KATHMANDU: The Nepal Rastra Bank (NRB) has released first quarter review of the Monetary Policy 2021-22 through a virtual event held today.
Releasing the review report, the NRB has projected the economy to recover wisely in coming days citing that the impact of Covid-19 has been gradually diminishing, the availability of vaccines has increased, the number of people going for foreign employment has increased, foreign tourist arrivals have increased and that the export of electricity has started.
Similarly, the central bank has projected that the pressure on external sector stability will continue as the demand for credit is increasing amidst economic recovery process and a large portion of such credit is being spent on import payments while the remittance inflows is not increasing as expected. “Expenditure on local elections in the current fiscal year will further expand the demand for credit and put pressure on prices,” stated NRB.
Meanwhile, the NRB has made no changes in policy rates like CRR, SLR. Similarly, the 90% cap on CD ratio is also unchanged.
In a bid to address the declining foreign exchange reserves, the NRB has adopted different measures to discourage imports like making cash margin mandatory when opening LC, limit import of silver and simplify the process of bringing in deposits from NRNs.
The NRB has also introduced a provision whereby commercial banks can issue collateral for loans in foreign currency for commercial agriculture, manufacturing industries, tourism and projects.