November 25: Nepal’s foreign trade declined by 20 percent in the first four months of the current fiscal year (FY 2022/23). As a result, the country’s trade deficit also declined by 16 percent.
The decline in trade deficit amid devaluation of the Nepalese currency, Russia-Ukraine war and rising prices of petroleum products in the international market is considered to be a positive sign for the Nepalese economy.
However, it is a warning sign to the government’s revenue which chiefly relies on imports.
Experts believe that the foreign trade of Nepal declined in the review period due to various factors including the Covid-19 pandemic, global inflation due to Russia-Ukraine war, decline in banks’ credit flow for imports and the policy adopted by the government to discourage imports to ease the pressure on foreign exchange reserves.
According to the data released by the Department of Customs, the volume of Nepal’s foreign trade in the review period stood at Rs 587.46 billion against Rs 732.41 billion in the corresponding period of last fiscal year.
During this period, the country’s imports dropped by Rs 117.60 billion (18.08 percent) to Rs 532.69 billion. The drop in the country’s imports was due to the government’s policy to discourage imports.
Citing a pressure on declining foreign currency reserves, the government had imposed restrictions on imports of luxury goods in April.
The country’s exports also dropped by 33.30 percent in the review period.
The country exported goods worth Rs 54.77 billion in the first four months of the current fiscal year. The figure was Rs 82.12 billion during the corresponding period of last fiscal year.
Due to the decline in trade deficit, the Balance of Payments recorded a surplus after a gap of 14 months.