percent year-on-year. Imports of iron and steel stood at Rs119.1 billion, and imports of machinery and parts amounted to Rs89.69 billion. The country imported vehicles and accessories valued at Rs69.73 billion, and electrical appliances valued at Rs65.49 billion.
Among exports, fats and vegetable oil accounted for the highest revenues of Rs7.34 billion.
Export earnings from acrylic yarn stood at Rs7.24 billion, followed by woollen carpet with Rs5.75 billion, tea and coffee with Rs5.67 billion and iron and steel with Rs4.96 billion.
Shyam Giri, president of the Federation of Nepal Cottage and Small Industries, said the government needed to accord priority to boosting the country’s small industries to reduce the trade deficit through the budget statement. According him, the federation consists of more than 40,000 small producers who mainly produce exportable goods. “Apart from boosting exports, these industries help substitute imports,” said Giri.
In the last fiscal year, the country’s negative trade balance stood at Rs1.16 trillion.