KATHMANDU, July 16: Nepali Congress (NC) has concluded that the importance of the upcoming monetary policy for the current fiscal year 2020/21 is greater than the previous fiscal years.
A special committee of Nepali Congress centered on economy said that the upcoming monetary policy holds paramount importance as COVID-19 has devastated the national economy, adversely impacted the jobs and income of millions of people and hit the confidence of the private sector of economic revival and investment.
Organizing a press meet on Thursday, the special committee of the Nepali Congress, the main opposition party, said that the target of both fiscal policy and monetary policy should be toward supporting the Nepali society in getting rid of health, economic and human crises caused by the global pandemic.
Nepali Congress also recommended to the central bank to focus its monetary policy on five areas to address the current challenges. According to the Nepali Congress, the monetary policy should focus on economic revival, long-term economic growth, financial reform, exchange rate and external payment stability and regulation and supervision capacity.
Revised interest rate corridor system introduced
The policy recommendations of the main opposition party comes at a time when the NRB is in the final stage of formulating the monetary policy for the current fiscal year 2020/21 that begins from today (Thursday).
The central bank is preparing to unveil the monetary policy this week or early next week, according to officials at the NRB.
According to Nepali Congress, the monetary policy should offer flexibility on loan management through loan restructuring, reschedule loan repayment period and capitalization of interest. It has also asked the central bank to provide economic relief to sectors like tourism, transportation, construction and SMEs that are hit hardest by COVID-19.
The refinance fund size should be increased to Rs 200 billion, according to a recommendation of Nepali Congress. Stating that only limited areas and groups have benefited from the current refinance fund, Nepali Congress also called for operating the fund in line with its objectives.
Nepali Congress has also advised the central bank to become cautious to minimize the effects of crowding out of private sector investments due to the government’s plan to raise nearly Rs 225 billion in domestic debts.
Increasing the limit of margin lending of banks and financial institutions, huge discounts on profit tax for at least two years for BFIs to encourage merger and acquisition and revision of the maximum limit for the digital payment, among others, also featured in the recommendation of Nepali Congress.
