Kathmandu: Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel has emphasized the necessity of enhancing the collaboration between the Ministry of Finance and Nepal Rastra Bank. He called for concerted efforts to bolster the national economy through improved coordination between fiscal and monetary policies.
According to National News Agency Nepal, Minister Paudel, speaking at a pre-monetary policy discussion organized by Chanakya Media Pvt Limited, underscored the significance of aligning the government’s economic and fiscal strategies with the Central Bank’s monetary policies. He stressed that achieving shared objectives should be the foremost priority. The Finance Minister pointed out that the state system has not adequately addressed the lack of coordination and coherence between government policies and those of the Nepal Rastra Bank (NRB). He highlighted the growing concern over the absence of a balanced relationship between these entities, asserting that the system envisions a close and dynamic interaction between officials from both sides.
Dr. Prakash Kumar Shrestha, a member of the National Planning Commission, commented that the upcoming fiscal year’s monetary policy should prioritize increasing loan disbursement and stimulating market demand, particularly following the recent reduction in bank interest rates. He warned of the potential risk of capital flight due to a surge in bank deposits coupled with a continuous decline in interest rates. Currently, the interest rate on bank deposits is approximately 4.45 percent, the lowest since 2073 BS, and is nearly equivalent to the prevailing inflation rate.
Former Governor of the Nepal Rastra Bank, Maha Prasad Adhikari, praised the central bank’s governance, suggesting that if all institutions achieved a similar level of governance, the country’s economic landscape would transform. Meanwhile, Nepal Insurance Authority Chairperson Sharad Ojha emphasized that policy-making should prioritize the general public, noting that improvements in the insurance sector are underway but will take time to manifest.
NRB Deputy Governor Bam Bahadur Mishra shared that the central bank is exploring diverse approaches to regulate banks and financial institutions and execute monetary policy. He mentioned discussions on topics including foreign exchange operations, amendments to working capital loan guidelines, loan restructuring, and recapitalization.
Anjan Shrestha, Senior Vice President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), highlighted the necessity for facilitative measures in the forthcoming fiscal year’s monetary policy due to declining private sector investment and credit expansion. Kamlesh Kumar Agrawal, President of Nepal Chamber of Commerce, expressed concerns about unstable policies causing challenges for the private sector.