Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU — Prime Minister Balendra Shah has asked the central bank to act independently and deliver quick results, telling Nepal Rastra Bank Governor Dr. Bishwanath Paudel to “work without fear” amid growing economic pressure.
The direction came during a nearly hour-long meeting on Monday evening, where the two discussed the state of the economy, reform priorities and immediate policy steps.
According to sources, the Prime Minister was blunt: don’t work under pressure, don’t wait, and don’t hesitate to act.
He specifically pushed the governor to move aggressively against loan misuse and money laundering practices that have long distorted Nepal’s financial system. The message was clear—results matter, and they are needed fast.
At the same time, Shah urged the central bank to move beyond routine regulation and take a more proactive role in shaping economic recovery. With growth slowing and private sector confidence still weak, he asked for concrete suggestions that can immediately inject momentum into the economy.
The Prime Minister also flagged rising global risks. The ongoing tensions involving the United States, Israel and Iran, he said, could hit Nepal indirectly—especially through remittances, fuel prices and foreign exchange stability—and asked the central bank to closely assess potential fallout.
Governor Paudel, in response, pointed to a familiar but unresolved problem: the government’s inability to spend.
He argued that large-scale infrastructure projects could be the quickest way to unlock economic activity. Among the ideas discussed were a Kathmandu–Birgunj railway link connecting India and a Kathmandu–Pokhara fast-track corridor—projects that could absorb up to Rs 20–30 billion in the first year alone if execution begins.
Such spending, he suggested, would not only mobilize idle capital sitting in the banking system but also revive demand across sectors.
Paudel also indicated that the central bank is ready to support improvements in public finance management, using strong remittance inflows and relatively stable financial indicators as a base. If major projects move on time, he said, the economy could start showing visible results within two to three years.
The meeting signals a shift toward a more assertive coordination between the government and the central bank—at a time when Nepal’s economy is stable on the surface but struggling to gain real momentum underneath.
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