KATHMANDU, Oct 2: The government has raised gold import quota by five kilograms to 25 kg per day.
Though the Ministry of Industry, Commerce and Supplies took the decision last week, it will come into effect only after the Nepal Rastra Bank (NRB) makes amendment to the working procedure for import and sale of gold.
The government has set a ceiling on gold imports as a measure to curb excess import of the yellow metal which put pressure on balance of payment (BOP) position of the country.
According to the central bank's working procedure, only commercial banks, upon the recommendation of Nepal Bankers' Association -- the umbrella organization of 'A' class banking institutions, allowed to import gold from international market and sell it to traders and jewelers in the domestic market. Currently, the quota has been fixed at 20 kg per day.
With the rising demand in the domestic market due to impending festive season, the central bank had sought the ministry's nod to ease the import restriction for the time being.
“We have received approval from the ministry. The upcoming meeting of the NRB board of directors might amend the working procedure to pave the way for increasing import quota," said Bhisma Raj Dhungana, the executive director at the Foreign Exchange Department of the NRB. “Then banks will be allowed to import an additional 5 kg gold on top of 20 kg that they are importing each day," he added.
Although the NRB had asked the ministry to raise the import limit by 10 kg to 30 KG a day, the ministry agreed to raise the limit only by 5 kg citing widening trade deficit of the country which has put pressure on the external sector of the country.
In the previous years, the central bank used to relax gold import limit keeping in view the surge in demand for gold ornaments and jewelry ahead of major festivals like Dashain and Tihar, and wedding season when demand for the precious yellow metal hits peak.
According to ministry officials, they decided to raise the import quota only by 5 kg due to the rapid rise in import bill which has sent the country's balance of payment into deficit.
The NRB data shows that the country imported Rs 32 billion worth of gold in the last fiscal year 2017/18, up by 17 percent compared to import figures of FY2016/17.
The central bank's data shows that the current account deficit rose to Rs 245 billion, or 8.2 percent of the GDP, in FY2017/18, up from Rs 10 billion (0.4 percent of GDP) in the previous fiscal year. Similarly, the trade deficit widened by 26.7 percent to Rs 1,161.64 billion in the last fiscal year as the total imports elevated to Rs 1,242.83 billion. Exports fetched the government only Rs 81.19 billion in that year.