"Monetary Policy 2080/081 is Balanced in Present Economic situation of Nepal - Sunil K C, NBA

Jul Wed 2023 02:42:59


"Monetary Policy 2080/081 is Balanced  in  Present Economic situation of Nepal - Sunil K C, NBA

Kathmandu . Nepal Bankers Association has expressed its views on the monetary policy issued by Nepal Rastra Bank recently. The world's major central banks are raising interest rates. This week, there are indications that the interest rate will be increased again. The Bank of England also raised interest rates last month. We have seen the situation where the price increase is still increasing or has not been brought under control. Global political problems still remain. Recently, Russia has withdrawn from the Back Sea Grain Advance.

Nepal Rastra Bank has announced the monetary policy. Internally, there is some improvement in the external sector of Nepal. Foreign exchange reserves are good. The balance is 228 billion more. Remittance inflows also set a record last month. The liquidity situation in banks has also improved. It has given some positive message. At the same time, the expenditure of the government is more than the income. A loss of 470 billion has been seen in this. It seems that this situation may continue.

Looking at the external and internal scenario, this policy is somewhat different from the previous policy. What has been achieved: It seems that the goal is to advance the economy by maintaining it. Therefore, the monetary policy is somewhat balanced and solid.

In the policy, the target of credit expansion has been set at 11.5 percent. According to the current calculation, there should be an increase of about 565 billion. Last year, credit expansion increased by only 2.5 percent. In the previous year, the National Bank had set a target of 12.5 percent. Looking at that, it seems that the loan expansion target has not been met. But looking at the 10-year data, there was an increase of more than 800 billion in 2077/78, which was an increase of about 27 percent. Except for the last year, the target of extending 565 billion loans has been set less than that.

Looking at all aspects, the actual increase is about 700 billion. Looking at all this, there are some challenges. When reading the monetary policy in its entirety, it is seen that the increase of 11.5 percent is intended to expand in the productive sector or to support it. We expect that the Central Bank will issue necessary instructions for this.

There are some new things in monetary policy. Things like giving some concessions in real estate, shares and vehicle loans have also been done. While giving such concessions, it also helps related construction and other sectors. The fixed deposit facility is said to be 4.5 percent. This will largely control the fluctuations in the currency market in the days to come and will stabilize interbank interest rates. It is said that as soon as this comes down, arrangements will be made for banks to make deposits in the central bank. We understand that this will facilitate the management of our treasury and money market.