Monetary policy needs ensuring financial discipline

Kathmandu, July 9: Federal parliament lawmakers and economic experts have stressed the need to launch a monetary policy that pays adequate attention to fiscal discipline and a vibrant economy.

The incoming monetary policy requires creating an atmosphere for investment promotion, they argued. They were voicing for it during a meeting of the Financial Committee under the House of Representatives on the upcoming monetary policy of the Nepal Rastra Bank. The increase in loans for production and employment creation is another suggestion expressed during the meeting held on Wednesday.

Former Vice Chairman of the National Planning Commission, Dr Min Bahadur Shrestha, suggested an easy flow of project loans except for real estate collateral. He stressed reconsidering the present 65 percent of the total loan to collateral on real estate. The sources in the banking sector a public property, so only Rs 404 billion amount of investors out of the Rs 700 billion reserve was used, he reminded. Another expert, Nar Bahadur Thapa, wondered if there was no expected investment despite maximum liquidity and a low loan rate.

“If the economy is not vibrant, it creates a disappointing situation. More investment is required for scientific agriculture,” he recommended. Former finance minister Barsha Man Pun said, “Monetary policy should focus on making fiscal behaviour disciplined while ensuring a vibrant economy.” He recommended promoting small and medium-scale industries. Another former finance minister, Dr Prakash Sharan Mahat, said monetary policy can correct past aberrations and set a proper action plan.

“Monetary policy’s effectiveness lies in its contribution to a vision for economic reform. Adoption of new technology in agriculture needs promotion.” Committee member and economist Dr Swarnim Wagle observed that the country was in a vicious cycle of political interference in economic structure and process. Lawmaker and businessperson Binod Chaudhary urged the government to create an atmosphere for result-oriented investment. Investors must be encouraged, he stressed.