No Luxury Items for Nepal!

Financial Crisis in Nepal

This move made by the government is not to live a modest life but it has been done in order to avoid any severe financial crisis.

Nepal’s trade deficit rose by nearly 34.5% on year to $9.35 billion in mid-March, while forex reserves have fallen below $10 billion.

The import ban is aimed at averting the situation now faced by Sri Lanka, which is enduring its worst economic crisis in decades after running out of foreign exchange to pay for imports. The South Asian island nation has suffered months of extensive blackouts and severe shortages of food, fuel, and pharmaceuticals, with angry demonstrations demanding the government’s resignation.

The Himalayan country has decided to ban these imported items until July 2022.

  • Cars
  • Motorbikes above 250cc
  • Colour TV above 32 inches
  • Tobacco
  • Whisky
  • Toys
  • Playing cards
  • Diamonds

Falling payments and tourism earnings, combined with a blowout budget deficit, have severely knocked off Nepal’s fiscal position during the Covid-19 pandemic. Another reason is the rising prices of oil and the situation was further worsened by the Russian Ukrainian war.

In addition to the ban, the government has also decided to introduce 2 public holidays every day from Saturday to Sunday. This decision was taken to save consumption of petroleum products and save foreign currency as well.

According to the Central Bank, the reserves are sufficient only to cover the imports for the next 6 months. This is a good short-term measure used by the government but they should also focus on a long-term measures to boost foreign investment and export earnings.

– written and contributed by Divya Shetty.

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