The Nepal Government has suspended the country’s Central
Bank Governor Maha Prasad Adhikari over disagreements with Finance Minister
Janardhan Sharma and for not doing enough to revive the economy from
depression.

Adhikari, the Nepal Rastra Bank (NRB) Governor, was
suspended on Friday after the government formed a panel under ex-Supreme Court
judge Purushottam Bhandari, reported to the Kathmandu Post. On April 6, 2020,
Adhikari was appointed as Nepal’s 17th Governor under the previous government
of Prime Minister KP Sharma Oli.

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This is the second instance that a sitting governor, who
generally enjoys five-year tenure, was suspended.

According to a PTI
report, disagreements had arisen between Adhikari and Sharma due to the falling
forex reserves and the current economic condition in Nepal.

Last week, the NRB announced a ban on the import of
vehicles and luxury items, citing a liquidity crisis and dwindling foreign
reserves.

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Since July 2021, Nepal has seen a sharp decline in forex
reserves due to the increasing imports, the declining inflow of remittance and
meagre earnings from tourism and exports.

By February 2022, the country’s gross forex reserves had
declined 17% to $9.75 billion from $11.75 billion in mid-July 2021, as per the
central bank records.

Currently, the forex reserves can only sustain imports of
goods and services for 6.7 months, below the central bank’s target of at least
seven months.

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In the last week’s Cabinet meeting, Adhikari’s
performance was high on the agenda.

During the meeting, Maoist Centre chair Pushpa Kamal
Dahal and CPN (Unified Socialist) chair Madhav Kumar Nepal, who are key
coalition partners, had expressed serious concerns over the state of the
economy and asked Prime Minister Sher Bahadur Deuba to take strong steps.

Deputy NRB Governor Nilam Dhungana Timilsina has been
appointed as the Acting Governer following Adhikari’s suspension.