Finance Minister Prakash Sharan Mahat has said the current economic problems can be resolved through monetary policy instead of fiscal policy.
Initiatives will be taken to resolve the problems through the monetary policy since the government lacks options to run the fiscal policy, Minister Mahat said while addressing the Nepal Business Summit 2023 jointly organised by The Government of Nepal, Confederation of Banks and Financial Institutions Nepal (CBFIN) and Nepal Business Institute in Kathmandu today.
“The implementation of the fiscal policy could not increase,” Minister Mahat said and added, “We are unable to flow capital through the fiscal policy. We lack resources to increase fiscal spaces.”
The government is unable to work through the fiscal policy since the revenue collection is very low, he said. “Time has come to work for achieving common goals and objectives of coordination. Nepal Rastra Bank (NRB) is at work to review the fiscal policy towards mid-May. Bank interest rates could be reduced through monetary equipment. We must focus on creating a climate of investment by decreasing interest rates through monetary equipment.”
The government could not effectively spend the development budget in time, he admitted. He said the economy could not be dynamic due to the failure to increase capital expenditures, resulting in low revenue collection. He stressed the need for creating a mechanism that would ensure capital expenditures from the very beginning of the next fiscal year, 2023/24.
“Now, it seems economy is weak and facing problems. Internal trade and business are weak. Inflation is under control. But, there are problems. Industries and trade are in problems due to bank interest pressure. Revenue collection is not satisfactory as well,” he said.
Stating that the government’s efforts alone are not enough, he called for all sectors to come together for economic improvement.
