Nepal cuts imports as forex kitty runs low

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Nepal, home to 30 million, is taking no chances after the foreign exchange debacle in Sri Lanka, which forced the latter to declare an economic emergency. In a move to contain the outflow of foreign exchange, Nepal has imposed a temporary ban on a some items such as betel nut, pea, dried date and peppercorn.</p>
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Dev Kumar Dhakal, spokesperson for Nepal Rastra Bank has told the Chinese <a href="http://www.xinhuanet.com/english/asiapacific/2021-10/04/c_1310225915.htm">news agency Xinhua</a> that the country’s commerce department has advised the central bank not to provide foreign exchange facilities for the inbound shipment of these goods as they are under the prohibited list for the imports.</p>
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"Based on this request, we issued a circular in the name of banks not to provide any foreign exchanges for the import of these items," the news agency quoted Dhakal as saying.</p>
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Since January this year, Nepal’s forex reserves have been steadily weakening.</p>
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In the first month of the current 2021-22 fiscal year starting in mid-July, Nepal's foreign exchange <a href="http://www.xinhuanet.com/english/asiapacific/2021-10/04/c_1310225915.htm">reserves decreased to $11.42 billion from 11.75 billion</a>, as imports saw a huge growth.</p>
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Nepal’s economy contracted by 1.8 per cent in 2020. The tourism sector is a key contributor to the country's GDP. It is also a major source of foreign exchange and revenue. But the Covid 19 pandemic has dealt a huge blow to this sector.</p>
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For Nepalese Prime Minister Sher Bahadur Deuba, one of the biggest challenges include fixing the country's economic situation, which has been severely damaged due to the Covid 19 pandemic. While unemployment has risen, the country’s exports sector remained muted.</p>