NRB seeks to discourage imports – The Himalayan Times – Nepal’s No.1 English Daily Newspaper


In a nod to Nepal’s burgeoning trade deficit, Nepal Rastra Bank, as part of its first quarter monetary policy review of 2021-2022, has adopted numerous measures to strengthen the country’s foreign exchange reserves. that are running out.

Among the measures introduced as part of the review, as announced at a virtual event held today, the central bank introduced a provision whereby cash deposit has become mandatory to open letters of credit for the imports.

Previously, an importer could open the LC by keeping as collateral the relevant company documents such as the updated registration certificate, income tax registration certificate, as well as the various forms provided by the Nepal Rastra Bank, among others.

Newly released data from the Customs Department showed that Nepal recorded a trade deficit of 568.17 billion rupees in the first four months (mid-July to mid-November) of this fiscal year, an increase of 56.83 % compared to the corresponding period of the previous financial year.

Nepal’s exports amounted to Rs 82.12 billion during the period under review, while the country imported goods worth Rs 650.29 billion.

The latest macroeconomic data from the central bank also revealed that Nepal’s total foreign exchange reserve as of mid-October had fallen to $ 10.98 billion from $ 12.55 billion in mid-October 2020.

The NRB, nonetheless, predicted a gradual recovery in the COVID-affected economy with declining numbers of people testing positive for coronavirus, increased availability of COVID vaccines, more people opting for employment abroad, an increase in tourist arrivals and as the country has now started to export electricity.

In the meantime, the NRB has not made any changes to policy rates such as the statutory liquidity ratio (SLR) and the cash reserve ratio (CRR).

Likewise, the 90 percent cap on the credit-to-deposit (CD) ratio also remained unchanged.

The central bank also introduced a provision whereby commercial banks can issue guarantees for foreign currency loans for commercial agriculture, manufacturing industries, tourism and projects.

A version of this article appears in the November 27, 2021 print of The Himalayan Times.

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