- Lack of foreign exchange reserves in Nepal
- Government took steps to save dollars
- Import ban on many goods including cars
Nepal Economic Crisis: Nepal is constantly facing a severe shortfall in foreign exchange reserves. To avoid this, the government has started taking steps. If these decisions of the government do not prove to be effective, then there is a possibility that Nepal may also have a situation like Sri Lanka. The government has completely banned the import of 10 items till August to save dollars. According to the report of China’s news agency Xinhua, these restrictions were imposed in late April. Then it was believed that its effect would last till mid-July. That is, when the current financial year ends. However, it has been extended by one month.
According to the official notice of news agency IANS, the restrictions have been imposed to protect the balance of payments and external financial position to avoid any threat to the economy. According to a notice published in the Nepal Gazette on Sunday, till August, the entry of mobile phones costing more than USD 300 and motorcycles with engines larger than 150cc has been banned 30 times. This item also includes alcohol, tobacco products, diamonds, color TV sets larger than 32 inches, jeeps, cars and vans, dolls, playing cards and snacks.
Government has no more options
Speaking to Xinhua, senior economist Keshav Acharya said, “Since there is no improvement in foreign exchange reserves, the government is left with no more options. The only option left with the government is to ban the import of non-essential goods. Due to which foreign exchange will be saved from going out of the country. This will tackle the problem of shortage of foreign exchange reserves. He said that despite the impact of this ban on revenue, “we cannot allow the country to slip into a Sri Lanka-like situation by allowing unrestricted imports of goods.”
According to Nepal Rastra Bank, the country’s foreign exchange reserves declined by 19.6 per cent to USD 9.45 billion in the first 11 months of the financial year 2021-22. At the same time, in mid-July 2021 it was US $ 11.75 billion. On the other hand, talking about Sri Lanka, this country is also facing its biggest economic crisis so far due to the decrease in foreign exchange reserves. Initially, the government had banned non-essential goods, but there was a long delay in doing so. Due to which the foreign exchange fell so much that there was no money left to import essential goods like fuel and medicine. Due to which the anger of the people increased and they came out on the streets against the government.
Initially, the entire cabinet, except the President and the Prime Minister, had resigned as the situation worsened. Then those who were made the new Finance Minister also left their post the very next day. After some time, Prime Minister Mahinda Rajapaksa left his post due to pressure to resign. But Gotabaya Rajapaksa was not ready to resign from the post of President. The situation worsened when the protesters occupied the Rashtrapati Bhavan. Due to which Gotabaya Rajapaksa had to flee the country. He first went to Malaysia and Singapore. From there he tendered his resignation to the speaker. After which Prime Minister Ranil Wickremasinghe has been made acting President.