By TRN Online, Kathmandu, Mar 22: The sharp rise in the exports especially in the second half of the current fiscal year (FY) has helped improve the import to export ratio.

The Foreign Trade Statistics (FTS) of mid-March released by the Department of Customs showed that import to export ratio in the first eight months of the current FY reduced to 8.6 which is encouraging compared to 11.69 as recorded in the same period of the previous FY.

The FTS pointed that the improvement in the ratio could be attributable to the sharp rise in export in term of percentage in comparison to the imports. During this period the export rose by 82.90 per cent, however, imports mildly rose by 38.64 per cent in comparison to the amount recorded in the same period of the previous FY.

With 82.90 per cent expansion in comparison to the previous year record, the exports now rose to Rs. 147.7 billion whereas the export amounted to Rs. 80.7 in the first eight months of the last FY.

Though proportional increase in export in comparison to previous FY outweigh proportional increase in imports, the large size of imports have been continuously widening the trade deficit further putting pressure on balance of payment (BoP).

 The 38.64 per cent increase in the amount of imports led its volume expanded to Rs. 1308.7 billion in the first eight months in comparison to Rs. 943.9 billion recorded in the previous FY.

Such a hefty volume of imports in comparison to the exports edged the trade deficit to increase by 34.50 per cent in comparison to the previous FY. The trade deficit in the first eight months of the current FY expanded to Rs. 1160.9 billion however in the same period of the previous year the amount recorded was Rs. 863.2 billion.

The first seven months Macroeconomic and Financial Situation report of the Nepal Rastra Bank (NRB)  revealed that foreign exchange reserves in the banking sector is sufficient to cover imports of merchandise and services for 6.7 months which is supposed to be sufficient for 7 months according to the objective of monetary policy of the NRB. Amid rising imports volume and stagnation in inflow of remittance, maintaining foreign exchange reserve in compliance to the monetary policy is faced with serious challenges.