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Bad signs are ahead in Nepal’s economy

By Our Reporter
All is not well with Nepal’s national economy. Widening trade deficit and negative growth witnessed in the balance of payment of Nepal in the last two months are testimony to this. If immediate measures were not taken to correct these negative trends, the risk of Nepal becoming a failed state would be very high.
According to Department of Customs, the trade deficit widened by 80 per cent compared to the corresponding period in the previous fiscal year.
The country imported goods worth Rs 220.62 billion against the export worth Rs 18. 9 billion, said the ‘Foreign Trade Direction’ revealed this week. The widening gap between import and export this year is a cause of anxiety for the policy makers as there is no immediate remedy to this alarming trade deficit.
Likewise, the country’s balance of payments (BoP) surplus that had reached an all-time high of Rs 144.85 billion in fiscal 2014-15, mainly due to low growth of import, and increased flow of remittances, among others in August last year, has witnessed a negative trend in the last two months.
The foreign reserve dropped by o.6 per cent in two months, according to the NRB.
Decreasing demands of Nepali migrant workers and the increasing fuel prices are blamed for the negative growth. The country has made various reforms to improve the position of current account after the BoP crisis of fiscal 2009-10 when the current account deficit stood at Rs 32.35 billion and overall BoP deficit was recorded at Rs 2.62 billion.
Since then, the country has adopted numerous reforms including curbing the rampant import of gold and other commodities that were being brought into the country with an aim of distorting the market prices. But again the BOP has witnessed a negative trend which is not a good sign.

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