Nepal’s trade deficit widens as export falls

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Owing to soaring imports of consumer goods and insignificant amount of export trade, Nepal’s trade deficit is likely to go beyond Rs. 300 billion by the end of the current fiscal year.

Trade deficit which was around Rs. 220 billion last year saw a whopping growth this year.

Talking to The Rising Nepal, Krishna Hari Baskota, Revenue Secretary at the Ministry of Finance, said that trade deficit had already reached Rs. 275 billion could exceed Rs. 300 billion by the end of thus fiscal year.

Merchandise imports grew by 35.6 per cent to Rs. 309.88 billion in the first 10 months of the current fiscal year. Such imports had grown by 25.4 per cent to Rs. 228.54 billion in the same period last year.

He said that the growth in the import of vehicles and spare parts, billet, petroleum products, wire and rods and hot rolled sheet in coil among others, from India and gold, telecommunication equipment and parts, polythene granules, steel rod and sheet and silver among others, from other countries contributed significantly in the rise of total imports in the review period.

As a result of the slowdown in exports and accelerated import growth, the ratio of export to import dropped to 16.2 per cent in the 10 months of the current fiscal year from 24.7 per cent a year ago.

Similarly, according to the Nepal Rastra Bank (NRB), total trade deficit during the 10 months of 2009/10 expanded by 51 per cent to Rs. 259.68 billion.

Trade deficit had risen by 27.4 per cent to Rs. 172 billion in the same period last year.

Trade deficit with India rose by 51 per cent in the review period compared to a growth of 10.5 per cent in the corresponding period last year.

Likewise, imports from other countries grew by 36 per cent compared to a growth of 52.2 per cent in the same period last year. Trade deficit with other countries widened by 50.9 per cent compared to a growth of 56.5 per cent in the same period last year.

However, as per the NRB’ report, the imports of gold and vehicles, which had increased significantly in the earlier months, have, however, dropped substantially from Jan/Feb and Feb/March, respectively.

Merchandise exports declined by 11.2 per cent to Rs. 50.20 billion in the 10 months of the current fiscal year.

Such exports had grown by 19.5 per cent to Rs. 56.54 billion in the same period last year.

Exports to India declined by 7 per cent in the ten months of 2009/10 in contrast to a growth of 10.4 per cent in the same period last year.

Likewise, exports to other countries plummeted by 18.2 per cent as against the growth of 38.2 per cent in the same period last year.

The decline in the exports to India was mainly ascribed to the decrease in the exports of readymade garments, zinc sheet, GI pipe, plastic utensils and pulses, among others.

Likewise, exports to other countries declined considerably due mainly to the decrease in the export of woolen carpet, pulses, readymade garments, herbs as well as silverware and jewelleries among others.

Similarly, imports from India increased by 35.3 per cent in the review period as compared to a growth of 10.5 per cent in the same period last year. (Source:The Rising Nepal)