As the remittance inflow has significantly improved and import restrictions on certain items are still in place, the foreign exchange reserves of Nepal have increased by $130 million in one month.
According to the latest macroeconomic data by Nepal Rastra Bank (NRB), the gross foreign exchange of the country has gone up to $9.48 billion in mid-October, compared to $9.35 billion in mid-September.
However, compared to the three-months report, the foreign exchange reserves have slipped by 0.6 percent from $9.54 billion in mid-July.
Meanwhile, remittance inflows increased 16.8 percent to Rs 281.05 billion in the review period against a decrease of 7.1 percent in the same period of the previous year.
In the time frame, 147,932 people took the labor permit (institutional and individual) for foreign employment. It is a staggering escalation of 123.1 percent. Likewise, the number of Nepali renewing their labor permit counted at 57,861. It went up 66.2 percent.
According to economist Keshav Acharya, the government policy of banning the import of certain non-essential items has somehow managed to improve the country’s current account, BoP and foreign exchange reserves.
He, however, opined that import restriction is not a sustainable solution and the government should rather focus on an import-substitution policy.
“With a limited source of foreign capital, the country is struggling to maintain the foreign exchange reserves owing to the COVID pandemic and Russia-Ukraine war,” he shared.
“Instead of exporting goods, we’ve been exporting our human resources to other countries. Moreover, we are not receiving adequate foreign grants and foreign direct investment lately and also the tourism sector is struggling to generate precious dollars at par with the pre-pandemic level,” said Acharya.
