KATHMANDU, Nov 30: Alarmed by indicators such as whopping growth imports, slowdown in remittance growth, and downward trend of revenue collection on several products, the government’s chief revenue officer fears that the country is on the verge of financial crisis.
To explain the country’s disquieting rate of imports, the government has started preparing a white paper, according to Chandra Ghimire, the commerce secretary.
A white paper is a government report issued to describe the status of a situation or crisis, together with remedial measures.
The white paper, which is expected to be unveiled within few weeks, will also chart out things-to-do by concerned ministries and departments for a coordinated effort on boosting exports and narrowing down trade imbalance.
The country had set a target of suppressing the export-import ratio below 1:4 when Nepal became a member of the World Trade Organization. But the ratio has already reached 1:13.5. And the 14th three-year periodic plan has set a target to put trade deficit below 30 percent of GDP, or below Rs 780 billion going by the GDP of last fiscal year. But the deficit recorded Rs 912 billion in the fiscal year. The export posted a nominal growth of 2.8 percent, by Rs 73.12 billion, in the fiscal year while the import jumped by whopping 28 percent to Rs 912 billion.
“If it goes in the same way this year, trade deficit will reach near Rs 960 billion, which would be a new alarming level,” said Ghimire. The country now imports from 130 countries while its exports reach only 30 countries.
“The only thing we can do is to intervene in ailing international trade performance of the country,” said Ghimire, adding that slowdown in remittance growth and downward trend of revenue collection were not helping the country at all.
Additional cost of running administration in federal system, which may go up to Rs 330 billion, is another reason to worry. This may badly affect the government’s ability to allocate budgets for development projects and capital expenditure.
During a meeting of secretaries at the office of Chief Secretary Lok Darshan Regmi on Tuesday, Ghimire presented the current trade status of the country. He also listed out prospective products for promoting exports, which included tea, herbs, coffee, cardamom, ginger, woolen carpets, shoes, mountain-goat pashmina, ready-made garments, handicrafts and instant noodles, according a press release issued by the Ministry of Commerce on Wednesday.
Ghimire suggested controlling the import of energy drinks, soft drinks, furniture, alcohol products, tobacco products, mobile phones, gold, silver, and vehicles.
The Ministry of Commerce has also proposed to give more incentives on exports and run programs of value addition on National Trade Integration Strategy (NTIS) products such as ginger, cardamom, pashmina, and coffee.
This is probably the first white paper to be issued focusing trade.
Earlier, the government had come up with another white paper during the Indian blockade that focused on boosting production and increasing exports. However, nobody cared about taking action on the issues identified by the white paper. Going by that experience, there is little to cheer until the government and political parties show sincere commitment to implement the suggestions charted out in policies and plans.
Ghimire said that the upcoming white paper will be prepared in line with common agenda of recent election manifestos of major political parties.