As there is no sign of replenishing the foreign reserve, we have to impose a ban on importing luxury goods
The bankers themselves have decided not to issue letters of credit (LCs) for the import of luxury goods eventhough the Ministry of Finance took no initiatives to address the dwindling foreign exchange reserve in the recent months. An executive meeting of the Nepal Bankers' Association (NBA), an umbrella organisation of the chief executive officers of 27 commercial banks, took a decision to this effect on Sunday, adhering to the directives of the Nepal Rastra Bank, which told them not to issue any LC for the import of luxury goods due to depleting foreign exchange reserve, which, according to the central bank, has gone down to its lowest level in recent months. It may be recalled that the central bank had written a letter to the Ministry of Finance weeks ago suggesting imposing a ban on the import of luxury goods until the country had enough foreign exchange reserve at its disposal. As per the central bank, the country's foreign exchange reserve can sustain only for 6.5 months of imports, whereas it used to be for 11 months until last year. The Nepal Rastra Bank had suggested the Finance Ministry that the country would be under pressure even to import most essential goods if the already scarce foreign currency reserve was spent on importing luxury goods. Adhering to the central bank's directives, the commercial banks have decided not to issue LCs for the import of luxury items such as vehicles, gold, silver, sugar, chewing gum, dry food, furniture, cigarettes, alcohol, perfume and mobile phones.
The NBA's decision not to issue any LC for the import of luxury goods is a welcome move, and it is also a slap on the face of the Finance Ministry, which took no decision on this issue even though it was well aware of the country's deteriorating economic health. The Finance Ministry should have promptly swung into action to stabilise the country's economic condition, which is getting worse day by day due to lower inflow of remittances and dwindling reserve of foreign currency, which has directly impacted the balance of payments. The Ministry of Finance and the Ministry of Industry, Commerce and Supplies should have taken a proposal to this effect at the cabinet meeting.
However, both the ministries took no initiative to address the looming economic crisis. Nor did PM Sher Bahadur Deuba take any step in this regard.
Earlier, the central bank had imposed a 50 to 100 per cent cash margin on the import of 47 goods in a bid to stop the outflow of the country's depleting foreign exchange reserve. Not only luxury items but other goods such as cereals, meat, fish, vegetables, fruits and even mineral water, all of which can be produced or grown within the country, are also imported, spending billions of hard-earned foreign currency.
Our economy will be heading the Sri Lankan way if the government does not take measures to tighten the belt on importing luxury goods and encourage the farmers to grow food and other items that can be done within a couple of months. However, sad to say, the farmers rarely get any incentive from the government so that they can engage in the agriculture sector.
As there is no immediate sign of replenishing the foreign exchange reserve, we have no option other than to impose a ban on importing luxury items.
TIA initiative
The robbery that takes place in broad daylight at the Tribhuvan International Airport (TIA) is a blot on the country's only international airport. Passengers complain of baggages getting lost or valuables kept inside them stolen. Goods susceptible to theft include such expensive gadgets as laptops, iPhones and mobile sets which are allegedly stolen by baggage handlers, some of whom have been caught in the act. This has been going on for ages, but the authorities have done little to hold anyone accountable for the theft.
Due to the growing number of complaints, the Airport Security Guard Office under the Nepal Police is going high-tech to put a stop to the mismanagement at TIA. Accordingly, baggage handlers will now be required to wear body cameras to record their activities at all times. But will this approach work? There are thousands of airports, international and domestic, worldwide, but such criminal negligence as at TIA is nowhere to be found. Immediate suspension and action against the suspected baggage handlers in the past would have brought discipline among them. But the strong unionism existing at the airport, with the unions protected by the political parties, has failed all management initiatives.
A version of this article appears in the print on April 12, 2022, of The Himalayan Times.
