FNCCI requests FinMin to protect economy

Published On: December 5, 2022 01:27 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Dec 5: The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has requested Finance Minister Janardan Sharma for cooperation and coordination to protect the country's economy.

A team led by FNCCI President Shekhar Golcha met Finance Minister Sharma and said that the current financial year's monetary policy could not address the existing problems. He also requested the minister to protect the economy, saying that there are multi-faceted effects on the economy.

Golchha said that the revenue cannot cover even the recurrent expenses and the price increase is the highest since seven years and the private sector is shrinking. He said that the government and the central bank should take steps to protect the economy as the multifaceted risks increased during the period of about a year after they started to control the market directly and indirectly.

According to the FNCCI, the guidelines implemented at a time when private sector investment is shrinking and revenues are continuously decreasing, putting pressure on the country's economy, have added complexity to business. Fluctuations in interest rates, national and international financial discomfort, internationally raised fuel and raw material prices, and logistics and freight charges have also increased. The Federation claims that there is a mismatch between the determination of the estimated financial statement, the determination of the actual required limit of working capital and the lack of working capital has caused difficulties in the operation of the industry. The Federation demands that the implementation of current capital guidelines 2079BS be postponed for at least two years. It is also requested to continue the initiative of reforming the system that affects the private sector in guidance for two years.

The FNCCI believes that the central bank will be positive as the economy is demanding promotional rather than punitive reforms from the regulatory bodies. Through the monetary policy review, the average interest rate difference of commercial banks should be maintained between 4.4 percent and 4 percent and the average interest rate difference of development banks and finance companies should be maintained at 5 percent to 4.6 percent, according to the Federation. Businessmen say that if the interest rates do not decrease, it will be difficult to save the economy.

As about 60 billion rupees of re-loan withdrawal from banks and financial institutions in the middle of January will cause problems for entrepreneurs and the lack of liquidity in the market will be more complicated, it has been requested to facilitate re-loan renewal for at least one year. The Federation suggests that the mandatory cash ratio should be reduced by one percentage point, the policy rate should be reduced, liquidity management measures should be adopted by transferring the funds in the government treasury, and the amount going to the local level should be calculated at 100% for a certain period. Lack of capital expenditure is a long-standing problem of the country and there is a lack of liquidity in the market due to the lack of expenditure, so special initiatives have been taken to increase expenditure. The Ministry of Finance has requested the immediate implementation of the plan to increase the expenditure in the context of the fact that there is no capital expenditure. The federation has suggested implementing the automatic process mentioned in the budget to attract foreign investment.

It has been said that country rating, which has been included in the government's policies and programs, should be done immediately, and bonds and other instruments can be used to bring in international funds. The federation has requested that the private sector and banks should facilitate and encourage borrowing from abroad, and the provision of loans to manufacturing industries at lower interest rates than other businesses mentioned in the budget statement should be implemented immediately.

During the meeting, Finance Minister Sharma said that he has taken very positively the continuous initiatives taken by the Federation to reduce the risks facing the economy. The finance minister said that according to the suggestions given by the Federation, the government, the central bank and the private sector will cooperate with the ministry to move forward.


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