Kathmandu, September 29:

Nepal Rastra Bank today announced the Monetary Policy for the fiscal year 2008-09. NRB said it would limit the year’s price rise to 7.5 per cent.

In Shrawan month of the fiscal year 2007-08, price rise was 13 per cent. NRB said that it had hoped to limit the price hike to just six per cent but the hike at year-end was 11 per cent.

NRB also said that this year’s crop price hike by 20 per cent would fetch farmers good returns.

Referring to the rise in the prices of petroleum products, NRB said, “If no adjustment is made in the price of petroleum products, it might lead to inflation this fiscal year by 7.5 per cent.” It also said that the current budget had assured of limiting the petroleum products price hike to 7.5 per cent.

NRB also has given priority to foreign exchange for imports and services for a period of at least six months. To meet the seven per cent price hike, NRB will opt for price liquidity management.

The new monetary policy will provide short term liquidity facility, development of treasury bills and credit letters for development banks and finance companies.

For increase in the rate of competition capacity of export and increase in flow of Nepali currency (punah karjadar) has been lowered from 2.5 to 2 per cent.

The policy says that credit facility should be provided to deprived classes by commercial banks

(@ three per cent), development banks (@ 1.5 per cent) and finance companies (@ 1 per cent).

It also mentioned forwarding support to finance companies started with World Bank support and make an effective monitoring policy for the proper management of banks by NRB. The Monetary Policy is customarily announced after the budget each year.