Delayed Budget Drags Down Overseas Imports .

Overseas imports decreased by 23.7 percent over the first eight months of the fiscal year 2010/11 to Rs 82.23 billion compared to figures of the same period last year, thanks to protracted confusion over government policy on revenue mobilization due to delayed announcement of full-fledged budget.

Total overseas exports in 2009/10 had sharply gone up by 46.8 percent to Rs 113.15 billion compared to previous fiscal year.


Merchandised imports, too, grew at a slower rate of 1.4 percent to Rs 253.50 billion during the review period of the current fiscal year. Such had grown by 41.8 percent to Rs 250.06 billion in the same period last year, according to Nepal Rastra Bank (NRB).

Similarly, overseas import of gold, readymade garments, steel rod and sheet, other machinery and their parts, threads, betel nuts, bags, crude edible oil, MS wire rods and steel rods, among others, declined during the review period.

Experts have attributed delayed budget and weakening formal system to the fall in overseas imports. Senior economist Chiranjibi Nepal said confusion over the government policy on revenue and customs tariffs due to delay in budget announcement was the major reason behind drop in overseas imports.

“Sharp decline in overseas imports shows that informal economy has flourished in the country,” Nepal told Republica on Sunday. He further argued that increasing price of Chinese goods -- dominant products in the international market - was the other factor behind drop in overseas imports.

“Chinese currency has been devalued by 0.18 percent compared to US dollar over the past two decades, resulting to rise in prices of exportable Chinese goods,” said Nepal. He opined that decline in overseas imports also indicate weakening purchase power of Nepalis.

During the review period, imports from India grew by 25.1, compared to a growth of 38 percent in the same period last year. Import of petroleum products, M.S. billet, cold rolled sheet in coil, other machinery and parts, chemical fertilizers and medicine, among others, from India increased during the period.

Senior economist Biswambhar Pyakurel said decline in government expenditure as well as private sector expenditure during the period was behind drop in overseas exports.

“Imports of capital goods from institutional level plunged significantly over the first eight months of fiscal year 2010/11, triggering sharp fall in overseas imports,” said Pyakurel. He also said complex process under existing Public Procurement Act has also discouraged government consumption.

Weak functioning of formal economy has encouraged informal trade, sparking shortage of Indian currency (IC) in the market.  NRB has already injected IC worth Rs 67 billion in the market till mid-March 2011.

Suresh Kumar Basnet, president of Nepal Chamber of Commerce (NCC), also said confusion over tax rates due to lack of timely full-fledged budget, sufficient stocks of goods in stores due to slow demands and liquidity crunch for imports were the key factors behind drop in overseas imports.

Merchandise exports, however, increased by 6.6 percent to Rs. 42.84 billion during the period. Such exports had dropped by 8.5 percent to Rs. 40.18 billion in the same period last year.

Source : myrepublica.com