Liberal policy vital for economic vibrancy: Finance Minister Mahat

KATHMANDU: Finance Minister Prakash Sharan Mahat has underlined the need for a liberal monetary policy for the acceleration of economic activities. Taking part in a discussion on 'Nepal's economic situation and upcoming monetary policy', the Finance Minister said the economy will be vibrant if the issues of policy rate are addressed during the determination of a monetary policy for the upcoming fiscal year. A liberal policy is capable of making the economy vibrant, according to the Finance Minister. 'The liberal economic policy brought targeting the recovery of the economy after Covid 19 pandemic was tightened being based on external economic issues.  The same move has led to issues in domestic economic settings." He insisted on the collaboration between the Finance Ministry and the Nepal Rastra Bank to promote the nation's economy. The government wished the NRB to function independently and make efforts for the improvement of the overall economy.  There should be coherence between fiscal policy and monetary policy to operate the economy effectively.

 

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He claimed that the government's fiscal policy stressed economic improvement. "At the moment, capital flow is limited due to a high cost, preventing the economy to catch its vibrancy." "The government prioritises fiscal discipline," he said adding that it had controlled the unnecessary budget transfer. According to him, the government has set a target of achieving 6% economic growth in the upcoming fiscal year. Lawmaker Metmani Chaudhary stressed prompt identification of the present problems in the economy and resolving them. "Nepal's economy is headed towards a serious condition. There is a need for reviving it and it is necessary to identify the underlying problems — whether that is related to intention or policies — for that," he said. Chaudhary, who is also the president of the Economic Discussion Forum, said the suggestions collected for the monetary policy for the upcoming fiscal year 2023/24 will be submitted to the central bank. Economist Dilliraj Khanal opined that problems in the banking and finance sector will result in problems in the entire economy. He said, "Although the economy is on the path to improvement, it is still in crisis. The liquidity has increased at present. However, the loans have not expanded. The lending by the banks and financial institutions (BFIs) have not extended their loans in the productive sectors." Economist Khanal said that an extension-oriented monetary policy brought for the post-Covid recovery was requirement. However, it could not produce the expected output later on. According to him, inflation is seen in the market since the investment has not been higher in the small, medium-scale and productive sectors. He said problems like investment in the unproductive sectors, limited big business houses using a large chunk of loans on a concessional basis, and cooperatives becoming problematic, among others are seen in the financial sector and these needed to be improved. Economist Chandrakanta Adhikari said the results of the sector-wise loans could not be seen in the GDP. "The contribution of agriculture, hydropower and other sectors to the GDP is minimum compared to the amount of loan issued to these sectors," he pointed out. Former banker Anal Raj Bhattarai said the market demand has contracted at present and stressed that the monetary policy for the upcoming fiscal year should be able to create an environment conducive to the private sector business. By RSS READ ALSO:

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