Nepal bans import of luxury items to avert forex crisis

Wednesday 04th May 2022 07:31 EDT

Kathmandu: Nepal banned imported liquor, playing cards and nearly a dozen other “nonessential” goods to address the country’s widening trade deficit and declining foreign currency reserves, officials said. Falling remittances and tourism earnings, combined with a blowout budget deficit, have severely dented Nepal's fiscal position during the Covid-19 pandemic. The central bank has said reserves are only sufficient to cover just over six months of imports, down from 10 months in mid-2021.

A commerce ministry directive announced prohibitions on the import of several items including diamonds, large televisions, expensive mobile phones and tobacco until July. “This is a short-term measure taken to prevent the economic condition of the country from going bad,” ministry joint secretary Narayan Prasad Regmi said. The ban also forbids imports of toys and playing cards.
Rising prices for oil have added to pressure on Nepal’s foreign reserves. So to conserve fuel, information minister Gyanendra Karki announced that the government would reduce the work week from five-and-a-half days to five.

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. Petroleum tops its list of imports, with Nepal spending $1. 54 billion between July last year to March 2022. The import ban is aimed at pre-empting the situation now faced by regional neighbour Sri Lanka, which is enduring its worst economic crisis in decades after running out of foreign exchange to pay for imports.

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