KATHMANDU, January 30: Economists have called on the government to implement tough measures to control the depletion of foreign exchange reserves amid a deteriorating balance of payments (BoP).
In a meeting with Finance Minister Janardan Sharma on Sunday, experts suggested the government maintain existing restrictions on imports until the country’s balance of payments returns to normal. Although macroeconomic indicators have not deteriorated so far, the government should implement necessary measures to prevent the country’s economy from further deteriorating, economists said.
Recently, the slowdown observed in the external sector has raised serious concerns on several fronts regarding the country’s economic health. According to a report by Nepal Rastra Bank, the BoP remained at a deficit of 195.01 billion in the first five months of the current financial year.
During the period, the trade deficit soared by 54.7% to Rs 735.49 billion while remittances declined further. Due to the massive flight of foreign currency from the country, Nepal now has sufficient foreign exchange reserves to import goods and services for only 6.8 months.
Economists Shankar Sharma, Bishwombhar Pyakurel, Min Bahadur Shrestha, Durgesh Man Singh, Hari Rokka and Ram Kumar Phuyal were among those attending Sunday’s meeting with Minister Sharma. The experts also underlined the need to improve agricultural productivity, discourage bank credit to unproductive sectors and introduce structural reforms in various sectors to ensure the good health of the country’s economy.