As part of its effort to control the outflow of foreign currency, Nepal Rastra Bank will now regulate the spendings of Nepalis on foreign trips and universities.

“Necessary policies will be made to regulate foreign exchange expenditure on education and group tours,” states provision 143 of the monetary policy, unveiled on Wednesday for the new fiscal year.

According to Rastra Bank officials, the provision, along with several others under the Foreign Exchange Regulations, is intended to protect the country’s depleting foreign exchange reserves.

“The amount of money Nepalis spent abroad on travel has exceeded the amount the country earns in revenue from international tourists,” said Laxmi Prappanna Niroula, spokesperson for the central bank. “Similarly, with more and more Nepali students going abroad for education, spending is on the rise, and we want to regulate that.”

Nepalis spent over Rs41 billion on education in foreign universities and Rs20 billion on travel abroad in the past fiscal year, according to the Rastra Bank. Provision 143, officials say, is specifically aimed at regulating “group tours” organised by private companies and students attending “expensive” universities abroad.

Although the bank has yet to draft specific regulatory policies, Niroula said the goal is to encourage Nepalis to travel domestically and discourage students from attending “expensive” universities.

Economists say the provisions signal the pressure the bank is feeling, with the country’s foreign forex reserves depleting amid rising trade deficits.

“The central bank is panicking because the country saw its highest-ever trade deficit this past year,” said economist Keshav Acharya. “Despite introducing several provisions to limit outflow of currency, the gap hasn’t decreased much, so the bank wants to regulate spending on services such as education and travel.”

The balance of payments (BOP) deficit, the difference between a country’s earnings and expenditures, rose to a record Rs 90.83 billion in the first 11 months of the last fiscal year. A rising BOP deficit has put pressure on the foreign exchange reserves, which dropped to $9.25 billion from $10.08 billion in the same review period. While as recently as 2016, the reserves could sustain 14 months of imports, today, that number has nearly halved.

“Today, the reserve can pay for 7-8 months of import, tomorrow the situation may worsen where the reserve can only pay for 3-4 months,” said Raghu Bir Bista, an associate professor at the Tribhuvan University’s Department of Economics. “Thus, we shouldn’t interpret the provision as trying to control people’s movement. It’s just a short-term emergency measure which is needed to stop the country from falling deeper into crisis.”

Bista says regulation doesn’t necessarily mean restriction.

“This doesn’t mean you can’t travel or study abroad,” said Bista. “The government is just trying to regulate the spendings on these sectors because there’s a foreign exchange emergency.”

While economists say the bank’s move is a need of the time, they say that in order to truly address the trade deficit issues, the government should focus on improving the investment climate, and work towards courting foreign investors.

“Of course, the road ahead would be to promote export; increase manufacturing units, address issues that result in the country being placed low on rankings for investment-friendly countries and effectively implement one window policy,” said Acharya.

The bank has introduced several restrictive policies in order to address the depleting foreign exchange reserves. In January, it reduced the limit for foreign currency that an outbound migrant worker could carry to $200 from $500. Similarly, the bank reduced the maximum amount of foreign currency that a Nepali national travelling abroad could take to $1500 from $2500.