KATHMANDU: The country’s fiscal regulator, Nepal Rastra Bank (NRB), has rejected taking long-term measures combat the liquidity crunch. It is a short-term phenomenon and NRB will not

impose long-term measures, said NRB acting governor Krishna Bahadur Manandhar.

NRB’s short-term measures are working well and the crunch will ease in weeks, he said at an interaction organized by Federation of Nepalese Chambers of Commerce and Industry (FNCCI). Nepal is facing liquidity crunch since last October due to the multiple effect of high import of gold and consumer goods, low confidence of people in the banking system and dwindling remittance.

Money is outside the banks and financial institutions channelling it have created the problem, he said. He gave an example of remittance to support his argument saying, foreign currencies coming as remittance into NRB has reduced from 85 per cent last year to 40 per cent this year. However, he did not elaborate where the money is going.

Acting governor Manandhar assured entrepreneurs that the current crisis and interest rate hike would not last long. Rising interest rates in lending up to 8 per cent has spoiled many’s dreams of starting new industries in Nepal. “The interest rate is unrealistic and will go down in a few months,” he said.

Finance secretary Rameshwor Kahnal echoed Manandhar and dismissed rumours of revaluation of Nepali currency’s exchange rate. “We don’t have to take such strong measures because already simple measures of NRB are giving positive results. NRB had taken two strong measures — ceiling on lending in real estate and housing and a ban on gold import — to ease liquidity in banks and financial institutions (BFIs) since December.

Addressing entrepreneurs and economists, Finance Minister Surendra Pandey assured that the government would take economic issues as aspirations for a new Nepal. “Just wait some months, political parties will unite for industrial revolution,” he said adding recent developments are already working for a prosperous Nepal.

Speaking on the occasion, Prime Minister Madhav Kumar Nepal urged the private sector to come up with innovative ideas. “The private sector should come up with competitive ideas and the government is ready to support it,” he said, “The government want the real sector boosted.”

FNCCI banking committee chief Pashupati Murarka said businessmen importing goods from India are buying IRs 100 at the rate of NRs 163 in secondary market whereas NRB’s rate is 1:1.6. Secondary market of IRs is growing and needs to be curtailed, he said.