KATHMANDU, March 22: Prime Minister Sher Bahadur Deuba on Tuesday directed the government bodies concerned to forward policies and programs that could help reduce the country’s widening trade deficit.
“As the country’s trade deficit has posted a dismal picture, there is a great need for implementing appropriate policies to reduce it,” said Deuba, addressing a meeting of the ministry-level Development Problem Solving Committee. Promotion of consumption of local products and increase in consumption of electricity via use of electric vehicles and electric stoves are among the priorities of Prime Minister Deuba in this regard.
President expresses concern over nation's soaring trade deficit
The concern at a higher government level about the worsening performance of the external macroeconomic indicators has come only after several months’ of the country facing serious problems in the segment. Since the beginning of the current fiscal year, the country has been witnessing a worsening balance of payments and a critical liquidity crunch in the country’s banking sector.
After there was a drop in the cases of the second wave of the coronavirus pandemic, import has been inflating every month. According to the Department of Customs, Nepal’s trade deficit increased 34.50 percent to Rs 1.160 trillion during mid-July 2021 and mid-March 2022.
During the period, the government enforced various measures like making the importers maintain up to 100 percent cash margin while opening a letter of credit account on import of 47 items and reduction in the quota on gold import to 10 kg daily, among others. However, the government policies have failed to result in any notable drop in the country’s import expenses.
In the review period, Nepal’s import expense soared 38.64 percent to Rs 1.308 trillion against export earnings of mere Rs 147.74 billion.
