Monetary Policy Must Support Real Sector Expansion: NPC Member Dr. Shrestha

National Planning Commission (NPC) Member Dr. Prakash Kumar Shrestha has emphasized the need for a real sector-oriented monetary policy in the upcoming fiscal year. Speaking at the inaugural session of a two-day "Advanced Banking Training for Economic Journalists" organized by Nepal Economic Journalists Society (NAFIJ) in collaboration with Nabil Bank, Dr. Shrestha stated that real sector expansion is essential for sustainable economic prosperity.

He highlighted that the ongoing economic slowdown has started affecting the banking sector as well. "The lack of growth in the real sector is now visibly impacting banks. Therefore, expanding the real sector has become crucial," he said.

Dr. Shrestha stressed the need for a monetary policy that stimulates credit demand. “Currently, banks have over NPR 700 billion in loanable funds sitting idle. The upcoming monetary policy should be designed to boost credit demand,” he explained. He added that energizing the industrial sector would automatically lead to an increase in credit demand.

The Nepal Rastra Bank is in the process of drafting the monetary policy for the next fiscal year. According to Dr. Shrestha, the policy should facilitate easier access to credit for enterprises and entrepreneurs. He cited Nabil Bank’s ongoing entrepreneurship loan scheme as an example that other banks should replicate to positively impact the broader economy.

He also pointed out that the government's inability to spend adequately has hindered internal credit growth. Dr. Shrestha emphasized the need to improve government spending mechanisms and increase domestic borrowing to support the economy.

Furthermore, he acknowledged the growing competence of economic journalists in Nepal. “Earlier, economic issues rarely received attention in the media. Now, financial news is widely covered, and journalists are becoming more knowledgeable in economic reporting,” he remarked.