Source::The Kathmandu Post
For the first time since 2017-2018, Nepal annual import cost has reached 1 trillion rupees, a 51.13 per cent increase from last year. During the fiscal year of 2017-18, it was mostly due to the cost of the reconstruction drive after the 2015 earthquakes. During the first six months of the fiscal year 2021-22, the cost of imports have reached a staggering Rs 999.34 billion, a quarter of Nepal's GDP or equal to remittances from migrant workers last year.
In contrast to the imports, the exports, while increasing by 95.48 per cent from last year, are still is paltry Rs 118.85 billion, causing the staggering current account deficit of Rs 880.49 billion. In addition, the biggest procurement of foreign currency, foreign remittances have also decreased by 7.3 per cent. Due to this, the foreign exchange reserves in Nepal have decreased by almost 15% in the last six months.
In response to this grave situation, Nepal has taken several steps to mitigate the situation. First, the central bank of Nepal, Nepal Rashtriya Bank, has severely restricted imports of foreign goods and forex limits have also been dramatically reduced. Also, IMF gave Nepal a credit loan of $395.9 million with $110 million of that ready for immediate use.
The Ministry of Finance has also reported a 45.9 per cent increase in revenue collection to collect more money to alleviate the situation. But with the tourism industry and domestic industry still yet to recover and the current government's focus tied on the rising number of pandemic cases and high inflation causing prices to balloon up, the efforts have yet to bear fruit in the long term.
Photo Courtesy: [Juan Antonio Segal/Wikipedia Commons]
