Referring that only one out of four rural people had access to finances and many more were deprived of the benefits of economic growth, Pun stressed on effective institutions so that the benefits of growth could be fairly distributed among people. [break]
“Growth with equity is what we aspire for, but for that we must have sound policy, effective programs and competent institutions to reap lasting benefits,” said Pun.
Inaugurating the international conference on economics and finance organized by Nepal Rastra Bank (NRB), Pun said Nepal had already lagged behind and has no resources to experiment with different policies and programs.
“We must make most efficient use of limited resources that we have and for that we must fine tune our policies, particularly financial sector related policies, based on knowledge that worked in similar countries in the world,” said he.
The three-day conference, the first major event of this type organized by NRB, revolves around a theme of Role of Financial Sector Development in Economic Growth and Poverty Alleviation. More than 65 international participants and domestic fellows are scheduled to present more than 60 papers.
While highlighting the importance of financial sector in achieving high-broad based and inclusive economic growth, Governor of NRB Yuba Raj Khatiwada stressed on the need to make financial institutions more efficient and to enhance financial inclusion.
“In order to ensure efficiency, we have adopted a strategy to consolidate the institutions expansion. But at the same time we are also concentrating on raising rural populace´s access to finances,” said Khatiwada.
He said NRB´s approach to financial system was it should be "demand lead" so that it could lead to the growth of real sector.
Citing empirical studies, guest speaker of the conference Faisal Ahmed, IMF resident representative in Cambodia, noted that financial sector development directly impacts growth. “But how it impacts the poverty depends largely on quality of growth,” he said emphasizing on financial inclusion.
Ahmed noted that low income countries like Nepal were largely characterized by low saving and financial development, concentrated production and export base, higher vulnerability and exposure to external shocks, and constrained regulatory and supervisory capacity.
“All these factors seek low income countries to be more cautious while devising policy and programs,” he said, adding that road towards financial development can be bumpy, and policymakers should make special effort for striking a balance between growth and development.
Moreover, Ahmed suggested the governments in low income countries to remain alert at safeguarding the soundness of banks, enhancing coordination between banks and capital markets for maintaining a clear financial link, soundness of macro-economic policy and prudently attracting and managing foreign capital.
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