Trade deficit widens as export dips, import surges

Kathmandu, September 8:

Due to frequent strikes and bandhs plaguing the manufacturing sector, trade deficit has been widening over the recent months. Trade deficit with India, Nepal’s largest trade partner, is double that of with the rest of other countries.

According to Nepal Rastra Bank’s yearly data, in 2007-08 the merchandise trade deficit widened by 22.2 per cent to reach Rs 165.3 billion compared to an increase of 19.2 per cent the previous year. The ratio of merchandise trade deficit to GDP was 20 per cent in 2007-08. “Of the total, trade deficit with India amounted to Rs 105.9 billion and the remaining deficit of Rs 59.4 billion with other countries,” said the central bank’s yearly report.

Significant growth in imports relative to a marginal rise in exports widened the merchandise trade deficit. Total exports went up by 2.4 per cent in comparison to a decline by 1.4 per cent the previous year. Of the total exports, those to India dropped by 7.4 per cent in contrast to a rise by 2.5 per cent last fiscal year. “Exports to other countries, however, soared by 25.5 per cent as against a decline of 9.6 per cent in 2006-07,” revealed the report.

The dismal performance in exports to India was due to decline in the export of vegetable ghee, textiles, chemicals, resin and readymade garments. On the other hand, exports to other countries rose primarily because of increase in export of pulses, Nepali paper and paper products, herbs, wheat, noodles, ceramic products, electric wire and stationery.

Total imports increased by 16.1 per cent in 2007-08 compared to a rise of 12 per cent the previous year. While imports from India accelerated by 24.7 per cent compared to a growth of 8.1 per cent in 2006-07, imports from other countries rose by just 3.5 per cent compared to a rise of 18.3 per cent the previous fiscal year.

As a result, total trade deficit expanded by 22.2 per cent in comparison to its growth of 19.2 per cent a year earlier.

Import of petroleum products, MS billet, vehicles and spare parts, hot rolled sheet in coils and cold rolled sheet in coils from India as well as an increase in the import of telecommunication equipment and parts,

other machinery and parts, transport equipment and parts, video television and parts and polythene granules from other countries have contributed to the upsurge in total imports, said the central bank’s report.

Nepali team back from US:

KATHMANDU: US officials have urged Nepali entrepreneurs to work things out at the political level for easy access of Nepali readymade garments’ to the US market. “Our team, led by chief secretary Bhojraj Ghimire, has been advised by US officials to talk at the ministerial level to solve the problems of the Nepali readymade garments sector,” Prashant Pokharel, president of the Garments Association of Nepal (GAN) said adding that some of the African countries, Afghanistan, Pakistan and some Carribean countries are getting customs free access to the US market on bilateral agreements. There is no bilateral trade agreement between Nepal and the US. “The isssue should be taken up with the US during Prime Minister Pushpa Kamal Dahal Prachanda’s visit to the US next week,” said Pokharel. The US is the largest market for Nepali readymade garments. — HNS