KATHMANDU, July 18: Nepali Congress (NC) partly welcomed the Monetary Policy 2020/21, stressing the need for simplifying the procedure of refinancing and making it more transparent to enable the targeted group receive maximum benefit.
The party’s view on the monetary policy was expressed in a press release issued by a special committee of the party after Nepal Rastra Bank (NRB) unveiled the monetary policy for the next fiscal year. The special committee of the main opposition party has said that the central bank has incorporated some of the important measures suggested by the special committee.
The committee has welcomed the NRB’s move to increase the refinance fund from Rs 100 billion to Rs 200 billion. It has hailed the mobilization of long-term repo and flexibility in core capital-cum-deposit (CCD) ratio, stating that the measures could help improve liquidity in the banking system.
The extension of loan repayment period and increase in the credit ratio in the stock exchange market are also among the recommendations forwarded by the NC’s Special Committee that have been incorporated in the main policy document that will drive the financial system of the country.
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“The Monetary Policy seems to have taken care of mobilizing the resources for the expansion of the COVID-hit economy. However, the central bank needs to simplify the procedures to be enforced by working guidelines and circulars for full utilization of the provisions,” reads the press statement.
The NC’s committee has expressed its skepticism on the effective use of an increase in the CCD ratio that has been upped to 85 percent from the previous 80 percent. As the credit issued under the subsidized loan provision is not counted in the CCD, the effective mobilization of credit funds cannot be ensured even in the new scenario, according to the committee.
Despite making the funds available to the needy sectors, the target of the monetary policy might not be achieved due to the low confidence prevailing in the business fraternity, the committee believes. The committee has also hailed the central bank’s move to increase the minimum loan requirement of banks under the specific programs in agriculture, energy and tourism sectors to 40 percent by 2023/24.
Similarly, the committee has also appreciated the NRB for its plan to successively increase the credit amount in primary sectors from the existing 25 percent. But the NRB has been put to question whether it will be able to pressurize the banks to invest in line with the guidelines set by the monetary policy.
The NC’s committee has also criticized the monetary policy on the ground that it fails to give proper attention to capacity building of the related manpower, supporting to devise the business plan by potential entrepreneurs and other technical assistance needed by the borrowing firms.
Given a notable rise in jobless numbers and a heavy fall in income in the wake of the coronavirus pandemic, it will be a major challenge for the monetary policy to maintain the inflation rate at the targeted seven percent to give respite to the poor and vulnerable people.
