June 30, 2022, Thursday
Nepal 1:37:26 pm

Monetary Policy in right direction

The Nepal Weekly
August 17, 2021

The monetary policy made public recently by the Nepal Rastra Bank has taken a positive and sympathetic approach to contemporary economic problems facing Nepalis. It has appropriately analyzed the current economic status of the country and felt the need to address myriad disruptions caused by the COVID nineteen. The policy could also be helpful in maintaining financial stability in the country. Although the policy makers had to stand between two major economic documents of the ongoing fiscal year – ordinance- budget introduced by Oli-led government and common minimum programme prepared by the coalition government of PM Deuba –specialists demonstrated a sense of professionalism in developing monetary policy. The economy hit hard by lockdowns and other disturbances for weeks is too feeble and it requires special attention from the authorities concerned. Such attention is visible in the policy through various considerations including direct fiscal relief and indirect compensation for those who have taken bank loan for their investments and enterprises. Conscious of encouraging new investors and small entrepreneurs, the policy has provided room for series of adjustment-measures for initiating economic activities or continuing the same. Hotel and tourism industry entrepreneurs who are suffering from the loss of business because of the virus for two years have also received some relief and measures to survive through financial relief. Similarly the provisions made for transport entrepreneurs, and those cottage industries with investment of less than one crore rupees are also encouraging.  Measures undertaken for promoting liquidity in the economy through awarding one percent more interest for remittance-deposit, fixing loan deposit ratio at ninety percent and raising double the consortium finance could contribute to economy positively. If the policy could be implemented sincerely with proper monitoring it would at least not discourage the investment sector in Nepali economy. Since the policy does not depart from the relief provided last year also disrupted by the virus-related issues, the fresh measures could help entrepreneurs in a consistent manner. Had there been some measures in the policy for small and marginalized farmers and informal sector workers particularly wage earners, the policy could have contributed further to the broad cause of improving the ailing economy.