Government Updates Trade Deficit Reduction Plan

Kathmandu. The government has updated the 'National Action Plan for Trade Deficit Reduction, 2079' with the objective of controlling the country's growing trade deficit and promoting domestic production.

The first updated (2083) action plan, prepared by the Ministry of Industry, Commerce and Supplies, has set an ambitious target of increasing the ratio of exports of goods and services to the country's Gross Domestic Product (GDP) to 20 percent within the next 5 years.

According to this action plan, which considers the fiscal year 2078/79 as the base year, the share of exports in GDP was only 6.3 percent at that time. The government has put forward this integrated action plan with the conclusion that the share of imports in the country's economy is excessively high and that foreign exchange reserves are also under pressure from time to time.

The government has adopted the main policy of increasing competitive capacity to minimize the impact of potential loss of trade facilities in the international market as Nepal graduates from Least Developed Country to Developing Country. For this, a strategy has been put forward to increase the production and consumption of domestic goods by providing necessary support to campaigns led by the private sector such as 'Make in Nepal' and 'Made in Nepal'.

Furthermore, the government aims to replace 30 percent of agricultural and livestock imports within the next three years by increasing the production of agricultural produce. Under this, it is mentioned in the document that comparative advantage goods such as tea, coffee, cardamom, ginger, and high-value medicinal herbs will be identified and commercial farming will be encouraged.

The updated action plan emphasizes energy transition to reduce dependence on petroleum products, which account for a large share of imports. Policies have been adopted to provide customs and tariff concessions by encouraging the use of electric vehicles, electrical appliances for domestic use, and electricity instead of coal in industries.

Similarly, the establishment of green hydrogen and chemical fertilizer factories within the country and the completion of integrated check posts in Dodhara Chandani and Bhairahawa and dry ports at the Korala border within the stipulated time have been included in the action plan for infrastructure development.

Stating that illegal trade and customs evasion due to open borders have seriously affected the economy, the government will further increase the activeness of security agencies at the border crossings. To face the security challenges created by the changing nature of crime, special responsibilities have been assigned to the Ministry of Finance, Ministry of Home Affairs, and Nepal Rastra Bank to control financial crimes such as Hundi business, cryptocurrency, under-invoicing, and cybercrime.

In addition, it is mentioned that 'economic diplomacy' will be made more effective by mobilizing Nepali diplomatic missions abroad to take Nepali products to the global market.

Since reducing the trade deficit is not possible with the efforts of a single ministry or agency, the action plan has made inter-ministerial coordination mandatory.

Responsibilities and deadlines have been assigned to ministries ranging from the Office of the Prime Minister and Council of Ministers to the Ministries of Finance, Foreign Affairs, Agriculture, Energy, and Home Affairs and included in the schedule. All concerned bodies will have to compulsorily include the programs of this action plan in their annual budget and programs. The progress review of the action plan implementation will be arranged to be carried out by the National Development Problems Solution Committee and the Central Monitoring Committee, chaired by the Prime Minister.