Imports surge to alarming levels

KATHMANDU, JUL 12 -

Entire earnings from transfer of funds, including remittance, exports and pensions, among others, are not enough to sustain the country’s import s, official data have shown.

Nepal import ed goods and services worth Rs 549.63 billion in the first 11 months of the fiscal year, but the earnings stood at just Rs 516 billion, according the data from the Trade and Export Promotion Centre (TEPC) and the Nepal Rastra Bank (NRB). In the review period, the country earned Rs 457.76 billion from exports and remittance, but the trade deficit stood at Rs 480.33 billion. “This will give rise to vulnerability in the economy,” said Dipendra Bahadur Kshstry, former vice-chairman of the National Planning Commission (NPC). “If the trend continues, Nepal may not be in a position even to buy essential goods and services and repay debts.”

He said the precious foreign currency was being spent for import ing consumption goods. “If the import s were of industrial raw materials, it would have added some value to the economy,” he added.

Along with automobiles, import s of petroleum products also rose in the 11 months. Petroleum topped the chart with import s worth more than Rs 100 billion. It was followed by iron and steel, machinery parts, and vehicles. Imports of luxury goods like gold and silver, energy drinks, alcohol products, tobacco and cosmetics also surged during the review period, according to the TEPC.

The 11-month import s figure is Rs 101 billion more than the figure in the same period last fiscal year. It has also surpassed the import s figure in the entire last fiscal year, which was at Rs 498.16 billion.

Trade experts said the government’s was more concentrating on revenue collection instead of taking steps to boost exports. Trade expert Bijendra Man Shakya said the government’s policy was only directed towards collecting revenue rather than to promoting import substitution and export-based industry.

The government’s revenue has grown by 22 percent, particularly due surge in import s. “There is no such analysis on why exports are declining in recent times,” Shakya said. “Remittance is also not being used in the productive sector.”

Udaya Raj Pandey, president of Garment Association of Nepal, said the lack of security and increasing production costs have discouraged investment in the production sector. “That’s why most of the industrialists are turning into commission-based trading business.”

India is the biggest trading partner of Nepal, but the country has been import ing heavily from the southern neighbour. According to the NRB, exports to India grew by just 2.2 percent, while import s surged by 23.3 percent. The status of the country’s trade deficit is greatly determined by its trade with India. Of the total exports of Rs 69.3 billion, exports to India stood at Rs 46.32 billion. Imports from India amounted to Rs 362.24 billion out of the total import s of Rs 549.63 billion.

As a majority of the country’s export items are agriculture-based, Pandey said the government’s failure to focus on the issue resulted in soaring import s. Cereal import s alone reached Rs 18 billion in the 11 months, according to the TEPC.

Economist Bishwombhar Pyakurel said structural problems were the main barrier for improving exports.

“There is not an effective linkage among the macroeconomic indicators like investment, employment and inflation,” he said.

Source: The Kathmandu Post