Nepal bans imports of cars, luxury items to conserve dwindling foreign reserves

Nepal banned imports of cars, alcohol, tobacco and other luxury items Wednesday and shortened its work week to help conserve its dwindling supply of foreign exchange.

A notice published in the government gazette said only emergency vehicles can be imported. No imports of any type of alcohol or tobacco products, large-engine motorcycles and mobile phones costing over $ 600 dollars will be allowed.

The ban, in effect until the end of the fiscal year in mid-July, also forbids imports of toys, playing cards and diamonds.

Without such drastic measures, the foreign currency reserves needed to import almost everything will last only a few more months, officials said.

Nepal’s main sources of foreign currency are tourism, remittances from overseas workers and foreign aid. Hundreds of thousands of foreign tourists usually visit the Himalayan country every year, but the number of visitors plunged during the coronavirus pandemic.

Ballooning imports in recent months have led to massive amounts of foreign currency going out of the country, pushing the balance of payments into the red and raising concerns of a crisis, officials said.

The central bank’s response follows growing concerns that the country may be headed Sri Lanka’s way as it faces a widening trade deficit, soaring balance of payment deficit, and decreasing remittance inflows and foreign exchange reserves.

Rising prices for oil have added to pressure on Nepal’s foreign reserves. So to conserve fuel, Information Minister Gyanendra Karki announced Wednesday that the government would reduce the work week from five and a half days to five.

However the crisis is already easing, he said, as tourists resume visits and more Nepalese go overseas to work, sending their earnings home. (Business Today)