Even as the commercial banks have halted issuing letters of credit (LCs) for non-essential items, including gold and vehicles, the country's trade deficit continues to widen unabatedly.

According to Nepal Trade Statistics unveiled by the Department of Customs (DoC) today, the imports growth rose by 31.97 per cent to Rs 1.47 trillion in the nine months of the current fiscal year compared to Rs 1.11 trillion in the corresponding period of the previous fiscal.

Petroleum products was the top import commodity, followed by crude soyabean oil and crude palm oil.

With the country's foreign exchange reserves under pressure due to ballooning trade deficit and slowdown in remittance inflow, the government even decided to slash the fuel allowance of government bodies on April 18.

The country's total foreign trade, meanwhile, surged by 28.47 per cent to Rs 1.31 trillion in the first nine months of the current fiscal, that is, from mid-July 2021 to mid-April 2022. The total foreign trade was recorded at Rs 1.02 trillion in the corresponding period of the previous fiscal, 2020-21.

Nepal's exports saw significant improvement in the review period, as per DoC. The country's exports soared by ,69.44 per cent to Rs 160.57 billion till mid-April against Rs 94.77 billion in the same period of previous fiscal. The top exports commodities were refined soyabean oil, refined palm oil and woollen carpets.

Nevertheless, the trade deficit widened to Rs 1.31 trillion in the review period from Rs 1.02 trillion in last fiscal.

The imports-to-exports ratio in the review period fell by 22.12 per cent to 9.13. This means Nepal imported $9.13 worth of goods for every dollar's worth of goods exported.

However, it was an improvement from the 11.73 recorded in the corresponding period of previous fiscal.

Nepal continues to have the highest trade deficit with its neighbours - India and China.

Nepal exported goods worth Rs 127.89 billion to India, while importing merchandise worth a staggering Rs 901.70 billion from the southern neighbour, resulting in a deficit of Rs 773.81 billion.

Similarly, exports to China amounted to Rs 622.86 million, while imports from the northern neighbour was merely Rs 211.05 billion, mostly due to border controls as the second biggest economy has adopted 'zero COVID' policy.

Due to this reason, its ranking came in 11th among the partner countries in terms of the export value, but the deficit with China stood at Rs 210.42 billion, the second highest.

The share of exports in total trade was 9.13 per cent in review period, which was rise of 25.59 per cent against its share of only 7.86 per cent in the nine months of previous fiscal.

The share of imports to total trade, on the other hand, actually slipped by 2.18 per cent to 90.13 per cent in the review period. The share of imports to total trade in the nine months of earlier fiscal was 92.14 per cent.

A version of this article appears in the print on April 23, 2022, of The Himalayan Times