The Nepal Rastra Bank Governor Maha Prasad Adhikari today said the Monetary Policy for Fiscal Year, 2023/24 would be issued in line with the budget policy.
Preparations are underway to bring the monetary policy next week, he said. The monetary policy would focus on achieving economic growth as per the budget target, controlling inflation and managing external sector, he said while attending the meeting of the Finance Committee under the Federal Parliament’s House of Representatives.
Although there are some positive economic indicators like the balanced external sector, decreasing interest rates and adequacy of liquidity, some problems like inflation, deficit reserve fund and sluggish credit expansion still persist. “The permissible limit of inflation for the previous FY was seven percent, and it remains above that this FY. The reserve fund is in deficit of Rs 193 billion. The credit expansion has decreased despite good deposit collection,” he said.
The external sector seems facilitating as compared to the previous year, he said adding “Now, there is liquidity worth Rs 88.5 billion in the banking system. The current accounts suffer a deficit of Rs 70 billion, and there were difficulties to recover loans due to the market slowdown”. According to him, Until June 15, 2023, the total 147,510 people took concessional loans.
Stating that the Central Bank would take an appropriate decision in finding ways to balance the country’s economy, the governor mentioned “Today’s problems are a slowdown in real estate, and failure to collect revenues and achieve capital expenditure as per target. The monetary policy does not have all instruments to resolve problems. We will use whatever instruments we have.”
According to the Nepal Rastra Bank, the interest and base rates of loans and deposits are decreasing, and the CD ratio has dropped to 82 percent. The government has set a target of keeping inflation within the permissible limit of 6.50 percent in the current FY, and the monetary instruments would be mobilised accordingly, it said.
Finance Secretary Arjun Kumar Pokharel viewed that there should be synchronization between the fiscal policy and monetary policy.
Similarly, achieving the economic growth and keeping inflation under control should be the first priority of the monetary policy apart from according priorities in implementing the government’s policies and programmes for increasing loans in the productive sector and domestic productions, he said.
(RSS)