NEPAL ECONOMIC CRISIS LOOMS AS GOVT FIRES CENTRAL BANK GOVERNOR, AMID RISING LIVING COSTS

Fears that Kathmandu may face a similar situation like Colombo have surfaced in the minds of the Nepali people. Long queues were spotted outside petrol pumps on Sunday last week as people queued up outside to buy fuel. On Friday last week Nepal’s petroleum transporters held demonstrations and halted the loading and unloading of petroleum products from Indian depots.

The Kathmandu Valley transport officials have also hiked public bus service fares and taxi drivers’ union too have increased their prices claiming that fuel is getting costlier. The Kathmandu Post reported that the Nepal Oil Corporation has raised fuel prices 18 times in the past 12 months.

The Nepalese authorities and the country’s central bank, Nepal Rastra Bank, however took a more drastic step and decided to reduce the import of petroleum products by more than half. The Nepal Oil Corporation fears that it can create an extreme shortage of petroleum in the Himalayan nation. The central bank also told news agency AP that Nepal is running low on foreign currency reserve that is needed for imports and it will last only for the next seven months.

Not only oil but the prices of food have also increased. Speaking to the BBC, traders, grocers and consumers said that basic items like cooking oil and food staples along with vegetables have only become costlier. Nepal relies heavily on imports and its economy is also dependent on foreign remittances (sent by Nepalese youth stationed abroad) as well as tourism – which remain the worst affected industry due to the Covid-19 pandemic. Consumer organisations told the BBC that prices for some basic food items have risen by at least 20% in Nepal.

The report by BBC pointed out that Nepal’s foreign currency reserves fell by more than 16% to 1.17 trillion Nepali rupees ($9.59billion) in the seven months to the middle of February. The Kathmandu Post said that these problems began in September but finance minister Sharma remained oblivious to the developments. The central bank told Reuters that it believes that Nepal’s foreign currency reserves were “under pressure”.

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Author: shehan

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