Nepal | August 04, 2020

‘Monetary Policy should prove lifeline to economic and business growth’

Himalayan News Service
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Amid Nepal Rastra Bank (NRB) preparing the Monetary Policy for fiscal year 2020-21, stakeholders have said that the policy for the upcoming fiscal year should prove to be a lifeline to revive the country’s economy and businesses that have been severely hit by the COVID-19 pandemic.

As the major challenges facing businesses/borrowers today are related to repayment of loans and interest rates and a slowdown in cash flow due to the halt in businesses throughout the lockdown period, stakeholders have said that the Monetary Policy for next fiscal year should be bold and centred on sustaining and reviving businesses and the economy as a whole.

Addressing a webinar organised by the Society of Economic Journalists Nepal (SEJON) today, former central bank governor Chiranjibi Nepal stated that amid the uncertainties on how the crisis will evolve and when the COVID-19 will be fully contained, NRB today has the tough responsibility to boost the morale of the economy and the driving forces behind it.

“Unlike the crisis Nepal faced after the earthquake in 2015 and the border obstruction, the coronavirus crisis has resulted in circumstances that Nepal had never faced before. In such a context, the central bank has to focus on financial stability, easing business operations, creating jobs and ensuring an uninterrupted supply chain in the market,” said Nepal.

Nepal suggested NRB that the Monetary Policy for next fiscal year should focus primarily on restructuring and rescheduling all types of loans and interest rates and bringing a relief package targeting small and medium scale industries (SMEs). “Effective measures should be adopted to boost the confidence of businesses of all types,” he added.

Anuj Agrawal, vice president of the Confederation of Nepalese Industries, said that the Monetary Policy should introduce some bold measures regarding restructuring loans, reducing interest rates and refinancing loans.

“While some businesses might take months to revive, others might take even years. Thus, the Monetary Policy should introduce far-sighted long-term measures to help businesses sustain and revive from the COVID-19 crisis,” he mentioned.

Similarly, Shekhar Golchha, senior vice-president of the Federation of Nepalese Chambers of Commerce and Industry, said that the primary problem that businesses are facing today is regarding the payment of loans and interests and the central bank should facilitate businesses on this front through the Monetary Policy as they are facing cash crunch. “While no businesses are in operation for the last three months, banks have started pressurising borrowers to clear dues as of this fiscal year,” he informed.

Similarly, Golchha also said that the central bank should make its refinancing facility accessible to SMEs and implement the decision to issue refinancing facility for businesses worth Rs 150 billion as soon as possible.

Meanwhile, NRB Governor Maha Prasad Adhikari assured stakeholders that the Monetary Policy will consider suggestions and recommendations and focus on helping the economy to sustain and revive from the current crisis. “We introduced different measures including deferring the loan and interest rate repayment period for borrowers. However, this seemed inadequate as the crisis is prolonging and businesses have not been able to operate in a full-fledged manner,” he said.

Adhikari also informed that the Monetary Policy for next fiscal year, instead of introducing blanket relief package, will facilitate sectoral businesses based on the level of impact they have faced due to COVID-19.

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