Increase in imports is widening the country’s trade deficit; there is a need to take urgent measures to jack up export

The only solace is an increase in remittance, which has for years helped keep the country’s economy afloat. As per the report, the workers’ remittances have increased by 37.3 per cent to Rs 242.17 billion in the review period compared to a growth of 2.6 per cent in the same period of last fiscal year. But to address the widening trade deficit, the country cannot rely on remittances forever. Immediate measures have to be taken to plug the BoP deficit. The problem, however, is there are certain items which Nepal cannot forgo. The report says the import of commodities like petroleum products, aircraft and spare parts, MS billet, vehicles and spare parts and other machinery items increased significantly in the review period. In the light of these facts, the only way Nepal can narrow the trade deficit is by jacking up exports. Nepal has increasingly become an import country. With a weak industrial and manufacturing base, lack of focus on the agricultural sector and failure to identify the exportable products with a competitive edge, the country’s import has refused to slow down. With sluggish growth of export, the country’s trade deficit has been ever widening. Imports in the first three months of the ongoing fiscal year have gone up by 43.6 per cent to Rs 373.59 billion as compared to a rise of 17.9 per cent in the same period of the previous fiscal year as per Nepal Rastra Bank Macroeconomic  Report for the period, thereby exerting a massive pressure on the country’s current account. The current account registered a deficit of Rs 81.96 billion in the review period against a deficit of Rs 25.52 billion recorded during the same period in the previous year. As a result, the overall balance of payments (BoP) remained at a deficit of Rs 35.42 billion in the review period in contrast to a surplus of Rs 4.27 billion in the same period of the previous year.

But to enhance exports, the country first must identify and diversify its exportable items and find market for them. Tea and coffee, ginger, yarn, carpets, apparel, iron and steel, footwear, carpets and handmade papers among other have traditionally been the major export of the country. Apart from enhancing the exports of these items, the country now needs to look for other value added products which could generate more revenue. Nepal has also failed to capitalise on the opportunity of “duty free quota free market” access in the European Union and United States of America because of supply side constraint. For Nepal, its geography may present a challenge when it comes to big volume export, but by laying emphasis on low volume high value products like medicinal herbs and pashmina shawls, the country can make up for the deficit. Agriculture still continues to remain one of the most neglected sectors. Hardly has there any progress in improving the industrial and manufacturing base. The governments at levels must focus on these areas. There should also be strategic collaboration and cooperation between different levels of government. The private sector can play a crucial role. But to improve exports there should be proper policies in place, an enabling environment for producers and exporters, and improved cooperation among the economic actors.

Guidelines breached

However, the Brindaban Municipality has already awarded the contract of mining the river products to a local contractor well before the team had carried out its inspection. How come is it possible to award the tender before the committee’s environmental assessment report? Security officials are not experts in conducting any environmental assessment. The team also did not say anything about the amount of river products the contractor can extract from the river. It clearly shows the panel and the municipality breached the government guidelines.The District Monitoring Committee, Rautahat has directed the local levels to allow contractors to extract river products if they meet the government criteria. A monitoring team comprising district-based security officials inspected Ramaulighat on the banks of the Bagmati River in BrindabanMunicipality on Sunday. The Committee recommended for the extraction of the river products, saying water level in the river had gone up due to excessive deposit of sand and boulders. The team also concluded that it would have no environmental impact as the river was located three kilometres away from settlements.