• Friday 20th September 2019

Balance of payment negative, foreign currency reserve critical

  • Published on: September 11, 2019

  • By Our Reporter
    All is not well with Nepal’s economic situation although the government has been claiming that the economy has shown positive signs.
    The growing inflation and burden on the balance of payment are testimony to this.
    The continues depreciation of Nepali rupees against dollars, escalating imports, poor export and the ongoing reconstruction drive as well as the growing trends among students to fly the USA and Australia have hit the BoP.
    Economists said that as Nepal’s economy is import-based, the devaluation of Nepali currency will invite negative consequences in the national economy. With rising value of the dollars, price of every imported item gets skyrocketed. Likewise, when more students go overseas for study, foreign reserve is unnecessarily under pressure.
    Unless the production of export items is increased and the import of luxurious items like motors is discouraged, Nepal cannot overcome the current crisis. Likewise, the government should try to retain the students in Nepal so as to avoid pressure on the foreign reserve. Similarly, the high production cost within the country has led to inflation.
    Now when the festival season is approaching, the economy is likely to feel more pressure as the import of clothes and foods as well as luxurious items go up during festivals.


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