September 26: Nepal’s foreign trade has been affected due to various reasons including the Covid-19 pandemic, economic recession, lack of liquidity in banks and government policy to discourage imports.
The policy adopted by the government has caused a decline in imports since mid-July while the exports have also slumped, affecting the overall foreign trade of Nepal.
According to the Department of Customs, the country's foreign trade has decreased by 15.70 percent as of mid-September in the current fiscal year compared to the corresponding period of last fiscal year. The country’s foreign trade amounted to Rs 358.55 billion during last Setpember which dropped to Rs 302.28 billion this September.
According to the data released by the department on Sunday, while the import declined by 13.01 percent in mid-September, the export dropped by 34.88 percent. The trade deficit also declined by 9.45 percent as Nepal’s export volume is negligible compared to imports.
Since the beginning of this year, the government adopted a policy of discouraging imports due to pressure on foreign exchange reserves. To reduce imports, the NRB had reduced the gold import quota and increased the requirement of cash margin for imports. The government also banned the import of certain luxury goods.
Diesel tops the list of imported goods with imports worth Rs 18.42 billion in the first two months of the current fiscal year. Similarly, petrol worth Rs 12.18 billion, LPG gas worth Rs 10.42 billion were imported during the review period.
By mid-August 2079, the trade deficit reached Rs 244 billion. Due to excessive imports, the foreign exchange reserves started to decrease. This made NRB intervene and it initiated a policy to discourage imports from the beginning of this year. Similarly, the government also banned the import of luxury goods from April.