March 22: The country’s trade deficit has crossed Rs 1,100 billion in the first eight months of the current fiscal year. Due to the rising Balance of Payments (BoP) and declining foreign exchange reserves, Nepal Rastra Bank (NRB) had adopted a strategy to discourage imports. Despite such measures, the trade deficit remains high because of the increase in prices of the imported items.

According to the Department of Customs, the country imported goods worth Rs 1387.3 billion as of mid-March in the current fiscal year while the country’s export during this time was worth Rs 147.74 billion.

The country’s BoP is high and the foreign exchange reserves declining due to excessive imports. Taking this into consideration, the central bank had adopted various policies since the last three months to discourage imports. In late December, NRB introduced a provision of 100 percent cash margin for opening LC to import 20 luxurious items. The central bank added another 27 items to the list in late January. A month later, the central bank reduced the import quota of gold by half to 10 kg.

Although the imports declined in the month of Magh (mid-January to mid-February), it again increased the very next month (mid-February to mid-March).

Nepal imported goods worth Rs 161 billion in mid-February to mid-March while the imports were worth Rs 148 billion in mid-January to mid-February.

Nepal’s exports also increased in the month of Falgun (mid-February to mid-March). During the review month, Nepal exported goods worth Rs 16 billion against Rs 12 billion a month ago.

Although the quantity of imports has declined, the prices have increased in the international market and the value of Nepali currency has depreciated compared to the US dollars. As a result, the trade deficit remains high, according to Gunakar Bhatta, spokesperson of NRB.