According to a BBC report, Nepal has put a curb on the imports of non-essential goods, including cars, cosmetics, and gold, after its foreign currency reserves dropped.
It is attributed to a fall in tourism spending and money sent home by the Nepalese working abroad helped drive up the government debt while the country’s main opposition party CPN-UML claims that their economy will worsen further in the coming days if effective measures are not taken immediately.
With the Opposition and market experts expressing apprehension that Nepal is on the brink of collapse and is taking a turn for the worse, very much like Sri Lanka which is facing its most serious economic crisis since Independence from the UK in 1948, Janardhan Sharma, the country’s Finance Minister has asserted that their economy will not nosedive like that of the island nation.
Janardhan Sharma dispelled rumours about Nepal’s economic instability and reportedly said that the country’s economy is comparatively in a better position in terms of the production and revenue system.
Meanwhile, the Nepal government removed central bank governor Maha Prasad Adhikari from his role last week without giving a reason for the decision.
According to the country’s central bank, Nepal Rastra Bank, foreign currency reserves fell by more than 16 per cent to 1.17tn Nepali rupees ($9.59bn) in the seven months to the middle of February.
Over the same period, the amount of money sent to Nepal by people working abroad fell by almost 5 per cent.
Deputy spokesperson at Nepal Rastra Bank Narayan Prasad Pokharel told the Reuters news agency that the institution believed the country’s foreign currency reserves were “under pressure”.
“Something must be done to restrict the import of non-essential goods, without affecting the supply of essential goods,” said Pokharel.
The government debt in Nepal has risen to more than 43 per cent of its gross domestic product, as officials increased spending to help cushion the economic impact of pandemic, Nepal’s finance ministry said on Monday, BBC reported.
The ministry also said the 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 reserves,” it said.
Earlier in the day, Nepal Finance Minister Janardan Sharma said the country’s debt was lower than other countries in the region and elsewhere.
Sharma told reporters: “I am surprised why people are comparing with Sri Lanka,” BBC reported. (India.com)
