KATHMANDU, Aug 21: The gap between import and export figures is widening with each fiscal year even though import substitution is stated as a priority program in every fiscal policy and periodic plan of the government.
Nepal's imports spiked by a whopping 28 percent to Rs 990.11 billion in Fiscal Year 2016/17, while exports posted a sluggish growth of 4.2 percent to Rs 73.05 billion, making mockery of the government policy of import substitution.
According to the Current Macroeconomic and Financial Situation Report of the Nepal Rastra Bank (NRB) unveiled in Kathmandu on Monday, Nepal's import from India increased by 32.8 percent to Rs 633 billion in Fiscal Year 2016/17, compared to a negative growth of 2.9 percent in Fiscal Year 2015/16.
Import from India was in negative territory Fiscal Year 2015/16 due to unofficial blockage imposed by India for nearly six months in the fiscal year.
Similarly, imports from China grew by 10 percent to Rs 127 billion in Fiscal Year 2016/17. Such imports had gone up by 15.5 percent in the previous fiscal year.
Import of goods and services from third countries recorded a rise of 26.8 percent to Rs 229 billion in the review year, compared to negative growth of a little over 1 percent in Fiscal Year 2015/16.
According to the report, imports of petroleum products, vehicles and spare parts, MS billet and cement, among others, increased in Fiscal Year 2016/17, whereas imports of chemical fertilizers, medicine, cold-rolled steel sheet and coil and dry cell battery decreased.
Total import-to-GDP ratio increased to 38.1 in the review year compared to 34.4 percent in Fiscal Year 2015/16, according to the NRB.
CURRENT ACCOUNT SEES DEFICIT
Spike in import bills amid slow remittances growth has pushed the country's current account into negative territory.
The current account, which is also an indicator of economy's health, slipped into a deficit of Rs 10.13 billion in Fiscal Year 2016/17 compared to surplus of Rs 140.42 billion in the previous fiscal year.
The surge in imports relative to exports accounted for a deficit in the current account. The overall Balance of Payment recorded a surplus of Rs 82.15 billion in the review fiscal year compared to a surplus of Rs 188.95 billion in Fiscal Year 2015/16, according to the central bank.