NICCI welcomes monetary policy for FY 2026/27, calls for  investment-led reforms

KATHMANDU: Nepal-India Chamber of Commerce and Industry (NICCI) has welcomed Nepal Rastra Bank’s monetary policy for fiscal year 2026/27. The chamber praised its cautiously accommodative stance aimed at supporting higher growth while preserving macroeconomic stability.

The chamber said the policy arrives as Nepal’s economy shows gradual recovery amid global geopolitical uncertainty, volatile energy prices and shifting international economic conditions. It pointed to the July 2026 Macroeconomic Report’s findings of improvements in the external sector, banking liquidity, foreign exchange reserves and investor confidence as a foundation for expansion in the coming year.

NICCI approved the central bank’s projection that inflation will remain near 5.5% and its support for the government’s 7% growth target. The chamber welcomed the decision to keep policy rates unchanged, retain the existing interest rate corridor, maintain adequate banking liquidity and preserve exchange rate stability with the Indian rupee. It said these steps should sustain business confidence and create a more predictable investment climate.

The chamber highlighted the policy’s emphasis on financial sector reforms. These include simplification of banking regulations, measures to strengthen financial stability, promotion of digital banking, encouragement of credit-scoring systems, improvements to credit recovery mechanisms and enhanced foreign exchange management. NICCI said such measures will help improve the efficiency and resilience of Nepal’s financial system.

However, despite ample liquidity and historically low lending rates, NICCI observed that private sector credit growth remains muted. The chamber said this indicates constraints beyond the availability and cost of finance. It identified investor confidence, policy predictability, project readiness, regulatory bottlenecks and the pace of reform implementation as the main barriers to stronger private investment.

NICCI urged that monetary policy be complemented by fiscal discipline, accelerated capital expenditure, policy stability and structural reforms to improve the ease of doing business and attract productive investment. It listed priority areas for accelerated investment as manufacturing, hydropower, tourism, agriculture, information technology and export-oriented industries.

The chamber called for a more predictable, investment-friendly regulatory framework to attract greater domestic and foreign direct investment, particularly from India. It also sought improved coordination among central bank, the Ministry of Finance and other regulatory bodies to simplify approval procedures and facilitate cross-border investment. NICCI encouraged greater use of available banking liquidity for productive sectors rather than concentrated collateral-based lending. It urged measures to strengthen export competitiveness and value-added manufacturing to narrow the trade deficit while leveraging preferential access to the Indian market.

NICCI welcomed continued reforms on foreign exchange management, technology transfer payments, royalty remittances and investment repatriation as ways to boost Nepal’s attractiveness to investors. The chamber also stressed the importance of infrastructure development, industrial corridors, logistics connectivity and trade facilitation to raise competitiveness.

Pointing to improving private investment, stronger remittance inflows, higher foreign exchange reserves and rising foreign direct investment (FDI), NICCI said Nepal has an opportunity to shift from a consumption-driven model towards investment and production-led growth. The chamber added that closer economic integration with India offers significant prospects in manufacturing, energy trade, supply chains, digital services, tourism and cross-border investment.

In a press release, NICCI has said it is committed to working with NRB, the government of Nepal, Indian investors and the private sector to promote investment, industrial development, trade facilitation and policy reforms that enhance Nepal’s competitiveness. The chamber expressed confidence that effective implementation of the announced measures, timely execution of development spending and continued policy coordination can help Nepal achieve higher, sustainable, investment-led growth while maintaining macroeconomic stability.