Economic crisis in Nepal: Is Nepal going through an economic crisis? A decision by Kathmandu has made the world set up and take notice. Nepal’s government has banned the import of luxury items things like cars cosmetics and gold. Why did Kathmandu restrict these imports Nepal’s foreign currency reserves are depleting rapidly, they have dropped by more than 16 percent in seven months.
In February they stood at less than 10 billion dollars that’s only sufficient for six and a half months. Nepal’s finance minister Janardan Sharma says there is no reason to worry but questions are still being raised. There’s a staggering trade deficit the price rise of the basic commodities has affected every household in Nepal. Tourism another key source of foreign currency has also slowed down due to the COVID pandemic.
The economic indicators don’t look promising inflation is rising rapidly in Nepal it has crossed the 7.14 percent mark that’s the highest in more than five years. The cost of essentials has skyrocketed the prices of items like clarified butter and oil have increased by over 26.36 percent transportation services have become costlier by more than 16 percent.
The sudden departure of the central bank chief triggered more doubts reports say Maha Prasad Adhikari had disagreements with the finance minister. Nepal’s government has now opened an inquiry against Adhikari he is being accused of leaking confidential information and incompetence. He was suspended last week.
Three former finance ministers of Nepal have spoken out they have raised concerns over recent events. International agencies are concerned too multilateral agencies like the international monetary fund or the IMF, the Asian Development Bank, and the World Bank are the biggest donors.
Some of these agencies are concerned about the future repercussions of the suspension. The circumstances that led to the ouster of Adhikari led to these doubts. The finance minister claims Nepal’s economy won’t face a crisis like Sri Lanka. The assurances approving to be counterproductive.