KATHMANDU, April 1: The country's economy is crumbling. Due to the unsatisfactory reduction of financial crimes such as corruption, tax evasion, money laundering, and cryptocurrency trading, Nepal has been placed on the ‘grey list.’
The monetary policy adopted by Nepal Rastra Bank (NRB) determines the direction of the country's economy. The NRB also serves as the government's economic advisor. The Governor must accelerate the sluggishness seen in the economy and maintain a balance between fiscal and monetary policies. It is the responsibility of NRB to address economic challenges, understand the sentiments of the private sector, and implement policies that align with the market's needs.
To effectively advance these various issues, the NRB Governor, which is considered highly sensitive for the economy, must be a positive force in banking and financial sectors. While the process of appointing the Governor of NRB moves forward, certain political leaders and intermediaries have become active in attempting to bring in individuals from non-financial sectors.
In the race to become the Governor of NRB, candidates include directors, executive directors, CEOs of commercial banks, and even former chief secretaries. A lobbying group, aiming to fulfill their own interests, is vigorously pushing for the appointment of a former chief secretary with no experience in the financial sector to be appointed as governor.
Governor Maha Prasad Adhikari is set to retire on April 7, which means the government will have to appoint a new governor this week.
US transgender woman wins Democratic nod for governor in Vermon...
Since the government is a coalition of the Nepali Congress and the CPN-UML, the appointment will be finalized based on an agreement between the two parties. The recently appointed Managing Director of the Nepal Electricity Authority (NEA) is close to the CPN-UML, which has led the NC to take the stance that it should get the Governor's position. The governor will be appointed solely based on the choice of Prime Minister KP Sharma Oli and Nepali Congress President Sher Bahadur Deuba.
Dr Ravindra Pandey, Dr Gunakhar Bhatt, and Gyanendra Dhungana, the former CEO of Nabil Bank, who are considered close to the NC, are actively lobbying for the position of Governor. On the other hand, Dr Neelam Dhungana, the Deputy Governor of NRB, Dr Prakash Kumar Shrestha, a former member of the National Planning Commission, Bham Bahadur Mishra, another Deputy Governor of NRB, and Ashok Sherchan, CEO of Prabhu Bank, are also in the race for the position, and are considered to be aligned with the CPN-UML.
Former Chief Secretary of the Nepal government, Rajendra Kishor Chhetri, has also stepped forward in the race to become the Governor. Although Chhetri has no experience in the financial, banking, and economic sectors, he has the ability to reconcile everyone. Leaders from NC and CPN-UML, as well as business families and intermediaries, are actively supporting his candidacy. However, Chhetri has no prior experience working in banks or financial institutions.
Former governors and heads of umbrella organizations in the private sector argue that if a person from the non-banking sector becomes the governor, there is a risk of the country's economy facing a crisis. Their argument is that whoever becomes the governor must have experience in the economic and financial sectors.
“A person without knowledge of the economy cannot drive the central bank,” said a former governor, “If someone, who lacks the trust of the general public and the private sector, is appointed, the entire economic system will be at risk of a crisis.”
Another former governor of NRB, Deependra Bahadur Chhetri, holds that a person with experience in the banking and financial sectors would be most suitable for the position of governor. “A person who understands the financial sector can manage financial crises,” Chhetri said, “It can be difficult to make appropriate decisions if the person comes from a non-financial background.”
The governor holds a significant responsibility, as they must make appropriate decisions based on both domestic and international economic conditions while gaining the trust of the private sector. The leadership of NRB also carries the responsibility of ensuring the success of the government’s economic policies.
The president of an umbrella organization in the private sector stated that the governor should be someone who understands the issues of banking and the economy. “We don't have a particular choice for the person,” the president said, “but if someone from a non-financial background becomes the governor, the economy could be at risk.”
The private sector leaders pointed out that bringing the country out of the gray list and revitalizing the economy is something a person outside of this sector cannot achieve.
The government has begun the process of appointing a new governor. After the formation of a committee under the leadership of Finance Minister Bishnu Paudel, candidates for the position of governor have started their lobbying efforts.
The selection committee includes Finance Minister Paudel, former Governor Bijayanath Bhattarai, and Dr Bishwo Paudel, the former Vice Chairman of the National Planning Commission. According to the NRB Act, the committee is required to recommend the names of three candidates, including one Deputy Governor of the central bank, from which the government will appoint one.
The government has changed the criteria for the position of Governor at NRB in order to appoint a governor of its preference. Under the current system, individuals over the age of 65 cannot become the governor. However, the government has amended the “Criteria for the Appointment and Nomination of Officials and Members of Public Bodies Affiliated to the Ministry of Finance, 2073”, removing the age limit for the position, thus allowing someone over 65 to be appointed as governor.
The government has scraped out Section 3(C) of the Criteria for the Appointment and Nomination of Officials and Members of Public Bodies, which previously stated that individuals must be at least 30 years old and not exceed 65 years of age to be appointed as the executive head of a public body. Among the current candidates, Dr Rabindra Pandey, a director at NRB and former Chief Secretary Rajendra Kishor Chhetri are both over the age of 65.
