Nepal restricts imports as reserves dwindle

Nepal has imposed import restrictions on non-essential products, including automobiles, cosmetics, and gold, following a decline in its foreign currency reserves.

It comes as a result of a decline in tourism expenditure and money returned home by Nepalis working abroad, which contributed to the government’s debt increase.

Meanwhile, the country’s central bank governor was relieved of his duties last week.

Nepal’s finance minister expressed amazement that the problem was being likened to Sri Lanka’s turmoil.

Foreign currency reserves plummeted by more than 16% to 1.17 trillion Nepali rupees ($9.59 billion; £7.36 billion) in the seven months to the middle of February, according to the country’s central bank, Nepal Rastra Bank.

Over the same year, the quantity of money transferred to Nepal by foreign workers decreased by about 5%.

According to Reuters, Narayan Prasad Pokharel, the central bank’s deputy spokesperson, the institution believes the country’s foreign currency reserves are “under pressure.”

“Something must be done to restrict the import of non-essential goods, without affecting the supply of essential goods,” Mr. Pokharel said.

He stated that importers were permitted to bring in 50 “luxurious goods” as long as they were paid in whole.

“This is not banning the imports but discouraging them,” Mr. Pokharel said.

Nepal’s government fired central bank governor Maha Prasad Adhikari last week, without providing an explanation.

Nepal’s government debt has soared to more than 43% of GDP, as officials raised spending to assist soften the economic impact of the epidemic, the finance ministry said Monday.

The ministry also said indicators of the country’s economic health were “normal”.

“However, due to some pressures in the external sector, some steps have already been taken to manage imports and increase foreign exchange reserve,” it said in a statement.

Nepal’s foreign currency reserves are double what is considered “a comfortable minimum” and government debt “is not particularly high”, Mr. Holmes said.

“Of course, things will eventually regress if the current account deficit does not narrow,” he added. “But crisis does not appear imminent”.

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