Kathmandu: Nepal Rastra Bank Governor Maha Prasad Adhikari announced that the Monetary Policy for Fiscal Year 2023/24 would be released in line with the budget policy. The central focus of the upcoming monetary policy will be to achieve the economic growth targets set in the budget, while also addressing concerns related to inflation control and managing the external sector.

Despite some positive economic indicators such as a balanced external sector, decreasing interest rates, and adequate liquidity, there are still some persistent challenges, including inflation, a deficit in the reserve fund, and sluggish credit expansion. In the previous fiscal year, the permissible inflation limit was set at seven percent, but it is expected to exceed that limit in the current fiscal year. Additionally, the reserve fund is facing a deficit of Rs 193 billion, and credit expansion has slowed down despite substantial deposit collections.

The liquidity situation in the banking system seems favorable, with Rs 88.5 billion available. However, there is a deficit of Rs 70 billion in current accounts, and recovering loans has become difficult due to the market slowdown. Concessional loans have been taken by a total of 147,510 people until June 15, 2023.

The Central Bank acknowledges that today's problems include a slowdown in the real estate sector, revenue collection challenges, and difficulties in achieving the target for capital expenditure. Although the monetary policy has limited instruments to resolve all these issues, the Central Bank will make use of whatever instruments are available to address them.

According to the Nepal Rastra Bank, interest and base rates of loans and deposits have been decreasing, and the Credit Deposit (CD) ratio has dropped to 82 percent. The government has set a target of keeping inflation within 6.50 percent for the current fiscal year, and the monetary instruments will be utilized accordingly to achieve this goal.

Finance Secretary Arjun Kumar Pokharel emphasized the importance of synchronization between the fiscal policy and monetary policy. He believes that achieving economic growth and controlling inflation should be the top priorities of the monetary policy. The policy will also focus on implementing the government's policies and programs to increase loans in the productive sector and support domestic productions.

In conclusion, the upcoming monetary policy aims to strike a balance in the country's economy by promoting economic growth, controlling inflation, and managing the external sector. It will address existing challenges and utilize available instruments to tackle current economic issues effectively.