Central bank pledges policy support for 7% economic growth target

KATHMANDU – Nepal Rastra Bank (NRB) has said it will formulate monetary and financial sector policies aimed at supporting the government’s ambitious target of achieving 7 percent economic growth while keeping inflation within 6 percent in the upcoming fiscal year.

Speaking at a discussion program in Kathmandu on Monday, Guru Prasad Paudel, Executive Director of Nepal Rastra Bank, said the central bank would align its upcoming monetary policy with the objectives outlined in the fiscal year 2083/84 budget.

He noted that the budget’s strong focus on governance reforms and economic revitalization could create positive synergy across the economy, helping achieve the government’s growth and stability targets.

“We will formulate policies that support the budget’s objectives, including ensuring adequate liquidity in the financial system to facilitate economic activities while maintaining inflation within the targeted limit of 6 percent,” Paudel said.

Asset Management Company Gets Fresh Momentum

Paudel welcomed the government’s decision to set a clear timeline for establishing a National Asset Management Company, describing it as a long-awaited reform in Nepal’s financial sector.

“The budget has addressed an issue that had remained pending for a long time,” he said. “At a time when non-performing loans and non-banking assets are increasing in the financial system, the establishment of an asset management company can help ease some of these challenges.”

According to Paudel, the legal framework will clearly define the model under which the company will be established and operated.

The government has announced plans to establish the institution by mid-January 2027 (Poush 2083 BS) to support the management of distressed assets and strengthen financial sector stability.

Consumer Financing Measures Expected to Boost Demand

Paudel also highlighted provisions in the budget that allow consumers to access financing for the purchase of various consumer goods through hire-purchase arrangements.

He said the measure is expected to stimulate domestic demand and support economic activity by making consumer financing more accessible.

The government has been seeking ways to boost consumption and private sector activity amid a slower-than-expected economic recovery in recent years.

Sovereign Wealth Fund Proposal Gains Attention

The NRB official also pointed to the government’s proposal to establish a sovereign wealth fund as one of the notable initiatives included in the budget.

With Nepal’s foreign exchange reserves continuing to grow, Paudel said policymakers are exploring ways to utilize surplus resources more productively.

“As foreign exchange reserves continue to increase, the budget has incorporated the concept of a sovereign wealth fund,” he said. “There is now a need to develop the necessary procedures and operational framework to move the proposal forward.”

Economists have increasingly debated the possibility of creating a sovereign wealth fund to channel excess reserves into strategic long-term investments, infrastructure development, and national economic priorities.

Monetary Policy in Focus

Paudel’s remarks come as expectations rise for the upcoming monetary policy, which is widely expected to play a critical role in implementing many of the financial sector reforms announced in the budget.

From liquidity management and credit expansion to non-performing loan resolution and financial sector modernization, Nepal Rastra Bank is expected to be at the forefront of efforts to support the government’s economic agenda.

The government has set a target of 7 percent economic growth and aims to keep inflation below 6 percent in fiscal year 2083/84, making the coordination between fiscal and monetary policy a key factor in determining the success of the broader economic strategy.