KATHMANDU, Feb 23: Nepal’s import expense climbed to Rs 126.50 billion in the past one month during mid-January and mid-February after the government completely lifted the restrictions on imports.

The figure, however, was less than the monthly average of the country’s imports in the first six months of the current fiscal year. According to the Department of Customs (DoC), the country spent Rs 132.11 billion per month between mid-July and mid-January.

The government lifted the ban on import of luxury items including automobiles, which had been in place for nine months, on December 6.

Likewise, on January 20, Nepal Rastra Bank (NRB) annulled the provision of cash margin, which the importers were required to maintain against their letters of credit (LCs) while importing goods. The central bank had imposed the restriction for almost one year citing pressure on the country’s foreign exchange reserves.

Due to the massive rise in imports last year, NRB had discouraged the country’s imports by tightening the money supply. The central bank, later, relaxed the rules under pressure from the International Monetary Fund and also due to the improvement in liquidity situation in the banking system.

However, the central bank is still skeptical about its decision, stating that the lenient policy could raise imports again, taking the country to a pressure of depleting foreign currency reserves.

The DoC’s records show that Nepal’s trade deficit declined 18.71 percent, backed by a notable fall in imports between mid-July and mid-February. Compared to the imports of Rs 1.147 trillion in the review period last year, the figure dropped to Rs 919.16 billion this year.  

Out of the total imports, Nepal spent Rs 156.69 billion for the import of petroleum products alone. In the past one month, the country spent Rs 13.62 billion to import diesel, petrol, cooking gas and aviation turbine fuel.    

Although the country gained a notable achievement in reducing imports, the export earnings still post a pathetic outlook. The landlocked country was able to increase its exports by a mere Rs 12.63 billion last month. The export figure was down from Rs 131.65 billion to Rs 93.43 billion during the first seven months of the current FY compared to last year.

Nepal’s trade deficit with its biggest trading partner India stood at Rs 504.74 billion. With China, the trade deficit was of Rs 124.62 billion during the review period.