Monetary Policy for 2018/19 to have policies to achieve growth as projected
Lalitpur, June 13: Governor of Nepal Rastra Bank Dr. Chiranjibi Nepal has said that the government-projected growth of 8 per cent for the coming fiscal year 2018/19 and inflation of 6.5 per cent were achievable, and remarked that the Monetary Policy for 2018/19 would have policies and programmes to achieve the growth and inflation targets.
"The economy is on the right track. When the country can achieve a 6 to 7 per cent growth rate with poor electricity supply and infrastructure and political instability, the economy would board on a higher growth trajectory," said the governor at a Monetary Policy discussion programme organised by IBN Media and Research.
He said that the country had achieved remarkable growth in the current and last fiscal year, and it would be sustained in the year to come.
"In addition to the Rs. 1,315 billion federal budget, there will be additional budget mobilisation by the provinces and local bodies, which will play an instrumental role to increase economic activities from the central to the local levels. So, 8 per cent growth is plausible," said Dr. Nepal.
Chief Executive Officer (CEO) of Sanima Bank Bhuvan Kumar Dahal suggested the NRB develop a whistleblowing mechanism for the banking industry in order to minimise discrepancy.
"A banker knows best about the banks and its dealings. Therefore, promoting whistleblowing in the industry will help in improving its business and the economy," he said.
He urged the central bank to make its moves as per BASEL III in terms of maintaining the liquidity ratio.
According to Dahal, as the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) have been implemented in Nepal, it would be better to remove the Cash Deposit (CD) ratio.
He also said that the current liquidity crisis could be addressed by bringing loans from foreign banks and expressed the hope that the hedging policy that the NRB was currently working on would create a favourable environment for the same.
Ramesh Maharjan, President of Federation of Nepal Gold Silver Gem and Jewellery Associations, asked the central bank to develop a one-door mechanism to facilitate gold import, sell and export jewellery.
"Gold is an industrial raw material for us. Therefore, the ceiling on gold import and procurement should be removed and the private sector should be allowed to import gold. It will create competition between the banks and traders, which will help the industry," he said.
He said that such a mechanism would increase the predictability of gold consumption.
If facilitated well, jewellery export could go as high as Rs. 200 billion, he said, and urged the government to lower the customs on gold. Currently, a 15 per cent customs duty is charged on gold.
Senior Vice-President of Federation of Handicraft Association of Nepal (FHAN) Kiran Dangol asked the NRB to look into the interest rate.
Acting President of Nepal Development Bankers Association Govinda Dhakal said that though the banks have increased the paid up capital, their haphazard lending might create problems in the future. He said that the development banks should be allowed to mobilise government funds.
According to the prevalent policy, government entities maintain their bank accounts only in class 'A' commercial banks.
Vice-President of Nepal Chamber of Commerce Kamlesh Kumar Agrawal said that the NRB had no alternative to announcing an expansionary monetary policy.