Monetary Policy 2014/15 Highlights

Nepal Rastra Bank has been adopting monetary policy the objectives of maintaining price and external sector stability, financial stability and facilitating high and sustainable economic growth, increasing financial access, control inflation, maintain external and financial sector stability, utilize credit in the productive sector and expand financial access.

The monetary policy for 2014/15 has been formulated based on the analysis of domestic economic outlook as well as changes in international economic situation. Likewise, the selection of monetary policy stance and instruments has been made consistent with the objectives and priorities undertaken by the government budget for 2014/15.Certain major concern areas of NRB in current monetary policy are interest rate stability, rein inflation at targeted level, maintain external stability, encourage merger of BFIs, financial sector stability, promoting credit to productive sector, financial service expansion, financial literacy and increase financial inclusion, managing the excess liquidity created by remittances. Following are major provisions on monetary policy 2014/15.

NRB has announced contractionary monetary policy with the objective to control the credit flow to unproductive sector because of excess liquidity created by remittances in the financial market. As per policy provision, there will be provisions to sanction sufficient fund from banking sector to achieve targeted economic growth. Major highlights of monetary policy 2014/15 are:

Failed Economic Development of Nepal

Economic development is a process whereby an economy's real national income as well as per capita income increases over a long period of time. Following figure represents the percapita GDP of Nepal, which shows its not much increase during long period of time.

Economic development, as it is now generally understood, includes the development of agriculture, industry, trade, transport, Tourism, power resources, etc. It, thus, indicates a process of development. The sectoral improvement is the part of the process of development which refers to the economic development. In context of Nepal, sector wise growth during FY 2013/14 is as follow:

The structure of Nepalese economy has been changing gradually. Contribution of agriculture and industry sectors to GDP showed a declining trend while that of services sector showed the opposite.