Kathmandu, July 31

Finance Minister Gyanendra Bahadur Karki has defended the monetary policy, which has been widely criticised for its likelihood to shrink investment, stating that the policy would in fact be a roadmap for economic development.

“There have been a lot of speculations about the monetary policy being a barrier for investment, but the fact is that it has paved the way for sustainable economic growth,” Karki said addressing a programme organised by Nepal Chamber of Commerce here today.

He also stated that the interest rate corridor mentioned in the monetary policy would help stabilise the interest rate on loan.

Some economists had criticised the monetary policy when it was unveiled by the central bank on July 9 stating that it had failed to pave the way for economic development and would shrink the investment too. Bankers had also said that the target of 18 per cent growth of broad money supply was insufficient.

“We need to enhance the private sector investment on capital formation,” Karki said. “As the government is willing to find a feasible solution to the problems raised by private sector, the latter should also increase investment in the country.”

Karki also expressed optimism on meeting the target of economic growth of 7.2 per cent for current fiscal year. He said that with the smooth supply of goods, the government has targeted to limit inflation to seven per cent.

“Since representatives have been elected at the local bodies, we can hope that they will support in boosting the development activities,” he said. “Local bodies have been allocated 19 per cent of the total budget, which should be utilised for development at local level and generate employment.”

On the occasion, Chairman of Nepal Chamber of Commerce Rajesh Kazi Shrestha said that the government should build confidence of taxpayers. He also stated that the capacity of the government should be enhanced to spend the allotted capital budget, failing which all the economic activities get affected.