Nepal imposes ban on imports of luxurious items to save foreign currency and prevent economic problems

Import of luxury goods such as cars, motorbikes above 250 CC, Colour TV above 32 inches, tobacco, and whisky have been halted for the time being to save foreign currency depletion

Team PGurus

April 27, 2022

Import of luxury goods such as cars, motorbikes above 250 CC, Colour TV above 32 inches, tobacco, and whisky have been halted for the time being to save foreign currency depletion

Nepal bans foreign liquor and TVs to avert forex crisis

Nepal on Wednesday morning officially announced a ban on the import of cars and other luxurious goods, including whisky and tobacco, and has introduced two public holidays, citing a liquidity crunch and declining foreign exchange reserves. Meanwhile, government officials assured that the economy will not go into a tailspin like Sri Lanka. Since July 2021, Nepal has seen a decline in forex reserves due to the surging imports, declining inflows of remittance, and meager earnings from tourism and exports.

By February 2022, the Himalayan country’s gross forex reserves had decreased 17 percent to USD 9.75 billion from USD 11.75 billion in mid-July 2021, according to Central Bank figures. According to the Indian news agency PTI, the ban has come into effect starting Tuesday and will last until mid-July 2022, the end of the current fiscal year. A notice to this effect had been published in the Nepal Gazette, Deputy Governor of Nepal Rastra Bank, the Central Bank of the country, Bam Bahadur Mishra told PTI.

“Import of luxury goods such as cars, motorbikes above 250 CC, Colour TV above 32 inches, tobacco and whisky have been halted for the time being to save foreign currency depletion,” he said. Only emergency vehicles can be imported as per the new provision. The ban also includes items such as the import of toys, diamonds, and playing cards, the official said. Earlier in March, the Central Bank had instructed the commercial banks not to import gold exceeding 10 kg per day, half the quantity compared to the previous provision.

Deputy Governor Bam said that the government has foreign currency reserves that are sufficient to support less than seven months of imports. It is because of growing imports of mainly food items and petroleum products that Nepal is facing a foreign currency crunch. The dwindling foreign currency reserve is partly because of the considerable decline in foreign tourists due to the pandemic and the decrease in the inflow of remittance in recent times. The rising prices for oil in the international market due to the Russia-Ukraine war have exerted extra pressure on the foreign currency reserves of the country.

Nepal Government has decided to introduce two public holidays – on Saturday and Sunday – every week, with effect from May 15. The decision has been taken in a bid to save consumption of petroleum products and thereby save foreign currency. It has been decided to maintain office hours from 9:30 AM to 5:30 PM with effect from May 15 as a trial. “Public holidays will be given two days a week on Saturday and Sunday,” stated the cabinet decision made on Wednesday. As per the existing practice, the government offices operate from 10 am to 5 pm in the summer six days a week, except for Friday when the office remains open only for five hours.

[with PTI inputs]

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