March 15: Around 24,693 kilograms of gold have been imported into Nepal in the last five years. This is the record of gold imported through legal channels. Gold is also smuggled into Nepal through various illegal channels.

Since the last few years, the price of gold has been on a constant rise although the pattern of import has remained almost constant. This has raised questions about where all the gold is used in the country and for what purpose.

Manik Ratna Shakya, president of the Federation of Nepal Gold and Silver Dealers’ Association said that 95 percent of the gold imported in Nepal is used by housewives as jewelry.

As per the records of the Department of Customs, the total value of gold imported from fiscal year 2074/75 to mid-February of the fiscal year 2078/79 amounts to Rs 132.38 billion. Economists say that the increase in transaction of gold should be considered as an increase in purchasing power of Nepali citizens.

On the other hand, economist Jitendra Upadhyaya says that the more amount is spent on the purchase of gold, the more negative impact it will have on the economy of the country. Economists argue that investment in productive sector creates employment opportunities and such activities should be encouraged rather than the trend of decorating oneself with jewelry.

In the last few years, the purchasing power of Nepali citizens has increased due to an increase in the number of people going for foreign employment. But the money earned from foreign employment being spent on luxury items often results in shortage of money when needed in future. Experts suggest investing the money in businesses rather than spending on luxury items. However, the suggestion has neither been adopted by the general public nor the government has succeeded to formulate a plan for the utilization of remittance.

According to the Central Bureau of Statistics (CBS), out of the total remittance entering the country, only 2 percent is utilized for investments. Experts express their concern stating that most of the remittance is returning back with the purchase of luxury items.

As per the statistics of Nepal Rastra Bank (NRB), Rs 961 billion entered the country last year as remittance. This year, Rs 540 billion has already entered the country as remittance within just seven months.  In Nepal, housewives consume most of the imported gold for making jewelry. Apart from this, gold is also used for making gold plated art pieces to attract tourists.

Former Executive Director of NRB, Nar Bahadur Thapa says that although businessmen reap the profits from selling gold, it has a negative impact on the economy of the country.

“Since the government has not brought any policies to invest remittance into the productive sector, the expenditure of money earned from foreign employment is increasing towards the unproductive sector,” said Thapa, adding, “If such expenditures continue to grow, the banks will face scarcity of investible capital. Therefore, the government should pay proper attention to such issues.”

In the seven months of the current fiscal year, a total of 3,643 kg of gold worth Rs 252.1 billion has already been imported in Nepal. During last fiscal year, altogether 3,924 kg of gold worth Rs 273.4 billion was imported into the country.