Kathmandu, Mar. 3
Dr. Ram Sharan Kharel, Executive Director
of the Nepal Rastra Bank, said that the tensions in West Asia can have impacts
on the price of goods and services.
"The price hike in the petroleum
products will immediately impact the production and transportation cost which
will result in growing price of the goods," he said speaking at an
interaction on 'The West Asian Conflict's impact on Nepal’s economy and supply system’
organsied by Nepal Association of Financial Journalists (NAFIJ).
However, he maintained that since the
inflation rate is around 2 per cent and the central bank has estimated to
contain it below 5 per cent, the inflation risk is low.
According to Dr. Kharel, the country has enough
foreign exchange reserves sufficient to cover the import of goods and services
for 18 months. "But remittance can be impacted if the situation aggravates
and gets prolonged. This will force Nepali migrant workers to return to their
homes," he said.
Out of the 17 countries in the Middle East,
Nepal receives remittances from 15. Of these, four countries account for 35 per
cent of the total remittance inflow. If the conflict is not resolved in the
short term, nearly 41 per cent of remittances could be affected, informed Dr.
Kharel.
But he said that this can be an opportunity
for Nepal. "Nepali industries and entrepreneurs are facing the shortage of
workers. They can get workers for the short term. Meanwhile, the banking
industry has enough liquidity which can be mobilised to the existing and new
entrepreneurs in order to expand the business," he said.
This will create employment or
self-employment for the youth.
Dr. Kharel said that the West Asian
conflict had added yet another challenge to Nepal’s economy. “Just as the
economy was beginning to return to normal following the COVID-19 pandemic,
geopolitical tensions, floods and landslides, and now the Iran–Israel conflict is
once again likely to affect it,” he said.
There was excessive liquidity in the
banking system, interest rates of banks and financial institutions had
declined, and it was expected that liquidity management would improve once a
new government was formed. However, the Middle East conflict has created
renewed uncertainty, said Dr. Kharel.
Speaking on the occasion, Shiva Prasad
Ghimire, Chair of the Transport Committee of the Federation of Nepalese
Chambers of Commerce and Industry (FNCCI) and a petroleum entrepreneur, said that
an immediate shortage of petroleum products was unlikely.
He said that although the government and
entrepreneurs must be concerned to the possible disruptions in the supply of
petroleum products as well as essential commodities, consumers need not be
worried.
“Nepal has experienced shortages of
petroleum products for various reasons at different times. Therefore, whenever
conflicts arise in different countries, a certain level of fear regarding
shortages spreads in Nepal as well,” Ghimire said.
He stated that considering the overall
situation, an immediate shortage of petroleum products does not appear likely.
Ghimire argued that although the current
conflict could reduce production and create disruptions in the supply chain,
its effects would not reach Nepal immediately. He also noted that only a few
days ago, fears of a gas shortage had spread, leading the public to worry about
a possible overall fuel crisis.
Likewise, trade expert Ravi Shankar Sainju said
that Nepal should learn lessons from the escalating conflict in the Middle East
and West Asia.
"The key issue is how the ongoing
conflict in West Asian countries will affect Nepal’s economy and what lessons
we should draw from it. In reality, we must learn how events in other countries
can influence our economy and how to adopt precautionary measures,” he said.
He suggested to move forward by
understanding the impact of external events on Nepal's internal economy.
Published in The Rising Nepal daily on 4 March 2026.
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