KATHMANDU, Nepal – Nepal is running out of foreign exchange reserves needed to import medicine, petroleum products, cars and a range of other items, and will run out in seven months if things don’t improve, a central bank official said today.
The central bank has raised interest rates, hoping this will discourage people from buying imports and help boost foreign exchange reserves, said Gunakar Bhatta, a spokesman for Nepal Rastriya Bank, the central bank.
“We are concerned about the sustainability of our foreign exchange reserves,” Bhatta said.
But he said there were already signs the situation was improving as the pandemic slowed. More tourists have started arriving and an increasing number of Nepalese are going abroad to earn foreign currency and send it back home, he said.
“Compared to previous years, the level of foreign exchange reserves has gone down, but we can manage it because the number of migrant workers going abroad has increased,” Bhatta said.
Nepal’s main sources of foreign exchange are tourism, remittances from foreign workers and foreign aid.
Normally, hundreds of thousands of foreign tourists visit Nepal every year. However, the number has dropped sharply due to restrictions imposed during the coronavirus pandemic.
Tourists are returning, with hundreds of climbers already applying to climb the world’s highest peaks and thousands more hiking the mountain trails.
Nepal exports little and imports almost everything from abroad. Motor vehicles and petroleum products account for a quarter of imports, Bhatta said.
The finance ministry said earlier this week that the government was working to reduce imports of gold and luxury goods, but did not provide details.