First Business News Portal in English from Nepal
KATHMANDU: Nepal Rastra Bank, the central bank of Nepal, has taken measures to avert current liquidity crunch and reduce trade deficit.
During a discussion organized by NRB with economic journalists on Wednesday, NRB Governor Maha Prasad Adhikari clarified that the central bank has given high priority to replace imports with export promotion in order to fix the current problem.
He shared that liquidity flow of Rs 2,500 billion was made through permanent liquidity facility, Rs 69 billion through overnight repo, Rs 220 billion through repo and Rs 27 billion through direct purchase as of December 20.
“An arrangement has been made to keep loan deposit ratio at 90 percent till mid-July 2022 while re-financing facility of Rs 92 billion has been approved as of December 22 in the current fiscal year,” the governor informed.
In order to tame ballooning trade deficit, the central bank has placed different measures, including determining ceiling of foreign currency available for silver import, increment of one percent interest rate in the deposit of bank accounts of the people in foreign employment and arranging cent percent margin in the import of certain goods and commodities.
He further informed that an arrangement has been made for the Non-Resident Nepalis and their associations to open savings and deposit accounts in foreign currency. Among other measures in place are cut-off in the facility of foreign currency cash exchange, control in the unlawful import of gold and reduction in the ceiling of ‘non-deliverable derivate forward’ that can be kept in foreign countries.
The country is heading towards economic recovery in the current situation with full liberation from the COVID-19 pandemic, he said, adding the situation of trade deficit resulted from the rise in the import and reduction of remittance inflow. “All these happened in course of the economic revival,” he claimed.
“The liquidity crunch has resulted due to the decline in deposits compared to the loan flow rate. Liquidity problems are recurring in Nepalese economy in the context when export is weak and dependency on import is on the rise,” the governor shared. — RSS
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