Nepal Rastra Bank sets seven targets for economic stability

NL Today

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Kathmandu: In a bid to steer the economy on a stable growth path, the Nepal Rastra Bank (NRB) unveiled its highly anticipated Monetary Policy for the fiscal year 2023-34, outlining seven key targets to achieve its economic objectives.

The primary goal of the monetary policy is to sustain foreign exchange reserves at a level capable of covering anticipated goods and services imports for a minimum of seven months. This measure aims to bolster the country’s economic resilience against external shocks.

Likewise, the NRB has decided to set its policy rates based on the capacity of foreign exchange reserves to cover imports and the target annual inflation rate. This approach is intended to strike a balance between import stability and inflation control.

Third, it has said that the currency’s exchange rate against the Indian currency will be maintained at its current level, fostering stability and predictability in cross-border trade and transactions. Fourth, the NRB aims to keep interbank interest rates within a specified corridor through open market operations, ensuring liquidity management and stability in the financial markets.

Fifth, the Monetary Policy has set an ambitious target of limiting inflation to 6.5 percent. To achieve this, the NRB will adopt measures to prevent undue pressure on prices through prudent monetary expansion, it said. Sixth, the central bank has prioritized channeling fiscal resources towards the productive sector, aligning with the government’s objective of attaining a robust six percent economic growth rate in the current fiscal year. 

And the seventh target is to increase broad money supply by 12.5 percent, while credit to the private sector from banks and financial institutions is anticipated to rise by 11.5 percent. These measures are aimed at stimulating investment and economic expansion.