NRB tightens the noose on the import of luxury goods amid declining foreign currency reserves – myRepublica

KATMANDU, December 21: Nepal Rastra Bank (NRB) asked selected luxury goods importers to maintain one hundred percent cash margin to open letter of credit (LC) accounts, aimed at tightening the noose on the importation of these products.

In an effort to curb the flight of foreign currencies amid increasing pressure on the country’s foreign currency reserves, the country’s central bank has taken action. Revising the unified directive on Monday, NRB asked importers to maintain a one hundred percent cash margin on imports of dozens of goods, which fall under the 18 harmonic codes.

With the new provision in place, importers of sugar and confectionery, cloves, mineral water, alcoholic beverage, vinegar, energy drinks, cigarettes and tobacco products, perfumes, cosmetics, wooden articles, footwear, cement, wooden articles, ceramics, marble, umbrella, gold and silver will need to maintain a 100 percent cash margin in their LC accounts. This means that importers must keep money, equivalent to the cost of importing these goods, as a bank guarantee.

Likewise, the central bank has also asked auto importers to keep 50 percent of their cost at the margin. Previously, importers were only required to maintain up to 15 percent of the cash margin on selected goods while opening LC accounts for imports.

With large outflows of foreign currency amid the slow growth of the country’s income from overseas, Nepal’s foreign exchange reserves declined 10.9% to $ 10.47 billion in the first four months. of the current fiscal year. The amount now allows the landlocked country to finance imports for only 7.9 months.