Kathmandu. Finance Minister Dr Swarnim Wagle has said that some amendments are needed in the provision related to the qualifications of the board members of the Nepal Rastra Bank.

He said this in today’s meeting of the Finance Committee under the House of Representatives.

He also suggested that the provision of giving opportunity to the person who has worked in the executive level in the international financial institution should be made clear in the board of directors. He expressed the view that it was necessary to clearly define the definition of ‘executive level’ as there could be confusion in the interpretation if it was not clear.

Minister Dr Wagle underscored the need of amending the NRB Act to make it more active and accountable. He underlined the need of amending the acts to make public enterprises more effective and accountable.

During the clause-wise discussion on the bill designed to amend the Nepal Rastra Bank Act, 2058 BS, Dr. “In an economy like Nepal, fiscal policy and monetary policy complement each other and effective coordination between the Ministry of Finance and Nepal Rastra Bank is essential,” Wagle said.

Stating that the proposal of having at least 7 members in the board of directors of the NRB was appropriate, Minister Wagle said that the presence of the Finance Secretary would be more important after the provision of giving direct directives from the government of Nepal would be removed.

“In a country like Nepal, fiscal and monetary policies are like two wheels of the same chariot,” he said. “The Ministry of Finance handles the fiscal policy while the NRB looks after the monetary policy,” he said. Therefore, coordination between the two agencies is essential. ”

Finance Minister Dr Wagle said that Nepal Rastra Bank was not in a position to operate a fully independent monetary policy as it has maintained a stable exchange rate with the Indian currency. According to him, the instruments of monetary policy are also limited as Nepal’s inflation is heavily imported.

Minister Dr Wagle, referring to the ‘impossible trinity’ concept prevalent in monetary economics, said stable exchange rate, free capital flow and fully independent monetary policy were not possible at the same time. “Nepal is exercising limited autonomy of monetary policy by definitely regulating capital flow while maintaining a stable exchange rate,” he said.

On the occasion, Finance Minister Dr Wagle said that there was no need of three deputy governors in the NRB and two deputy governors would be sufficient. According to him, there is no need for additional duty governors as there is a separate structure of Executive Director (ED) in the NRB.

He also stressed the need to ensure the representation of experts from various fields including economic, monetary, banking, finance, management, public administration, law, statistics and mathematics in the board of directors of a special institution like the Nepal Rastra Bank.