Nepal Rastra Bank (NRB) is navigating a critical monetary policy challenge for the upcoming fiscal year. The government has presented an expansive budget of Rs 21.24 kharba for FY 2026/27, targeting an ambitious 7% economic growth. However, according to Ratopati, this goal clashes with the International Monetary Fund’s projection of just 3% growth.
Despite over Rs 13 kharba in investable funds within the banking system, low demand and a weak capital market indicate structural stagnation. While interest rates are at historic lows, investor sentiment remains dampened. The budget introduces initiatives like the ‘Investment Express’ and ‘AI Hub’, yet concerns arise over Rs 90.30 arba in unallocated funds and a 21% salary hike for government employees, potentially fueling inflation amidst a persistent trade deficit.
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