Rebati Adhikari
March 28:
The government recently lifted a ban on imports of items like dried peas, betel nuts, dates and luxury vehicles that were put in place for nearly a year.

Earlier last year when coronavirus was sweeping the country, the government decided to impose restrictions on various imports with an aim to curb the outflow of foreign currency and prevent the external sector position’s deterioration.

Citing that the imports of expensive items will have a negative impact on the foreign exchange reserves, the government had banned the import of high-end vehicles worth more than $50,000, expensive nuts, alcohol and limited gold import quota. The daily quota of gold import was also reduced to 10 kg from 20 kg. These restrictions on the imports were imposed soon after the lockdown was imposed in March last year in the wake of outbreak of coronavirus.

With the economy of the country regaining its some pace, the government has been gradually loosening its restrictions on the imports that it had placed last year. The ban on alcohol was lifted on the eve of Dashain and Tihar festivals last year. Last week, the government decided to allow imports of high-end vehicles without any restriction. Withdrawing the blanket ban, the government imposed quota on imports of black pepper, peas, dates and betel nuts.

While the blanket ban has been lifted, with quantitative restrictions on the import of some commodities, the government is yet to decide whether to raise the daily quota on gold import that was lowered last year.  
Gold dealers are now lobbying with the government and the Nepal Rastra Bank (NRB) to revise the daily quota upward in line with a rise in the demands for ornaments and jewelry in the market.
NRB currently allows commercial banks to import a total of 10 kg of gold daily which is then sold to gold dealers in the market.
Federation of Nepal Gold and Silver Dealers’ Association (Fenegosida) has been demanding that this quota be hiked to 25 kg per day.  Manik Ratna Shakya, President of Fenegosida, opined that the government should have relaxed the restriction on import of gold quota along with other items.

“During our discussions with senior officials at the Ministry of Industry, Commerce and Supplies (MoICS) and Nepal Rastra Bank (NRB), they had responded positively to our demand to increase the gold quota,” said Shakya.

Upon the recommendation of the MoICS, the NRB makes decision whether to lower or raise the quota of gold imports.  

Fenegosida President Shakya said that they are preparing to intensify their pressure upon the government to increase the gold quota to 25 kg. Gold dealers say that it is now time to revise the limit on the quantity of precious yellow metal allowed to import into the country.

According to Shakya, the demand of the bullion has gone up in recent months after a decline in its price. The price of the precious metal which had reached a new high of Rs 103,500 per Tola on August 7 last year is now down to Rs 86,300 per Tola on Friday. Last year, the price of per Tola gold had climbed to six-digit for the first time in Nepal. However, the gold price has been falling in recent months. Gold dealers say that the drop in the price has lifted demands that have been depressed by the pandemic.
They also expect the demands to rise further during the wedding season (April/May) that boosts the sale of ornaments and jewelry in the market.  
Fenegosida leaders say that the central bank should not worry much about the decline in its foreign exchange reserves as the bullion price has fallen significantly in the international market. 

If the daily quota is not revised in line with the market demands, there is a chance of smuggling of the gold as in the past, warn gold dealers.

However, the central bank is less likely to increase the quota immediately. NRB’s Deputy Spokesperson Naryan Prasad Pokhrel said the central bank may consider revising the daily quota on the imports of gold through its monetary policy for the next fiscal year 2021/22 that begins in mid July.

Gold is one of the major imported items in Nepal. According to Nepal Rastra Bank (NRB), the country imported gold worth Rs 34.63 billion in the fiscal year 2018/19 out of the total import of Rs 1,418.54 billion.