May 22: Nepal’s foreign trade, which was affected by the government’s policy of discouraging imports along with inflation and lack of liquidity in banks, has started to improve. Along with the increase in foreign exchange reserves, the ban on the import of some luxury goods was revoked, and the Nepal Rastra Bank abolished the requirement to keep a cash margin when opening an LC for imports. As a result, imports started to increase.

According to the Department of Customs, Nepal’s foreign trade until the month of Baishak (mid-April to mid-May) amounted to Rs 1466.2 billion. This year's foreign trade is 17.54 per cent less compared to Rs 1778 billion in the same period last year.

Compared to last year, the overall foreign trade has decreased, but it has started to improve after mid-March. In Chaitra (mid-March to mid-April) of the current fiscal year, while the import was worth Rs 143.12 billion, the export was worth Rs 134.8 billion. 

The NRB has tightened imports since last year due to the high trade deficit and declining foreign exchange reserves.

The NRB had also reduced the quota of gold and silver imports while implementing the provision of keeping a cash margin when opening letters of credit (LC) for the import of goods.

Similarly, the government banned the import of various luxury goods for 8 months from mid-April  last year.

As the current account has gone to surplus, the foreign currency reserves have also increased, and the import ban has been lifted by the government. NRB has also removed the provision of cash margin from the month of Magh (mid-January to mid-February).

Until Baishak (mid-April to mid-May), Nepal imported goods worth Rs 1335.32 billion. During the same period, goods worth Rs 130.9 billion were exported.

Compared to the previous year, imports have decreased by 16.78 per cent and exports by 24.49 per cent. By Baishak of last year, the import was equal to Rs 1646.5 billion and the export was equal to Rs 173 billion.

The trade deficit till Baishak is Rs 1204.42 billion. This is 15.85 per cent less than last year.

According to the report of NRB, the country's current account is in surplus by 180.1 billion as of Chait (mid-March to mid-April).

The total foreign exchange reserve which was Rs 1215 billion in Ashar 2079 increased by 17.9 per cent to 1433.7 billion in Chaitra. With the increase in foreign exchange reserves, the ability to meet the import of goods and services from abroad has also improved.

According to the NRB's report, the foreign exchange reserves of the banking sector are sufficient to support 11 months of goods imports and 9.4 months of goods and services imports. According to the improvement in the external situation of the economy, the NRB has also made the monetary policy flexible.