Monetary policy: inspiring for many

The monetary policy announced recently by Nepal Rastra Bank could be termed inspiring for many because it addresses the real-time issues facing Nepali economy today. It has understood the problem: why has the economy remained slow and dull despite the positive macro indicators such as stable inflation and impressive balance of payment? The spirit it takes is appropriate for it encourages foreign investors, real estate entrepreneurs, stock market players, remittance companies, travellers besides emphasizing ways to implement regulatory measures effectively and in a facilitating manner. The policy, 59th in Nepal’s MP list, clearly introduces the direction in which Governor Dr. Biswo Nath Poudel intends to drive the NRB in days to come. It also familiarizes observers of Nepali economy with the new Governor’s expertise on motivating varied actors for dynamism essential for economic development and growth. The new MP could be analyzed well through the measures it has undertaken as against the objectives it has set. One could find unity of purpose in both. The same would be instrumental in bringing about positive impact on the economy in due course. A number of problems facing foreign investors have been addressed by allowing commercial banks to play a role in foreign exchange risk management services, streamlining regulatory measures, easing repatriation of returns and avoiding bottlenecks which trouble and discourage investors. Remittance companies, which play a key role in the country these days, also draw a sense of encouragement from the MP for it seeks to classify them on the basis of capital, transaction value, operational size and financial strength. The measure will encourage them to be more competitive in action and bond them more with the digital remittance channels. Stock markets feel great to see the MP lowering interest besides pushing down the limit of standing liquidity facility and standing deposit facility and liberal approach towards easing borrowing against shares. Micro finance institutions have also some points to feel a sense of relief from the MP for it intends to review distribution of annual dividends exceeding 15 % (cash or bonus). Nepali travellers will feel more comfortable with the provision for carrying legally 3 thousand dollars. The measure will enable them to cope with the demand of international travel market. The MP, if implemented well, will make a difference in Nepali economy in both short and long term.