Constant dollars

Nepal’s finance minister urges non-residents to open dollar accounts

The Nepalese government has urged Nepalese residing in foreign countries to open dollar accounts in the country’s banks and make investments amid the economic crisis in the Himalayan nation.

Nepal’s foreign exchange reserves have been hit by a drop in tourism during the pandemic, a problem that has also hit Sri Lanka which has been going through a crippling economic crisis since its independence from the United Kingdom in 1948.

Speaking in a virtual interaction hosted by the Nepalese Non-Resident Association (NRNA), Nepalese Finance Minister Janardan Sharma said on Thursday that the opening of dollar accounts in Nepalese banks by Nepalese non-residents (NRN) would help the country get rid of the current foreign exchange crisis.

There will be no shortage of cash if 100,000 RRNs open bank accounts in Nepal at the rate of $10,000, Sharma pointed out.

We have enough foreign currency to purchase goods and services for 6-7 months. According to the latest report released by Nepal Rastra Bank (NRB), the central bank, the government has $9.58 billion in reserve, Sharma said.

As the price of gasoline has increased, millions of dollars have to be spent on it. He also informed that the government has completed the appropriate policy process for the dollar account for the benefit of Nepalese living overseas.

Sharma said discussions are underway on providing free visas to tourists coming to Nepal which will also make it easier for RRNs.

During the show, Kul Acharya, Executive Chairman of the Non-Nepalese Association (NRNA), said that opening dollar accounts was a way to connect NRNs in Nepal. He thanked the government for changing the rules of the policy to make it easier for Nepalese living abroad to open foreign currency accounts in Nepal.

Last week, the Nepalese government dismissed central bank governor Maha Prasad Adhikari for not doing enough to pull the economy out of the doldrums.

The NRB also announced a ban on imports of vehicles and other luxury items, citing a shortage of liquidity and a drop in foreign exchange reserves.

Since July 2021, Nepal has seen a decline in its foreign exchange reserves due to rising imports, falling remittances, and meager tourism and export earnings.

By February 2022, the Himalayan country’s gross foreign exchange reserves had shrunk by 17% to $9.75 billion, from $11.75 billion in mid-July 2021, according to central bank figures.

Foreign exchange reserves are now sufficient to support the import of goods and services for 6.7 months, below the central bank’s target for at least seven months.

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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