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Nepal Monetary Policy 2076/77: For Increased GDP and Inclusive Development!
The government has also designed a monetary policy to support the planned initiatives and drive income generation locally.
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Nepal has seen a wide range of transformation in the recent years in all aspects.
From witnessing the long-awaited political transformation to pitching for strong local development and extending beyond boundaries through external bilateral relations, the Himalayan nation is on path to progress!
In line with its growth prospects, the Oli-led Nepal Government has announced a well-planned Budget for FY 2076-77 with high emphasis on infrastructure development and self-sustainability through economic progress.
The government has also designed a monetary policy to support the planned initiatives and drive income generation locally.
Here are some highlights of the Nepal Monetary Policy 2076/77 (2019/20), as released by the Nepal Bureau of Standards and Metrology (NBSM):
1) A Snapshot of Nepal Economic Outlook
GDP Growth
Nepal’s GDP has seen three highs in the last five years from 3.30% in FY 2071-72 to 7.40% in FY 2073-74 and is expected to grow further to 8.50 percent in FY 2076-77
Inflation
Nepal has seen a drop in its inflation rate in the last five years (2071-76), from a record high of 9.90% in FY 2072-73 to 4.50% in FY 2075-76 and is targeting 6% inflation in FY 2076-77
Banking Institutions
Nepal currently has 91 micro finance banks spread into 3570 branches, 32 development banks with 1250 branches, 28 commercial banks with 3539 branches and 24 finance companies with 205 branches
2) Monetary Policy Targets for 2076-77
Inflation to be maintained within 6 percent for FY 2019-20
Foreign exchange reserves will have to manage imports and services dependence for 7 months period unlike 6 months in FY 2018-19
Domestic and private credits have been set to grow by 24% and 21% respectively, more than 22.5% and 20% in the previous year
Bank rates for the Lender of Last Resort (LOLR) reduced from 6.5% in 2018 to 6% for the current fiscal
Interest rate on general refinance has been reduced from 8% in 2018-19 to 7% for the current fiscal
3) Ways to Achieve Targets – Credit Management
Source: Nrb.org.np
4) Regulations
Source: Nrb.org.np
5) Payment System Reinforcement
RTGS mode of payment will be operational within this fiscal year, and a separate Nation Payment switch will also be developed for electronic payment and settlement within the nation
Transaction made on POS will not be subjected to additional charges
Cash Deposit Machines will be set up across all banks and financial institutions
For every e-transaction or through card on the purchase of goods and services, 10% of VAT from the respective invoice will go to the buyer’s bank account
6) Foreign Exchange Management
Now, any remittance for maintenance or purchase of software will require the recommendation of respective regulatory authority
Respective departments are also working on a model for Payment/Acceptance in foreign currency for social media ads
Foreign currency remittances will be placed in national priority sectors; Foreign Employment Saving Bonds and Citizens Saving Bonds shall be open throughout the year
Single point service center will be established to ensure easy inflow and outflow of foreign investment
The Conclusion Hope the new monetary policy will help the Nepal Government achieve its economic targets and planned initiatives in line with the country’s development agenda.
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