KATHMANDU, Oct 15: Capital flows from Asian countries to western countries is rising due to unstable foreign exchange driven by global trade war, Minister for Finance, Yuba Raj Khatiwada, said on Sunday.
Speaking at a discussion among finance ministers and governors of central banks of Asia Pacific region on ‘Challenges for Development in the Next Decade’, organized by International Monetary Fund (IMF) in Bali on Saturday, Khatiwada said: “More trading and investment within Asia as well as expansion of capital and monetary market can help to cope with these unprecedented effects that we have faced in this part.” He also underlined the need for a coordinated effort for stopping capital flow to US and European countries, according to a press release issued by the Ministry of Finance.
Stating that the practice of trade protectionism by some countries has also had an adverse effect on small countries, he called on global organizations like the World Trade Organization (WTO), the World Bank and the IMF to play leading roles for advocating and facilitating smooth trading at the global level and stopping such unnatural protectionism.
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Khatiwada also expressed worries over unequal distribution of income generated from economic growth propelled by the economy based on digital technology and knowledge. “The World Bank and IMF should also focus on these matters and work toward narrowing down income inequality,” he said in the discussion, adding that the scope and role of monetary policy in the global economy has been weakened. “In this context, monetary policies should be devised by connecting financing with production instead of the traditional concept of balancing inflation and exchange rates,” added Khatiwada.
He was also of the view that financing for production can only help in achieving growth at the current time of unstable financial situation.
MORE CREDIT SOUGHT TO FUND DEVELOPMENT WORK
During the meeting with multilateral donors, Khatiwada also sought more foreign loans for Nepal, stating that only such loans can help Nepal to graduate to middle-income country in the next decade.
“Nepal now needs more loans for investing in infrastructure development and export promotion,” the finance minister said, adding that Nepal can handle foreign loans up to 60 percent of the Gross Domestic Product.
Such foreign debt hovers over 5 percent of country’s GDP at present.
“Such loans are important not only to achieve higher economic growth but also to create more employment,” he said in the conference.
Meanwhile, in the meeting between WTO and officials of Ministry of Finance held on the sidelines of the conference, Nepal sought technical assistance from WTO for export promotion of pashmina, ginger and medicinal herbs, according to the release.
