Gopal Sharma

KATHMANDU (Reuters] – Nepal tightens imports of automobiles, gold, and cosmetics after its foreign reserves fall, a central bank official has said. The statement came Monday after the government suspends the governor of central banks and names his deputy interim chief.

Due to the shortage of tourism income, Sri Lanka is also experiencing a serious economic crisis. The Himalayan country has had its foreign reserves hit.

According to Narayan Prasad Pokharel, deputy spokesperson for NRB, Nepal Rastra Bank (central bank), Nepal Rastra Bank feels that the country’s foreign currency reserves are in danger. He suggested something be done to limit imports of non-essential items without affecting supply of essential goods.

According to him, importers will be granted letters of credit for 50 luxury goods if they pay full upfront to the bank. He declined to identify all items.

He stated that he had already informed border customs officials about the changes in import regulations. This isn’t a ban on imports, but discouragement.”

Un spokesperson from the central banks referred any questions concerning the governor’s suspension the finance ministry.

The ministry spokeswoman said that while he didn’t know the reason why Maha Prasad Ahikari, NRB Governor Mahaprasad Adhikari, was suspended Friday, but that an investigation by a panel of government officials would be done.

Unnamed government officials said Adhikari is accused of disclosing sensitive financial data to the media. Reuters was unable to reach Adhikari immediately as his mobile phone had been disconnected.

After two years of COVID-19’s pandemic, tourism has been struggling to re-emerge. As a result, Nepal’s gross foreign reserves dropped to $9.75 Billion by mid-February. This is 17% less than the mid-July financial year.

Current reserves will support imports for six months in the case of India, which has a population of 29 million and China who are fighting for their influence.

According to data from the central banking, remittances overseas dropped 5.8% to $4.53 Billion between mid July and mid February.

Balance of Payments had a deficit in balance of payments of $2.07Billion in the first 7 months of the current fiscal year, as compared to a surplus that was $817.6M in the same period last year.

Opposition parties criticize Prime Minister Sher Bahadur deuba’s government, accusing it of suspending the governor at the central bank when there is a weak economy.

Surendra Pandey, a leader and lawmaker from the Communist Unified Marxist-Leninist Party said that he had done a good job.

This month, the Asian Development Bank reported that Nepal’s public debt rose from an average 25.1% in 2016 to 2019 to 41.4% for the fiscal year 2021 due to increased spending during pandemics.

According to the bank based in Philippines, Nepal’s current accounts deficit will rise from 8% to 9.7% GDP this fiscal year.