Trade deficit fell by 8.9 per cent year-on-year to Rs 414 billion in the first four months of the current fiscal year 2019-20 due to a sharp drop in imports of petroleum products, iron and steel, aircraft and aircraft parts and vehicles.
According to Department of Customs (DoC), imports dropped by 6.92 per cent to Rs 450.29 billion, whereas exports swelled by 23.90 per cent year-on-year to Rs 36.27 billion – totaling the foreign trade to Rs 486.57 billion – between mid-July and mid-November.
The drop in imports – the fourth consecutive month in the current fiscal year – has also resulted in a reduction in the trade deficit though it has hit the revenue mobilisation target of the government. However, there is no cause for celebration as the increase in exports of a single product – palm oil – is not the domestic product as Nepal does not produce palm oil. Palm oil is imported from third country and then re-exported to India as traders are cashing in on the tariff difference between Nepal and India. The data shows that palm oil accounts for nearly one-fourth of the total export.
Imports of iron and steel – the key construction materials – dropped sharply by 33 per cent to Rs 52.65 billion in the first four months, though the drop in the import of iron and steel does not augur well as it shows that construction activities in the country are slowing down.
Likewise, imports of fuel and bitumen also fell by more than 15 per cent as the country imported fuel and bitumen worth Rs 65.21 billion in the first four months of the current fiscal year. Similarly, imports of aircraft and parts also reduced pulling the imports figure down. According to customs data, imports of aircraft and parts dropped by 39 per cent to Rs 10.68 billion, whereas automobile imports dropped by more than 6 per cent to Rs 34.74 billion due to the government’s unfriendly policy towards auto mobile sector.
The central bank has also fixed the down payment for vehicle loans at 50 per cent of the value discouraging the auto imports. In the past, the down payment on a car was as low as 10 per cent.
According to Department of Customs (DoC), imports dropped by 6.92 per cent to Rs 450.29 billion, whereas exports swelled by 23.90 per cent year-on-year to Rs 36.27 billion – totaling the foreign trade to Rs 486.57 billion – between mid-July and mid-November.
The drop in imports – the fourth consecutive month in the current fiscal year – has also resulted in a reduction in the trade deficit though it has hit the revenue mobilisation target of the government. However, there is no cause for celebration as the increase in exports of a single product – palm oil – is not the domestic product as Nepal does not produce palm oil. Palm oil is imported from third country and then re-exported to India as traders are cashing in on the tariff difference between Nepal and India. The data shows that palm oil accounts for nearly one-fourth of the total export.
Imports of iron and steel – the key construction materials – dropped sharply by 33 per cent to Rs 52.65 billion in the first four months, though the drop in the import of iron and steel does not augur well as it shows that construction activities in the country are slowing down.
Likewise, imports of fuel and bitumen also fell by more than 15 per cent as the country imported fuel and bitumen worth Rs 65.21 billion in the first four months of the current fiscal year. Similarly, imports of aircraft and parts also reduced pulling the imports figure down. According to customs data, imports of aircraft and parts dropped by 39 per cent to Rs 10.68 billion, whereas automobile imports dropped by more than 6 per cent to Rs 34.74 billion due to the government’s unfriendly policy towards auto mobile sector.
The central bank has also fixed the down payment for vehicle loans at 50 per cent of the value discouraging the auto imports. In the past, the down payment on a car was as low as 10 per cent.
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