Nepal's balance of payments (BoP) was in the red in fiscal 2021-22 that ended in mid-July despite a surplus seen in the previous fiscal year. According to the latest macro-economic update of Nepal Rastra Bank unveiled on Tuesday, Nepal's BoP saw a deficit of Rs 255.26 billion last fiscal year as against a surplus of Rs 1.23 billion recorded in fiscal 2020-21. This means the nation imported more commodities, capital and services than it exported. The report also showed that the current account deficit – one of the two components of BoP – nearly doubled to Rs 623.33 billion in the review year compared to a deficit of Rs 333.67 billion in fiscal 2020-21. Similarly, capital transfer slumped by 34.5 per cent to Rs 9.99 billion and net foreign FDI decreased by 4.9 per cent to Rs 18.56 billion during the review period. However, remittance inflows increased 4.8 per cent to Rs 1007.31 billion in the review year as against an increase of 9.8 per cent to Rs 961.05 billion in the previous fiscal.

A BoP deficit means the country has no option other than to encourage exports through improved production and productivity and better marketing. The financial collapse of Sri Lanka earlier this year made Nepal sit up and decided to curb import of non-essential and luxury goods in view of the dwindling foreign exchange reserves in the country. In last fiscal, merchandise imports increased by 24.7 per cent to Rs 1,920 billion while merchandise exports had in-creased by 41.7 per cent to Rs 200.3 billion. But the huge difference in exports and imports resulted in a 23 per cent surge in the trade deficit, or by Rs 1,720 billion in the review year.

Nepal's is a remittance-based economy, whose millions of workers toiling in the Gulf and Malaysia sent home al-most $8 billion last fiscal year. With the slackness seen in the coronavirus pandemic, the number of Nepali workers going for foreign employment has surged. With the earnings Nepal makes from exporting goods, they would meet just about 10 per cent of our import bills. Nepal's top five imports are petroleum products, vehicles and spares, other machinery and parts, medicines and crude soyabean. Its top five exports during the review year were soyabean oil, palm oil, woolen carpets, polyster yarn and jute goods. If cooking oil were to be discounted, because the industries here do nothing other than process imported crude oil, Nepal's exports would be negligible.

Even smaller countries like Laos, Cambodia and Mongolia export goods worth more than $6-7 billion annually. We might have performed equally well if not better had the government and the private sector utilised the money remitted by our migrant workers over the decades in setting up enterprises aimed at boosting exports or substituting imports. Development of the agriculture sector alone would help save more than a billion dollars in imports while enhancing exports. The country now has Forex reserves to cover merchandise imports of 7.8 months and merchandise and service imports of 6.9 months. So, the government must further tighten imports of non-essential commodities and not be swayed by the business community to relax them when the federal and provincial elections are just around the corner.

Poll expenditure

As many as 115,131 candidates of various political parties and independents have not submitted details of their election expenditure even though it has been more than three months since the local level elections were held. As per the Election Act-2016, all the candidates are required to submit details of their election expenses within 30 days of the announcement of the election results. The Election Commission (EC) has sought clarification from those who have failed to submit details of the poll expenses within seven days.

The EC can impose a fine as per the law against those candidates who fail to submit the election expenditure details or spend more than the maximum limit. Those people can be banned from contesting other elections for a period of six years if they fail to pay the specified penalty determined by the EC within six months. It is the duty of all the candidates to abide by the law and submit details of the election expenses. At the same time, the EC should also review its decision to set the maximum limit on election spending, which is far below than what actually a candidate spends during the election. The EC should also realise that a mayoral candidate cannot complete his/her poll campaign with just Rs 7.5 lakhs, the maximum limit set by the EC.

A version of this article appears in the print on August 18, 2022 of The Himalayan Times.