KATHMANDU, OCTOBER 3
The Confederation of Nepalese Industries (CNI) has engaged with the International Monetary Fund (IMF) to address economic challenges, industrial concerns and potential measures for economic enhancement.
During the meeting with the IMF regarding Nepal's economy, CNI President Rajesh Kumar Agrawal urged the IMF not to impose unnecessary pressure on policies, recognising that Nepal's economy possesses unique characteristics.
Agrawal expressed concerns that raising interest rates might not be the sole solution to control price increases, especially given the impact of imported petroleum products and goods on prices. He explained that interest rates have a more significant impact on the economy when industries are operating at only 30 per cent capacity.
He criticised the policy of increasing interest rates to curb inflation, highlighting issues with loan misuse after COVID-19 due to rapid regulatory changes. Agrawal also noted that Nepal Rastra Bank's policy guidelines primarily protect banks and questioned their alignment with the IMF agreement on loan restructuring.
He suggested that reducing interest rates could be a more effective way to stimulate overall demand and address economic problems.
The IMF's Mission Chief Tidiane Kinda and IMF Resident Representative to Nepal Teresa Daban Sanchez, along with others, discussed the impact of working capital guidance on industrialists and the CNI's perspective on necessary reforms, among other topics.
A version of this article appears in the print on October 4, 2023, of The Himalayan Times
