Nepal's leaders face the formidable task of harmonising divergent economic strategies to fortify national economic stability and stimulate sustained growth. The challenge ahead lies in transcending political rivalries to forge a cohesive monetary policy framework that fosters economic resilience and prosperity for all Nepalis
As Nepal enters a new fiscal year, the landscape of its economic policy takes centre stage amidst a backdrop of political contention and economic imperatives. The formulation of its monetary policy has evolved into a contentious arena where political aspirations clash with economic imperatives.
Central to this intricate dance are Prime Minister KP Sharma Oli's economic advisor, Dr. Yuvraj Khatiwada, Finance Minister Bishnu Paudel and Central Bank Governor Maha Prasad Adhikari. Despite their shared party affiliation, these figures diverge sharply on the direction and priorities of Nepal's economic strategy.
The recent abrupt halt to the monetary policy announcement by Dr. Khatiwada, a former central bank governor himself, underscores profound discord within Nepal's economic leadership. This decision disrupted the central bank's plans, postponing a highly anticipated policy update and injecting uncertainty into Nepal's economic landscape at a critical juncture.
The roots of this discord trace back to shifts in Nepal's political landscape and evolving leadership priorities. Initially crafted under former finance minister Barshman Pun, the policy framework underwent reassessment under the current administration, introducing fresh complexities with Dr. Khatiwada's appointment as economic advisor.
His insistence on a thorough policy reassessment clashed with the timelines and expectations set by Governor Adhikari and Finance Minister Paudel.
Prime Minister Oli advocates a pro-business stance, emphasising policies that stimulate industrial growth and attract investment. This approach sharply contrasts with Finance
Minister Paudel's focus on initiatives benefiting the middle class through targeted budget allocations.
Governor Adhikari, on the other hand, stresses regulatory rigour to safeguard Nepal's financial stability, advocating stringent measures amidst economic uncertainty.
These conflicting agendas highlight the challenge of reconciling political rhetoric with pragmatic economic governance. Despite their shared party affiliations, the practical execution of economic policy reveals deep-seated disagreements over priorities, implementation strategies, and their intended beneficiaries.
As Nepal navigates these turbulent waters, the urgent task remains reconciling these competing interests to forge a cohesive monetary policy that serves the nation's economic interests. Beyond political maneuvering, the focus must return to bolstering national economic stability and fostering consensus on the way forward.
Monetary policy is not merely a tool for short-term economic upliftment; it serves as a cornerstone for long-term economic resilience. The varying interests among Nepal's economic leaders reflect differing perspectives on how best to achieve this stability-whether through business-friendly incentives, middle-class empowerment or regulatory oversight.
Balancing these perspectives is crucial not only for economic growth but also for maintaining political cohesion and public trust in Nepal's economic management.
Ultimately, the resolution lies in pragmatic compromise and a renewed commitment to national economic stability-a commitment that transcends transient political dynamics and ensures Nepal's economic future remains anchored on a path of sustainable growth and development.
As stakeholders reconvene to chart the way forward, the hope is that consensus will prevail, unlocking the potential for a robust monetary policy that propels Nepal towards prosperity in the years ahead.
Reflecting on Dr. Khatiwada's tenure as Finance Minister, opinions vary widely. While he managed to secure significant foreign aid and allocate resources for crucial infrastructure projects, his approach to market trust was less successful.
Critics argue that he neglected the concerns of the private sector and international investors, failing to engage with them constructively.
The liquidity crisis of 2016 posed a significant challenge during Dr. Khatiwada's term, though it did not precipitate a market crash. However, his cautious approach to interest rates was criticised for potentially stifling market growth and exacerbating economic stagnation.
Despite short-term fluctuations driven by market rumours, the long-term trajectory of Nepal's stock market hinges on sustainable revenue generation and shareholder satisfaction.
The decline in share prices from 2017 to 2019 has been attributed, in part, to perceptions surrounding Dr. Khatiwada's policies. His remark that stock investments were "not productive" resonated negatively among investors, contributing to broader market uncertainties.
In navigating these complexities, Nepal's leaders face the formidable task of harmonising divergent economic strategies to fortify national economic stability and stimulate sustained growth. The challenge ahead lies in transcending political rivalries to forge a cohesive monetary policy framework that fosters economic resilience and prosperity for all Nepalis.
Dhakal is Chairman, Nepal Akshaya College
