Kathmandu. Finance Minister Dr Swarnim Wagle has directed the Executive Directors of Nepal Rastra Bank (NRB) to focus their regulation on promoting productive economic activities, investment and innovation rather than just risk control.

During a meeting with the Executive Directors of the Nepal Rastra Bank, he stressed the need for clarity, dynamism and confidence in the monetary policy to make the government’s economic reform campaign successful.

He said the discussions held with industrialists, businessmen and chief executive officers of commercial banks in recent days have concluded that the private sector is now looking for policy stability, clear rules, quick decisions and credible implementation rather than opportunity.

He said that the answer as to why the private sector has become defensive, why investors’ confidence has weakened, why credit could not expand to productive sector despite increasing liquidity in the banking system, why the relationship between capital market and real economy has weakened and why production and productivity did not pick up the expected pace, he said the economic policy of the coming decade would determine the economic policy of the coming decade.

Describing the budget for the current fiscal year as a clear roadmap for economic reforms and structural transformation and not a general budget, Wagle pointed out the need to redefine the role of NRB for its successful implementation.

He also laid special emphasis on measures to increase the flow of credit to production-oriented sectors, strategies to convert excess liquidity in the banking system into industry, production and employment, healthy relations between capital market, real estate, banking system and real economy and coordination between monetary and fiscal policies more effective.

He also stressed on necessary policy reforms to facilitate digital finance, fintech, alternative financial system, startup financing and new financial instruments.

Stating that the objective of regulation should be to enable productive economic activities and not just control, he said that the NRB should also introspect whether the regulation is stifling innovation or encouraging innovation.

He asked all officials to come out of the mindset of “this is not possible” and work with the mindset of “what should be done to make this possible?” Stating that policy-level confidence was needed for Nepal’s economy at present, he said it would not be difficult to achieve economic growth if the government, NRB, banking system and private sector were all self-confident.

Stating that the government has expedited legal amendment, institutional reform and the implementation, the Finance Minister said similar level of speed, clarity and commitment is expected from the monetary side as well.

He was of the view that Nepal Rastra Bank should not be seen only as a regulatory body but as a partner and co-builder of economic transformation of Nepal. The issues raised in the meeting would be transformed into an action plan, a joint taskforce would be formed if necessary, policy-level coordination would be institutionalized and decision-making process would be made more efficient, he added.