Kathmandu, Dec. 15
Minister for Finance, Janardan Sharma, has indicated that the government was not in the mood to let the market have its say on bank interest rates.
Speaking at the conference on 'Post-COVID economic revival' organised by the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) on Wednesday in the Capital, he said that if the government policies were creating challenges for the banks and financial institutions (BFIs), they should be addressed mutually by the regulator and businesses.
"There are two alternatives – to let the market have its say on the business, or have strong regulation to control the market activities," said FM Sharma adding that the Nepal Rastra Bank should intervene in case the interest rates begin to impact other businesses and economy.
However, he pledged policy facilitation to the BFIs should there emerge any problems.
Minister Sharma also said that the government will correct its policy for electricity supply.
There is a situation where electricity is being wasted but the industries are not getting it or are forced to pay higher rate to get the utility. "We will soon make reforms in this area. Our focus should be on increasing the consumption of electricity rather than exporting it," he said.
Stating that the private sector contributes 70 per cent to the economy, he maintained that the government should listen and incorporate the private sector's demands and suggestions at the same rate.
According to him, budget implementation has just started. Government is highly concerned about increasing capital expenditure. "I am hopeful that the budget mobilisation would catch speed in the next two months," he said.
Deputy Governor of the Nepal Rastra Bank, Nilam Dhungana, said that the central bank had to intervene in the market to keep the interest at the desired level.
"We are concerned about the interest of the larger population," she said.
She maintained that the NRB had utilised various tools to maintain liquidity in the market.
Low mobilisation of capital budget, decreasing remittance, foreign grant and loan and increased goods imports are the main factors contributing to the liquidity pressure, experts speaking at the programme said.
Dr. Richard Howard, Nepal Country Director of the International Labour Organization (ILO), said that social security should not be the burden for businesses and industries.
"Informal sector should be formalised and supported with financial and technical support for business revival," he said.
According to him, recovery is critical. There is no country that has witnessed voluntary business revival, there should be interventions, he said.
"A solid policy framework is needed for the business revival and support the labour force that lost job and economic opportunity, a tripartite cooperation among the FNCCI, government and ILO can help to build such framework," said Dr. Howard.
Secretary of Industry, Arjun Pokharel, informed that the government was mulling to formulate a strategy to formalise the micro, cottage and small enterprises running informally, and support them in business growth and marketing.
Shekhar Golchha, President of the FNCCI, said that the liquidity pressure had resulted in increased interest rate and lack of funds for investment.
"Businesses were trying to revive after facing the brunt of the first wave of the pandemic but the recent liquidity crisis has again created challenges for them," he said.
LDC (Least Developed Countries) graduation without better preparation at a time when the country is struggling to increase the share of exports in the international trade, is likely to have multiple challenges for the country. It will immediately impact exports and intellectual property, said Golchha.
According to him, MSMEs (Micro, Small and Medium Enterprises) are the business most affected by COVID-19 pandemic but there is no policy to address their issues.
Senior Vice President of the FNCCI, Chandra Prasad Dhakal, said that special action plan is needed for the revival of tourism and hospitality sector as it will take quite a while for the businesses in the sector to bounce back.
"Government should start treating investment – domestic and FDI – as our own investment and the entire government mechanism should be sensitised towards this. This is a proven method in Malaysia," he said.
He maintained that the domestic investors should be enabled and encouraged before inviting foreign investors because foreign investors consult the national investors before sending in the money.
Vice President of the FNCCI, Dinesh Shrestha, said that government has failed in creating awareness about the registration and facilities among the micro, cottage and small enterprises.
Published in The Rising Nepal daily on 16 December 2021.
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