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Monetary Policy Of Nepal For FY 2011

Issue 30, July 24, 2011


By KTM Metro Reporter

July 22, 2011: the Central Bank of Nepal called Nepal Rastra Bank has made public the monetary policy of Nepal for the fiscal year 2011 yesterday. The Central Bank has said that the monetary policy has taken into consideration of the national economic situation, the international economic events and their possible impact on the Nepalese economy, and is for supporting the achievement of the economic targets set by the Three-year Plan.

The main objectives of the monetary policy for the FY 2011 are not to cause inflation due to the high money supply, to keep the balance of payment at a manageable level, and to create fiscal stability for supporting the economic development.

Other objectives are to keep the inflation at an average of 7%, to keep the foreign currency reserve enough for import of goods and services for at least six months, to keep the broad money supply at 12.5% and manage the fiscal stability for achieving 5% economic growth set by the Three-year Plan.

For increasing credits to the productive sector, the Central Bank has reduced the cash reserve ratio from 5.5 to 5 freeing at least Rs 4 billion for credit.

To supervise and regularize the micro finance institutions, the Central Bank is working on setting up a Micro Finance Authority, and an autonomous Micro Finance Fund.

The Central Bank will provide financial institutions designated as ‘D’ category with up to Rs 1.5 million with no-interest for opening a branch in the nine districts where the financial services have been at a minimum.

The Central Bank has increased the amount of foreign currency made available to the Nepalis going abroad from US$ 2,000 to US$ 2,500. Anybody can receive this amount twice in a fiscal year.

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