Nepal's trade deficit in the first 10 months of fiscal 2022-23 stood at a whopping Rs 1.2 trillion, but this comes as no surprise to anyone.

Trade deficit, with imports surpassing exports by many, many times, has been a regular feature of the Nepali economy, with it burgeoning year after year, making it almost impossible to bridge the gap.

The total trade gap, according to the Department of Customs, however, narrowed by 15.85 per cent compared to the corresponding period last fiscal year 2021-22, if that is any solace. Imports fell by 16.78 per cent to Rs 1.33 trillion during the review period compared to Rs 1.64 trillion during the corresponding period last fiscal.

This may be good news, but Nepal's exports saw an even bigger drop year-on-year during the review period, with exports limited to just Rs 130 billion as against Rs 173 billion a year earlier – a plunge by almost 25 percent.

Nepal's trade deficit has been growing largely because it has failed to promote and diversify its goods and services. How can a country the size of Nepal with a population of 30 million have literally nothing to export? Nepal's top export items are refined soyabean and palm oil, and handwoven woolen carpets.

But then, all of the refined cooking oil is exported to India, the sole market, by importing crude palm and soyabean oil – Nepal's major imports – from overseas.

It's a trade that benefits only the business community, not the country.

The export of woolen carpets to Europe is also nowhere the figure of the eighties, when the commodity fetched upto $650 million annually. Inability to expand our export destinations beyond India and China by successive governments has also had telling impact on our trade. During the review period, Nepal exported goods worth Rs 91 billion to India while importing merchandise worth Rs 844.5 billion, resulting in a trade deficit of Rs 753 billion.

Export to China was a dismal Rs 1.35 billion while imports from the northern neighbor amounted to Rs 179 billion.

Such a huge trade deficit year after year couldn't have happened if the government had been serious about promoting Nepal's exports. Nepal's tea and coffee, among others, hold great potential for export, but their promotion has been limited to mere pep talk by officials. Nepal's annual tea export stands at around $24 million as against $1.3 billion for Sri Lanka.

Nepal produces just 500 tons of coffee as compared to 30,000 tons by Laos, although more than a million hectares are said to be suitable for coffee farming in Nepal. Nepal's trade deficit will continue to grow unless we can expand the manufacturing base and promote agro products for export. The easy availability of foreign currency remitted by millions of migrant workers in Malaysia and the Gulf countries has given rise to the import culture, which does not augur well for our economy. Nepal's exports cannot even meet half a year's worth of fuel imports, let alone pay for other capital goods, services and luxury items. Can we expect something new in the upcoming budget that will bolster our exports in the coming year and beyond? It's a tall order given that the government is caught up in a big refugee scam, but still let us hope.

Irregularities in camps

The CPN-Maoist Centre has denied any financial irregularities in the payments made to the then Maoist fighters living in 21 cantonments for six years till 2012. In a press meet organised at the party headquarters, Parisdanda, the other day, party vice-chairman and spokesperson Krishna Bahadur Mahara claimed that the annual report of the Office of the Auditor General (OAG)-2012 had mentioned about the audit of the cantonment expenditure.

The OAG had, however, pointed out there were irregularities in the management of the fighters and the cantonments.

However, many former Maoist fighters, who later joined the Maoist YCL (Young Communist League), had accused the leadership of providing them far less than the monthly allowance fixed by the Office of the Cantonment Management Central Coordination under the Ministry of Peace and Reconstruction. The number of Maoist fighters in the cantonments was inflated, showing more than the actual number, so that the Maoist leadership could receive more money from the government coffers. This was an irregular act in itself. Many ex-rebel fighters, including senior leaders who later deserted the party, had publicly said they were paid less than what had been stated in the receipts.