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The
Himalayan country's foreign reserves have been hit by a slump in
tourism in Asia during the pandemic, a problem that has also hit
Sri Lanka which is going through a crippling economic crisis due
to a shortage of tourist revenue and other funds.
"Nepal Rastra Bank (NRB, the central bank) feels the country's
foreign exchange reserves are under pressure and something must
be done to restrict the import of non-essential goods, without
affecting the supply of essential goods," NRB deputy
spokesperson Narayan Prasad Pokharel told Reuters.
He said importers would be issued letters of credit to bring in
50 "luxurious goods" only with full upfront payments with the
bank, declining to name all the items.
"We have already directed all the border customs points about
the new arrangements for the import of these goods," he said.
"This is not banning the imports but discouraging them."
A spokesperson for the central bank referred questions about the
governor's suspension to the finance ministry.
A ministry spokesperson said he did not know why NRB Governor
Maha Prasad Adhikari was suspended on Friday but that a
government panel would investigate the matter.
A government official said on condition of anonymity that
Adhikari was accused of leaking sensitive financial information
to the media. Reuters could not immediately contact Adhikari,
whose mobile phone was switched off.
With tourism struggling to resume after two years of the
COVID-19 pandemic, Nepal's gross foreign exchange reserves fell
to $9.75 billion as of mid-February, down 17% from mid-July last
year when its financial year started.
The current reserves are sufficient to support imports for about
six months for the country of some 29 million people, where
India and China jostle for influence.
Data from the central bank shows remittances from overseas fell
5.8% to $4.53 billion between mid-July to mid-February.
The balance of payments had a deficit of $2.07 billion in the
first seven months of the current financial year, compared with
a surplus of $817.6 million in the same period the previous
year.
Opposition parties have criticised Prime Minister Sher Bahadur
Deuba's government for suspending the central bank governor when
the economy is weak.
"He was doing a good job and his removal at a time when economic
indicators are not good is a wrong decision," said Surendra
Pandey, a senior leader and lawmaker of the opposition Communist
Unified Marxist-Leninist party.
The Asian Development Bank said this month that Nepal's
government debt increased to 41.4% of gross domestic product in
the 2021 fiscal year, from an average of 25.1% between 2016 and
2019 due to increased spending during the pandemic.
The Philippines-based bank predicted Nepal's current account
deficit would widen to 9.7% of GDP in this fiscal year from 8%
last year.
(Reporting by Gopal Sharma; Additional reporting by Manoj Kumar;
Editing by Krishna N. Das, Alison Williams and Susan Fenton)
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