Nepal-India Chamber of Commerce Welcomes Monetary Policy

24 Ashar, Kathmandu – The Nepal-India Industrial and Commerce Association has welcomed the monetary policy for the fiscal year 2083/84 announced by Nepal Rastra Bank.

The association believes that this policy will help maintain price stability while achieving higher economic growth. The monetary policy has been described as cautiously flexible. Despite geopolitical tensions in the global economy, fluctuations in energy prices, and international uncertainties, Nepal’s economy is gradually moving toward improvement. The monetary policy and the macroeconomic report published by Nepal Rastra Bank have led the association to conclude that significant progress has been made in Nepal’s external sector, banking system liquidity, foreign exchange reserves, and investment environment.

The association sees that a favorable foundation has been laid for expanding economic activities in the upcoming fiscal year.

The association expressed confidence that maintaining inflation within approximately 5.5 percent, while supporting the Nepal government’s target of 7 percent economic growth, will be achieved through monetary accommodation, keeping policy rates unchanged, ensuring adequate liquidity in the banking system, continuing the interest rate corridor, and maintaining stable exchange rate arrangements between the Nepalese rupee and the Indian rupee. These measures are expected to boost private sector morale and aid in establishing a more investment-friendly environment.

The association has also positively received the monetary policy’s focus on strengthening the financial sector’s stability, simplifying banking regulations, promoting digital financial services, developing a personal credit scoring system, improving non-performing loan management, and facilitating smoother foreign exchange management.

However, according to the association, the current economic situation also presents opportunities to address certain structural challenges.

Despite sufficient liquidity in the banking system, historically low interest rates, and ample credit capacity, credit expansion to the private sector has not met expectations. This indicates that the current challenge is not a lack of financial resources or high interest rates but rather concerns over investor confidence, policy stability, project implementation, administrative complexities, and the overall investment climate, the association noted.

In this context, the association emphasizes that achieving economic growth targets will require not only monetary policy but also effective fiscal policy, accelerated capital expenditure, policy stability, and coordinated implementation of private sector-friendly structural reforms.