From the $800 million in surplus in February last year, the balance of payment recorded a deficit of $2.03 billion in the first seven months of this fiscal [Between July to February].
Amid declining foreign exchange reserves, Nepal has now urged non-resident Nepalese in foreign countries to open dollar accounts in banks in the country and asked them to invest in its economy, in a move to avoid a Sri Lanka-like crisis.
The request came from Nepal Finance Minister Janardan Sharma who was addressing a virtual interaction organized by the Non-Resident Nepali Association (NRNA), where he sought help from non-resident Nepalese (NRN) to boost the country’s foreign exchange reserves.
The government, Sharma said, has completed the proper policy process for the dollar account for the benefit of Nepalese living abroad. Additionally, plans are also underway to provide free visas to tourists.
Pakistan, another country in the region with a large diaspora community abroad, had earlier implemented this initiative of dollar accounts, with decent success.
Forex and tourism, two of Nepal’s top forex sources, were hit by the pandemic. While imports are on the rise in the post-pandemic recovery, mainly fuelled by pent-up demand, the income from tourism is yet to pick up pace. Global high prices of commodities and fuel further exacerbated its trade deficit.
From the $800 million in surplus in February last year, the balance of payment recorded a deficit of $2.03 billion in the first seven months of this fiscal [Between July to February]. The current account deficit is at $3.41 billion against $856 million in the same period last fiscal year FY21. [read more]
Speaking at the event, the minister said there will be no shortage of liquidity if 100,000 NRNs open bank accounts in Nepal at the rate of 10,000 dollars. As per the latest data of the central bank, the country still has 9.58 billion in reserves, which is enough for the 6-7 months of imports.
Recently, the country’s central bank enforced import control measures, discouraging, and even banning in some cases, the import of non-essential and luxury items.