KATHMANDU, DECEMBER 5
Teresa Daban Sanchez, resident representative for the International Monetary Fund (IMF) Nepal office, said that IMF works with the government on the macro management of the economy and provides policy recommendations to the government on macroeconomic stability.
Speaking at a meeting with the executive committee members of the Confederation of Banks and Financial Institutions Nepal (CB- FIN), Sanchez said that the IMF has been working with the government of Nepal by providing policy recommendations.
Stating that the situation is complicated not only in Nepal but globally, IMF Chief Sanchez said, "High interest rates in the United States and Europe have contributed to higher inflation. Domestic demand is also weak in Europe, which means that all countries must be prepared to deal with the situation cautiously."
"Nepal's economy is influenced by its neighbours, namely India and China," she added.
The IMF chief also suggested that Nepal focus on producing locally and high-quality products to compete in the global market, as competitiveness and productivity are the key.
The IMF chief was of the opinion that Nepal can develop a strategy to cope with the existing challenges.
Similarly, former CEO of Standard Chartered Bank Nepal Ltd, Joseph Silvanus, commented that BFIs need to choose their investment products on their own.
"Nepal is low on non-funded income, "he said.
President of CBFIN Pawan K Golyan emphasised that Nepal is in a vicious circle, and the production and agriculture sector are underperforming due to high interest rates.
"The increased credit to the private sector earlier has generated more inflation. The productive sector is not getting money from the BFIs, which has created serious problems. Though Nepal has a unique product, they are yet to be promoted and marketed globally," said Golyan. "We need to focus on import substitution that helps in sustaining the economy."
He also expressed concerns regarding increased expenditure of government and opined that needs to be controlled. "Import rise of some agro products has also troubled us a lot though Nepal is capable of producing such products."
Likewise, Rajesh Upadhyaya, vice-president of CBFIN, suggested that major issues of the financial sector need to be discussed and tackled effectively to improve the sector such as increasing the role of BFIs in reducing the trade deficit, the impact on the financial health of BFIs due to capping on service fees and interest rates, strategies to increase loanable funds and risks to BFIs due to steep rise in interest rates.
Senior Vice-President of CBFIN, Bhoj Bahadur Shah, said that the meeting between the IMF and CB- FIN will unlock the possibilities for financial sector reforms through a partnership approach.
A version of this article appears in the print on December 6, 2022, of The Himalayan Times.
