KATHMANDU, APRIL 18
With the country's foreign exchange reserves under pressure due to ballooning trade deficit and slowdown in remittance inflow, the government has decided to slash the fuel allowance of government bodies.
Issuing a public notice today, the Ministry of Finance has stated that the Cabinet meeting held on April 13 decided to cut the fuel allowance of government bodies by 20 per cent until end of this fiscal year, that is, mid-July.
"The allowance allocated under the heading of fuel to various ministries, line agencies and public enterprises affiliated with the government of Nepal will be cut by 20 per cent from the remaining budget," the statement read.
However, the ministry has clarified that the decision will not apply to government bodies affiliated with development projects, peace and security forces, emergency services and upcoming local level elections.
According to the notice, the government has also decided to reduce the allowance by 20 per cent for the administrators who are getting fuel facility.
The monitoring of this decision shall be carried out by all central and constitutional bodies, the Office of the Prime Minister and the Council of Ministers at the provincial level and the Ministry of Federal Affairs and General Administration at the local level, as per the notice.
According to the latest macroeconomic update of the Nepal Rastra Bank, the import of petroleum products in the first eight months of fiscal year 2021-22 stood at a staggering Rs 185.17 billion, which was 14.1 per cent of the total imports and more than the total merchandise exports worth Rs 147.75 billion in the same period.
With the surge of 38.6 per cent in imports, the country's total trade deficit in the eight months to mid-March had soared by 34.5 per cent to Rs 1,160.99 billion.
The foreign exchange reserves in the review period shrunk by 18.5 per cent to $9.58 billion in from $11.75 billion at the beginning of the fiscal year.
Based on the imports of the eight months of 2021-22, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 7.4 months, and merchandise and services imports of 6.7 months, as per the central bank.
A version of this article appears in the print on April 19, 2022, of The Himalayan Times
