Nepal second South Asian country with economic woes

NEW DELHI — Nepal has banned imports of cars, alcohol and other luxury goods to conserve foreign exchange reserves as spiraling prices of fuel and food imports stemming from the war in Ukraine strain an economy already battered by the COVID-19 pandemic.

The Himalayan nation between India and China is the second South Asian country, after Sri Lanka, to face a foreign exchange crunch.

The goods that will not be imported include expensive televisions and mobile phones, the government said this week. The ban will remain in force until mid-July.

To conserve fuel, which Nepal imports, the work week in government offices has been shortened to five days.

“This is a short-term measure taken to prevent the economic condition of the country from going bad,” said Narayan Prasad Regmi, a senior official in the Industry, Commerce and Supplies Ministry.

Nepal’s central bank has said foreign exchange reserves are sufficient to cover just over six months of imports, down from 10 months in mid-2021. The landlocked nation of 29 million is heavily dependent on imports.

The government hopes the measures will help stave off a crisis like the one roiling Sri Lanka, where acute foreign exchange shortages have resulted in massive supply shortfalls, runaway price increases of fuel and food and a suspension of payments of its foreign debt.

Experts however call Nepal’s temporary ban on luxury goods and the shortening of the work week “desperate measures” that will not address the root cause of the problem that the economy faces. BBC

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Author: shehan

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