Kathmandu, October 7 :

Due to higher rate of growth in imports compared to exports, Nepal registered a substantial rise in trade deficit of about Rs 114 billion during the fiscal year 2005-06, in comparison to the same period in the previous fiscal year.

The trade imbalance continues to rise due to swelling imports vis-à-vis sluggish exports, as it rose by an overwhelming 25.5 per cent in 2005-06 compared to the growth of 10.2 per cent in 2004-05.

Nepal’s total foreign trade, however, recorded a sound growth of 13.5 per cent and touched Rs 236.36 billion during the period, according to a Nepal Rastra Bank (NRB) report. In 2004-05, the country’s total foreign trade was Rs 208.17 billion. Despite the increase in trade deficit and a decline in net services, a surplus was registered in the current account primarily due to the higher inflow of remittances. Consequently, the balance of payments (BoP) also posted a surplus during the review period. The overall BoP registered a surplus of Rs 25.6 billion in 2005-06 and the current account marked a surplus of Rs 13.8 billion during the period in comparison to Rs 11.5 billion a year earlier.

According to NRB, the total exports registered a growth of 4.2 per cent compared to an increase of 8.9 per cent in 2004-05. Exports accounted for 10.5 per cent in total GDP, in comparison to 11 per cent a year earlier.

Of the total exports, export to India rose by 5.4 per cent in 2005-06 in comparison to a significant growth of 26.4 per cent last year. Exports to other countries rose by 1.8 per cent in 2005-06 in contrast to a significant decline of 14.5 per cent a year earlier.

The total imports galloped by 17.1 per cent in 2005-06 compared to an increase of 9.7 per cent a year earlier. The share of imports in GDP rose to 30 per cent in 2005-06 from 28 per cent a year earlier. Out of total imports, imports from India soared by a whopping 23.3 per cent in 2005-06 in comparison to a growth of 12.6 per cent last year. Imports from other countries, on the other hand, rose by 8.2 per cent in comparison to a growth of 5.7 per cent a year earlier.

The significant rise in imports from India has been ascribed to the rise in the import of petroleum products by 26.3 per cent in 2005-06. Petroleum products currently constitute 30.8 per cent of total imports from India. Other imports from India that took an upward trend included rice, thread, medicine, chemical fertilisers and hot rolled sheet in coil, among others. With respect to overseas countries, the major imports comprised of palm oil, crude palm oil, polythene granules, textile dyes and electrical goods.

As a result of the increase of import, India’s share in the total trade went up to 63.6 per cent in 2005-06 from 61.3 percent in the previous year. While, the share of other countries went down correspondingly to 36.4 per cent from 38.7 per cent.