Countering Trade Deficit vs Trust Deficit

Beneath Nepal’s headline improvements in exports lies a familiar paradox: a structurally weak export base propped up by remittances and other capital inflows that mask deeper vulnerabilities. While exports have grown in recent months, imports remain elevated, leaving the country with a persistent trade deficit that increased by 10.5 percent to NPR 649.68 billion during the five months of 2025/26, according to the central bank. That gap is offset, at least on paper, by a surge in remittance inflows, which rose to NPR 640.43 billion over the same period, cushioning the current account and bolstering foreign exchange reserves.