Former Governor Nepal blames the NRB’s weakness on a shortage of liquidity

Former Governor Nepal blames the NRB’s weakness on a shortage of liquidity

By Karuna Thapa

Kathmandu, March 8

The problem of a shortage of investable money (liquidity), according to former Governor
Chiranjeevi Nepal, has not been improved owing to the Nepal Rastra Bank’s weakness. He said that the market lacked liquidity because Nepal Rastra Bank was unable to restrict the increase of bank loans.

Despite attempts to maintain the economy in balance through yearly monetary policy reviews, he added, deteriorating foreign exchange reserves have grown increasingly difficult to manage.

”The country’s economy is currently in a risky position. The main issue is that remittances have decreased ” ‘I informed the press agency,’ he said. It can only rely on imports to stay afloat. It will be even more difficult if it continues to decline.’

He stated that the government must take prompt action to address loan grants from abroad, as well as modify the policy and law governing foreign donations. He also stated that the government’s current economic growth objective will not be attained.

He pointed out that the government’s tendency to collect income and deposit is in the reserves rather than spending. He also said that the government of any country in the world did not collect income and deposit it in the Central Bank. Former Governor Nepal argued that only if the government restricts the quantity by enabling the government to collaborate with specific banks will the market’s liquidity be improved? He said that the market lacked liquidity because Nepal Rastra Bank was unable to restrict the increase of bank loans.

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