Nepal sacks Central Bank Guv, forex reserves at record low

New Delhi, April 10

After Sri Lanka, another Indian neighbour Nepal is facing serious foreign exchange issues, leading to the suspension of the Central Bank Governor Maha Prasad Adhikari for not doing enough. In February this year, Nepal’s forex reserves had fallen 17 per cent to $9.75 billion, enough to sustain the import of goods and services for just over six months.

The suspension came amidst differences that had emerged between the Nepal Rastra Bank (NRB) Governor and Finance Minister Janardhan Sharma over falling forex reserves and low growth of the domestic economy. It did not help that Adhikari was appointed by the previous KP Sharma Oli government.

The suspension was announced after a government headed by former Supreme Court judge Purushottam Bhandari submitted its report.

Adhikari was appointed as Nepal’s 17th governor on April 6, 2020 under the previous regime headed by former Prime Minister KP Sharma Oli. This is only the second instance that a sitting governor, who enjoys a five-year tenure, was suspended.

Last week, the Himalayan nation had banned the import of vehicles and other luxury items due to low forex reserves. As is the case with Sri Lanka, the crash in tourism due to the Covid pandemic and fall in remittances from expatriates has also badly hit its economy.

Himalayan nation stares at crisis

• In February this year, Nepal’s foreign exchange reserves had fallen 17% to $9.75 billion
• Enough to sustain import of goods and services only for six months
• Last week, Nepal had banned the import of vehicles and other luxury items due to low forex reserves

Not going Sri Lanka way, says FM

We are not headed in the direction of Sri Lanka. Our economy is in a better position. There is no huge foreign debt burden. — Janardhan Sharma, Finance Minister