By Our Reporter
Despite the government restriction on imports of luxury goods, trade deficit increases to an alarming level, a report of the Customs Department showed this week.
According to the report of the first nine months of the current fiscal year, the country’s trade deficit has reached a whopping Rs. 1,306.08 billion during the period.
The trade deficit of the period is higher by 28.47 per cent than the deficit of the corresponding period last fiscal year.
Trade deficit during the same period last year was Rs. 1,016.62 billion.
Despite an increase in exports, the country’s trade deficit has widened further during the review period due to the low volume of exports compared to the imports.
According to the Foreign Trade Statistics of the Department of Customs, export trade is at Rs. 160.57 billion during the first nine months (mid-July 2021 to mid-April 2022) of the current fiscal year while imports increased to Rs. 1,466.66 billion.
Nepal had imported goods worth Rs. 1,111.39 billion and exported goods worth Rs. 94.76 billion in the same period last fiscal year.
With an increase in exports, its contribution to total trade also increased from 7.86 per cent to 9.87 per cent during the review period. The share of export in the total trade has decreased to 90.13 per cent from 92.14 per cent last year.
According to the statistics, total foreign trade has also increased. The country’s foreign trade volume has reached Rs. 1,627.23 billion during the review period which is 34.91 per cent more than the previous year.
Nepal Rastra Bank has already applied measures to tighten the imports of luxurious and non-essential items in an attempt to control the trade deficit. However, the measures have been ineffective to narrow the trade deficit.
According to the data released by the Department of Customs, Nepal imported Petroleum products worth over Rs. 219 billion in the first nine months of the current fiscal year.
Diesel topped the lists of imported commodities in the first nine months of the current fiscal year. Diesel worth Rs. 105.97 billion was imported during the period.
Meanwhile, petrol worth Rs. 47.23 billion, liquefied petroleum gas (LPG) worth Rs. 45.34 billion, aviation fuel worth Rs. 9.30 billion, kerosene Rs. 1.07 million, lubricants worth Rs. 4.90 billion and petroleum bitumen worth Rs. 6.27 billion have been imported during the period.
The country imported crude soybean oil worth Rs. 46.31 billion, crude palm oil worth Rs. 33.23 billion and crude sunflower worth Rs. 16.49 billion during the review period.
Similarly, maize worth Rs. 12.14 billion, paddy and rice worth Rs. 50.7 billion and wheat worth Rs. 5.88 billion have been imported.
Revenue should be Rs. 1300 billion next year: Experts
The Revenue Advisory Board (RAB) has suggested that the government should make preparation to collect about Rs. 1300 billion in revenue in the coming fiscal year 2022/23.
Chairman of the RAB Mahesh Dahal said that the revenue ceiling was considered after reviewing the current status and future prospect. “Through the scientific and pragmatic point of view, Rs. 1.3 trillion revenue should be the target,” he said while speaking at a pre-budget discussion organised by the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) on Tuesday.
However, he maintained that the amount could slightly be modified before it is submitted to the government. The final report will be prepared in a week from now.
There is Rs. 1180 billion target for the current fiscal year 2021/22 of which Rs. 811.8 billion (about 69 per cent) is said to collected by now.
Dahal said that the country is at the Value Added Tax (VAT) deficit of Rs. 250 billion, and if this gap could be bridged, the government could be at a comfortable position in terms of resource management to fund the development works.
Speaking on the occasion, tax expert Dr. Roop Khadka said that tax compliance cost should be nominal. He also suggested the private sector to cease demanding the implementation of multiple rates of VAT since it will increase the tax compliance rate. “Why are the institutions like the FNCCI demanding the multiple rates of VAT? If your demands are met, you have to maintain robust account system to address the multiple rates,” he said.
Similarly, he said that the VAT discounts on the essential goods that largely used by the poor are also used by the people of higher class.
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