Nepal’s trade deficit in the first 11 months of the fiscal year 2018-19 reached Rs1.21 trillion on soaring import bills.

The statistics of the Department of Customs show that the country’s negative trade balance during the period mid-July to mid-June was higher than the deficit for the whole of fiscal 2017-18. Last year, the country’s trade deficit totalled Rs1.16 trillion.

A trade deficit is the difference between a country's export earnings and import expenses. According to the department’s records, Nepal’s trade deficit surged 17.4 percent year-on-year during the review period.

Over the period, the country’s export earnings swelled 18.18 percent to Rs87.83 billion while the import bill rose 17.45 percent to Rs1.29 trillion. In fiscal 2017-18, Nepal exported goods worth Rs81.35 billion and imported goods worth Rs1.16 trillion.

The country failed to benefit despite a rise in exports due to its small export basket, said trade analysts. Former commerce secretary Purushottam Ojha said the soaring trade deficit was mainly due to supply constraints and non-tariff barriers. “Nepal failed to increase exports by a notable amount because of its low productivity and small variety of exportable goods,” said Ojha.

Nepal's largest imports were mineral oils, bitumen and mineral waxes worth Rs231.72 billion. The iron and steel import bill came to Rs132.30 billion while the country spent Rs109.87 billion on importing machinery and mechanical appliances. Imports of vehicles and parts and electrical equipment were valued at Rs84.42 billion and Rs81.71 billion respectively.

Nepal's largest exports were animal or vegetable fats and oils and related products worth Rs10.99 billion. Export earnings from manmade fibres including acrylic yarn totalled Rs9.03 billion, and revenues from the export of coffee, tea and spices amounted to Rs7.61 billion. Exports of woolen carpets and flooring materials were worth Rs7.05 billion while the country earned Rs5.43 billion from the export of iron and steel.

Nepal enjoyed a trade surplus with 21 countries among its 155 trading partners, according to customs statistics. Nepal's largest trade deficit of Rs785.08 billion was with India. The country shipped goods worth Rs56.59 billion to the southern neighbour and imported goods worth Rs841.67 billion. Nepal had the second largest trade deficit of Rs184.63 billion with China.