Nepal’s trade deficit fell 12 percent to Rs307.78 billion in the first quarterReduced imports of readymade garments and electrical equipment shaved Rs20 billion off the trade deficit.
Nepal’s trade deficit fell 12 percent year-on-year to Rs307.78 billion in the first quarter, largely due to a sharp drop in the import of electrical equipment, readymade garments, petroleum products and gold.
According to Nepal Rastra Bank, exports increased 14.4 percent to Rs27.17 billion in the first three months of the fiscal year, compared to a growth of 16.1 percent in the previous year.
Imports were down 10.3 percent to Rs334.95 billion against an increase of 43.6 percent in the same period last year. Reduced imports of readymade garments and electrical equipment shaved Rs20 billion off the trade deficit.
Imports from China increased by 11.6 percent while imports from India and other countries decreased by 12.2 and 19.1 percent respectively.
The share of electrical equipment in total imports fell to 1.9 percent from 4.5 percent with no new hydropower plants being constructed.
Nepal imported electrical equipment worth Rs16.81 billion in the first three months of the last fiscal year. In the first three months of this fiscal year, electrical equipment imports dropped 61.90 percent to Rs6.40 billion.
Resham Devkota, president of the Federation of Electrical Entrepreneurs of Nepal, said that big hydropower projects imported a lot of electrical equipment last year and racked up a huge import bill. Similarly, new hospitals also imported electrical equipment.
“This year, there are no new hydropower projects in the electro mechanical phase that resulted in a steep reduction in the import of electrical equipment,” he said.
Readymade garment imports dropped by half to Rs10 billion in the first three months from Rs19.86 billion during the same period in the previous year.
Gold imports plunged 99 percent to Rs597 million as buyers fled high prices. Traders said that gold imports in the first quarter almost ground to a complete halt largely due to a sharp rise in prices.
According to Tej Ratna Shakya, former president of the Federation of Nepal Gold and Silver Dealers’ Association, people had been waiting for three months to buy gold, hoping prices would fall. “But the price did not fall, and there is still no sign of it decreasing.” The Federation of Nepal Gold and Silver Dealers’ Association fixed the gold price at Rs72,000 per tola on Thursday.
Imports of fruits and vegetable also dropped in the first three months due to strict quarantine enforcement at the Nepal-India border. A sharp rise in the price of onions, almost all of which comes from India, also helped to drag down imports.
Fruit imports dropped to Rs2.99 billion in the first three months from Rs3.76 billion in the same period last year. Vegetable imports dropped to Rs3.82 billion from Rs4.40 billion in the same period in the last fiscal year.
Exports to India increased 35.8 percent while exports to China and other countries decreased 19.9 and 11.7 percent respectively.
Shipments of palm oil, cardamom, medicine (ayurvedic), jute goods and yarn (polyester and other), among others, increased while exports of zinc sheet, juice, readymade garments, woolen carpet and wire decreased in the review period.
Economist Gyanendra Adhikari said the productivity of Nepali industry had increased due to the availability of electricity, and this had helped to increase exports. “Imports have been shrinking because of low consumer spending. The government has also imposed restrictions on the import of luxury goods.”
The statistics show that large cardamom export jumped to Rs1.25 billion in the first three months of this fiscal year from Rs767 million in the review period.
Nepal imported crude palm oil worth Rs5.05 billion, which is not produced in Nepal, and exported processed oil valued at Rs5.75 billion.
The export-import ratio increased to 8.1 percent in the review period from 6.4 percent in the corresponding period of the previous year.
The central bank’s statistics show that the balance of payments remained at a surplus of Rs14.43 billion in the first three months of the current fiscal year as compared to a deficit of Rs35.42 billion in the same period last year.
Gross foreign exchange reserves increased to Rs1.08 trillion as of mid-October from Rs1.03 trillion as of mid-July.
Remittance inflows down 4.9 percent
Remittance inflows decreased 4.9 percent year-on-year to Rs230.24 billion in the first quarter of the current fiscal year. In the first quarter of the last fiscal year, remittance inflow had grown 37.3 percent year-on-year.
According to Nepal Rastra Bank, the number of Nepali workers leaving for foreign employment decreased 3.7 percent year-on-year in the first three months. During the same period in the last fiscal year, departures had decreased by 34.8 percent year-on-year.