KATHMANDU, August 26: Revenue Secretary Shishir Dhungana on Friday said that swelling import has turned the country's economy upside down.
Responding to a query on the country's current economic scenario raised by Member of Parliament (MP) Bikash Lamsal, Dhungana painted a gloomy picture of the economy, stating that import was growing at an alarming rate, while export continues to growth at a disappointingly slow pace.
Speaking at a discussion on issues related to revenue at the meeting of the parliament's Public Accounts Committee (PAC) on Friday, Dhungana said that country's total export earning is insufficient to finance import of a single import commodity - petroleum products.
Statistics of compiled by government agencies shows that the nation imported petroleum products worth Rs 118 billion in the last Fiscal Year 2016/17 ending mid-July, while total export earning was only Rs 73 billion.
“Our trade deficit stands at a whopping Rs 803 billion,” Dhungana said, adding: “Another thing to worry is that import of agro-products has spiked in recent years.”
Trade deficit occurs when a country is importing more goods than it is exporting. Nepal's total import was worth around Rs 1 trillion rupees in the last fiscal year, according to the Nepal Rastra Bank (NRB).
“That fact that we imported rice worth Rs 22 billion and coarse rice worth Rs 5 billion in the last fiscal year shows our growing dependency on imports even for agricultural products. We, the Ministry of Finance, alone can do nothing in this matter,” added Dhungana.
He also said that the government was provided different subsidies for purchase of equipment like hand held tractors, milk chilling machines and machines carrying live fishes for farm mechanization, as well as on purchase of chemical fertilizers to boost production of agro products.
“What is worrying is even hilly districts of mid and far-western regions are now dependent on imported vegetables. This is an alarming situation,” he said and added that the government should encourage farm mechanization and give more incentive to exporters.
At the meeting, lawmakers questioned Dhungana why the ministry sets higher target for customs offices compared to economic activities and income tax within the country.
MP Amrit Lal Rajbanshi said that higher targets for Department of Customs show that the government was emphasizing imports.
The government has set revenue target for the Department of Customs at Rs 336 billion for the current fiscal year, while revenue target for internal economic activities and income tax has been set at Rs 300 billion.
Dhungana said that only the growth in foreign exchange earnings by bringing more foreign tourists and also substituting import of petroleum products by generating more hydroelectricity can improve the country's financial health. “Patchworks like putting focus on export of 19 products under Nepal Trade Integration Strategy won't help much,” he added.
PAC Chairperson Dor Prasad Upadhyaya said that the discussion will continue in the coming days as well.
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