June 22: The policy adopted by the government to reduce imports after facing increasing pressure on the foreign exchange reserves has failed miserably.

Despite the government's policy of tightening the credit flow for import through Nepal Rastra Bank (NRB), banning the import of luxury goods through the Ministry of Supply and reducing the import of fuel by giving two days public holiday, the imports have increased instead of decreasing.

According to the data published by the Department of Customs on Tuesday, the imports have increased by Rs 21 billion from mid-May to mid-June as compared to the previous month.

NRB had introduced a policy to discourage imports from last December after the balance of payments deficit increased due to high imports while the foreign exchange reserves were declining. During mid-December, the central bank made provision for keeping cash margin while opening LC for import of 20 different types of goods including cosmetics and luxury goods. Similarly, the gold import quota was halved to 10 kg per day in the first week of March.

Similarly, the government banned the import of 10 different types of luxury goods on April 27.

The Ministry of Industry, Commerce and Supplies prohibited the imports of mobile sets worth more than USD 600, color televisions of over 32 inches, vehicles including jeep, cars and vans, and motorcycles of over 250 cc, food, liquor, crackers, chips, cigarettes and tobacco products, cards and toys till mid-July. Also, the government decided to give two days leave per week from mid-May to mid-June citing that it would reduce the consumption of petroleum products.

Imports did not decline even five months after the government adopted the policy to discourage imports. Imports fell by Rs 20 billion from mid-April to mid-May as compared to the previous month and were limited to Rs 137 billion. The imports of mid-April to mid-May are the lowest this year. The imports of mid-May to mid-June were about Rs 21 billion more than that of mid-April to mid-May. Figures from the department show that goods worth Rs 158 billion were imported in May.

Diesel, petrol, LPG and cast iron top the list of imports. Diesel was imported the most amounting to Rs 145.21 billion as of mid-June.

Soybean oil is Nepal’s prime export, whose export amounted to Rs 46.58 billion in the last 11 months. As Nepal imports the raw material required for soybean oil production, it is the fourth largest importer of crude soybean oil. Crude soybean oil worth Rs 53.25 billion was imported in the last 11 months, as per the customs data.