KATHMANDU, NOVEMBER 24
The government's decision to give continuity to the ban on import of certain non-essential items limited the country's trade deficit to Rs 477.92 billion in the first four months (mid-July to mid-November) of the current fiscal year 2022-23.
According to Nepal Trade Statistics unveiled by the Department of Customs (DoC) today, the country's total trade gap narrowed by 15.88 per cent compared to Tra Rs 568.17 billion in the corresponding period of last fiscal year.
Issuing a notice on Nepal Gazette on October 14, the Ministry of Industry, Commerce, and Supplies had extended the restriction on the import of certain 'luxury' items including all kinds of readymade beverages, vehicles (jeep, car and vans, with exception of ambulances and hearse), two-wheelers (above 150 cc) and mobile phone sets (above $300) till December 15 in a bid to prop up the country's depleting foreign exchange reserves.
As a result, the country's imports fell 18.08 per cent to Rs 532.69billion in the review period compared to Rs 650.29 billion in the corresponding period of fiscal 2021-22. Petroleum products were the top import commodity, followed by crude soyabean oil and crude palm oil.
But at the same time, Nepal's exports saw a bigger drop in the review period, as per DoC. The country's exports plunged by 33.30 per cent to Rs 54.77 billion in the review month against Rs 82.12 billion recorded in the same period of previous fiscal. The top export commodities were refined soyabean oil, refined palm oil and woollen carpets.
Citing an example of how the US policy to limit import of carpets affected the entire carpet manufacturing industry, economist Bhim Bhurtel informed that the exports have fluctuated due to external factors.
"Nepali industries are largely dependent on imports for the raw materials, and thus the country's exports are primarily affected by the external factors. If you look at Nepal's recent top export goods like refined palm oil and refined soyabean oil that are mostly exported to India, the raw materials of the commodities have to be imported from the third countries.
Due to external factors like the Russia-Ukraine war, source countries have restricted export of these products in crude form which have affected the export of Nepal," Bhurtel explained.
According to him, the country lacks true industrialists that help to generate jobs and foreign currency. "What we have are mostly traders who generate income by importing goods from other countries."
The import-export ratio in the review period surged by 22.82 per cent to 9.73. This means Nepal imported $9.73 worth of goods for every dollar's worth of goods exported.
It was a deterioration from the ratio of 7.92 recorded in corresponding period of previous fiscal. "The surge in the import-export ratio is not a good sign. Hence, the government should identify and implement long-term sustainable solutions to minimise the gap between export and import," he said.
Nepal continues to have the highest trade deficit with its neighbours - India and China.
Nepal exported goods worth Rs 38.60 billion to India, while importing merchandise worth a staggering Rs 322.19 billion from the southern neighbour, resulting in a deficit of Rs 283.59 billion.
Similarly, imports from China amounted to Rs 74.61 billion, while exports to the northern neighbour was merely Rs 204.827 million. This caused a trade deficit of Rs 74.40 billion with China.
Comparative figures
Trade indicators FY 2021-22 FY 2022-23
Imports Rs 650.29bn Rs 532.69bn
Exports Rs 82.12bn Rs 54.77bn
Trade deficit Rs 568.17bn Rs 477.92bn
A version of this article appears in the print on November 25, 2022, of The Himalayan Times.
