Nepal continues import ban on 10 goods items as foreign exchange reserves dwindleThe latest restriction has been imposed on importing mobile sets that are priced over $300 and motorcycles with capacity over 150cc.
The government has continued the restriction on the imports of 10 goods, which it considers luxury, for another one and a half months, saying the country has not seen much improvement in its foreign currency reserves.
Nepal’s annual imports bill has been expected to reach close to Rs2 trillion last fiscal year that ended on Saturday.
The latest restriction has been imposed on importing mobile sets that are priced over $300 and motorcycles with capacity over 150cc.
These goods have been restricted from importing till August-end, as per the notice published in Nepal Gazette on Sunday.
When the government first announced a complete ban on the import of certain goods in late April, the import of mobile sets worth over $600 and motorcycles with capacity over 250CC were banned till mid-July.
Nepal imported mobile sets worth Rs39.13 billion as of the first 11 months of the last fiscal year.
Likewise, the country imported motorcycles worth Rs26.66 billion during the review period, according to the Department of Customs.
Besides mobile sets and motorcycles, the government has continued the ban on the import of liquor and tobacco products [except their raw materials], diamonds, television sets larger than 32 inches, jeep, car and van [except ambulances], toys, cards and snacks.
As per the government notice, the import ban was enforced to safeguard the country’s external financial position and foreign exchange reserves that have been depleting at a faster rate posing potential threat to the economy.
“As key sources of foreign exchanges such as remittance, exports, tourism and foreign aid have not been received as expected, the government currently does not have any other option,” said Keshav Acharya, a senior economist.
As of the first 11 months of the last fiscal year 2021-22 that ended in July 16, foreign exchange reserves decreased by 19.6 percent to $9.45 billion in mid-June 2022 from 11.75 billion in mid-July 2021, according to Nepal Rastra Bank (NRB).
The NRB data show that there has been a slight improvement in inflows of remittances, the largest source of foreign exchange earnings as of the first 11 months as the country.
The inflows of remittances increased by 1.5 percent to $7.51 billion during the period. It is for the first time that inflows of remittances increased in US dollar terms in the last fiscal year.
However, Acharya said that the country has not received the remittances as expected despite a massive surge in outflow of Nepali migrant workers.
According to the central bank data, a total of 313,367 Nepali migrant workers obtained labour permits to go abroad from the Department of Foreign Employment as of mid-June in the fiscal year 2021-22, a sharp rise from 62,011 during the same period in fiscal year 2020-21.
“So, the government does not have many options to keep the foreign exchange reserves at adequate levels,” Acharya said.
The continued ban on import of these goods, many of them contribute to the revenue significantly, will adversely affect the government’s earnings.
“It is the time of urgency, we have to take all measures to maintain adequate foreign exchange reserves to prevent the country from heading in the direction of Sri Lanka,” said Acharya.