Private sector calls for robust measures in monetary policy amidst economic struggles

KATHMANDU: The private sector has expressed dissatisfaction with the recently announced monetary policy for the current fiscal year 2080/81 by the Nepal Rastra Bank, stating that it falls short of addressing the existing economic challenges.

In a joint statement, the Federation of Commerce and Industry, Confederation of Industry, and Chamber of Commerce conveyed that the policy did not meet their expectations.

Expecting measures to tackle issues such as high interest rates, low demand, cash flow problems, reduced production, job cuts, and declining business morale, the private sector had hoped for a more robust response. However, they believe that the provisions in the current policy do not offer sufficient assurance.

The private sector raised concerns over the reduced loan target for the private sector, which has been decreased to 11.5 percent from 12.6 percent in the previous fiscal year. This reduction is likely to restrict credit availability and could hinder achieving the targeted economic growth of 6 percent.

The private sector urged the National Bank to take proactive steps to control the rising interest rates and consider all available tools to lower the bank’s base rate.

While the private sector appreciated certain aspects of the policy, such as increasing the limit for first residential house loans to 2 million and enhancing USD facilities to 2500, they also presented specific suggestions.

These included maintaining the loan loss regime at 1 percent, allowing industries or borrowers affected by decreased demand to reschedule and restructure loans with mutual consent, offering refinancing facilities, and keeping minimum premiums on interest.

Overall, the private sector called for a more comprehensive and targeted approach in the monetary policy to effectively address the pressing economic challenges faced by businesses and industries.