Trade deficit down by 10 percent

KATHMANDU, AUGUST 24: Nepal's trade deficit has declined by 10.38 percent to Rs 116.47 billion in the first month of the current fiscal year compared to the same period last fiscal year.

The such deficit went down in line with a drop in the imports by 12.90 percent in one month between mid-July and mid-August, according to data released by the Department of Customs. The country imported goods worth Rs 131.28 billion in the review month against the total import of Rs 150.73 billion in the same period last year.  

Experts attribute the reduction in import expenses to the government’s strict measures to restrict the inflow of expensive foreign luxury items into the country in the review period. 

The Nepal Rastra Bank adopted a policy last winter to discourage imports after excessive imports led to pressure on the Balance of Payments and also a depletion in foreign exchange reserves. Asa result, the imports of ten luxury items like private vehicles for private use, readymade liquor, expensive mobile phones, and television sets, among others.

It is reported that the imports also went down following the move of banks and financial institutes (BFIs) to stop credit flow for the import of goods amid a liquidity crisis. The shrinking of the trade deficit in the review period has provided some relief to the economy reeling under the yoke of depleting foreign currencies.   

The data shows that the country's exports plunged by 28.68 percent to Rs 14.81 billion in the review month against Rs 20.76 billion in the same period of the previous fiscal. The top export commodities were refined soyabean oil, refined palm oil, and woolen carpets.

In the first month of the current FY, petroleum products were the top import commodity as Nepal purchased such products worth Rs 25.03 billion from India.