Finance Minister commits to 'correct' government policy on financial market

KATHMANDU, Dec 15:  Finance Minister Janardan Sharma has said the government is ready to correct any difficulties created by government policies in the financial market. The Finance Minister's this assertion comes at a time when the banks are giving priority to deposit collection instead of investing due to liquidity crunch for months.

Addressing the Innovation Summit organised by the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) in the federal capital today, he said, "Come, tell directly if the government policy has created any difficulty in the financial market. We also have representative in the Nepal Rastra Bank (NRB). We are ready to tackle the problem right here." Through the Innovation Summit, the FNCCI has initiated the debate on having rapid and sustainable economic growth in the post-COVID changing scenario.

The FNCCI has said that the recommendations from the Summit would be submitted to the government for their implementation. Recalling that the economic activities were gradually coming back to business, Finance Minister Sharma stressed the need of making the country's economy robust in view of the possible impact of the pandemic in this sector. He suggested reviving the economy and bringing it back to a pace, taking into account resources and labour as well.

The Finance Minister emphasized on investing by identifying own requirements, capacity and possible competitive areas. "We cannot compete in all sectors. We need to carry out a study in new way to identify our competitive areas and ramp up investment in sectors that we have competitive edge," Finance Minister Sharma said. He said the problem of trade deficit was still there.

Finance Minister Sharma said the banks and financial institutions have invested 49 per cent (extended loan of 387 billion) of the annual target within the current four months. "We need to study whether this investment expansion is negative or positive. Looking at the statistics, we find that this investment has been more in the industrial sector and it will ultimately help the economy once it is used," Finance Minister said on optimistic note.

Stating that the existing liquidity issue in the country suggested the risk for a rise in interest rate, he said whether letting the market to deal with the issue independently or regulating it was the serious question of the hour. “What’s take of the Federation on this matter, we want to be informed about its views.” He took time to urge banks and financial institutions for the proposal advising a policy capable of strengthening the institutions and preventing the risk of liquidity. During the conference, President of Federation of Nepalese Chamber of Commerce and Industry (FNCCI) Shekhar Golchha stressed on the need of State policy to promote investment and entrepreneurship. Though some gradual green indicators in nation’s economy, the terror of COVID-19 continued to prevail and on this pretext, the economic sector needed the government support to tackle with possible adversities, according to him. FNCCI Vice President Chandra Prasad Dhakal said the event would discuss about post-COVID-19 impact on economy and issues requiring correction. As he said, the Conference would prepare an official approach paper incorporating its conclusions and hand over it to the government. He was of the opinion that policy that encourages investment would give a rise to internal investment. Liquidity management, promotion of micro, cottage and small industries and export promotion are among the pressing issues to be discussed among the panel discussions during the different sessions of the Summit.