The country’s trade deficit has decreased significantly in the last fiscal year thanks mainly to decline in imports 2022/23. According to annual trade statistics of the last fiscal year 2022/23, published by the Department of Customs on Monday, trade deficit has declined by 15.45 per cent and limited at Rs. 1,454.59 billion during the last fiscal year as compared to the previous fiscal year.

The trade deficit was Rs. 1,720.41 billion during the previous fiscal year 2021/22. Decline in both exports and imports have contributed to a fall in trade deficit during the review period. The imports declined by 16.08 per cent while the exports declined by 21.44 per cent in the last fiscal year. With the decline in both imports and exports, the foreign trade has declined by 16.58 per cent to Rs. 1,768.87 billion during the last fiscal year.

Foreign trade was recorded at Rs. 2,120.47 billion in the fiscal year 2021/22.

The ratio of import and export in the fiscal year 2021/22 was 1:9.60 while this ratio is 1:10.26 during the last fiscal year 2022/23. The contribution of export and import to the total trade is 8.88 and 91.12 per cent respectively. 

Due to the restriction measures taken by the government in import of luxurious items to keep the foreign currency reserves in sound position, the import has been reduced which contributed to improved trade deficit and reduce overall foreign trade.

The government banned the import of all kinds of ready-made liquors except raw materials, vehicles jeeps, cars and vans (except ambulances and hearses) and motorcycles with a capacity of more than 150cc.

Imports drop by 16%

Imports have decreased at a high rate due to the restriction of the government.

According to trade statistics, the total import decreased by 16.08 per cent in the last fiscal year as compared to previous fiscal year. Goods worth Rs. 1,611.73 billion were imported in the review period. The country imported goods worth Rs. 1,920.44 billion in the previous fiscal year.

After significant decline in foreign currency reserves, the government had banned the import of luxurious items from April 2022 in a bid to stop country’s foreign exchange reserves from further depleting. This is one of the reasons behind import reduction in the last fiscal year.

However, with the improvement in forex reserves, the government lifted the ban effective from December 16, 2022. And, due to the contraction in domestic demand, import did not increase as expected even after the ban was lifted.

Over Rs. 300 billion spent for petroleum products

During the review period, the country imported petroleum products worth Rs. 300 billion

Diesel worth Rs. 153.76 billion, aviation fuel worth Rs. 20 billion, kerosene worth Rs. 1.4 billion, petrol worth Rs. 66.84 billion and liquefied petroleum gas (LPG) worth Rs. 58.15 billion had been imported in the last fiscal year.

Similarly, the country spent around Rs. 56 billion for the import of cereals during the review period. Paddy and rice worth Rs. 36 billion, and maize worth Rs. 17 billion were imported during the review period.

Due to the increase in the price of petroleum products in the international market, the import of petroleum products has increased significantly during the review period.

Around Rs. 100 billion has been spent on the import of various machines and their parts while Rs. 31 billion have been spent for the import of vegetables. Similarly, the country has imported iron and steel worth Rs. 140 billion during the review period.

Drastic fall in soybean, palm oil hits overall export 

Not only imports but also exports have decreased. Goods worth Rs. 157.14 billion had been exported in the last fiscal year. This is 21.44 per cent lower than the previous fiscal year. Goods worth Rs. 200 billion were exported in the previous fiscal year 2021/22. That amount of export was historic for Nepal.

Similarly, the exports of soybean oil and palm oil have decreased drastically due to decrease in imports which resulted in decline overall export during the last fiscal year.

Soybean oil worth Rs. 8.47 billion had been exported during the last fiscal year while it was Rs. 48.12 billion in the previous fiscal year.

Palm oil worth Rs. 20.50 billion and sunflower worth Rs. 440 million had been exported during the review period. Palm oil worth Rs. 41 billion and sunflower worth Rs. 4.54 billion were exported during fiscal year 2021/22.

The war between Russia and Ukraine affected the import of crude soybean, sunflower and palm oil, which has directly affected Nepal’s exports. 

The share of soybean, palm and sunflower oil in the export trade was above 40 per cent in the previous fiscal year.