Nepal Rasta Bank’s FY24 monetary policy aims to boost recovery amid economic challenges: CareEdge
New Delhi: To support economic recovery, the Nepal Rasta Bank (NRB) has announced its monetary policy for the fiscal year 2023-24, focusing on controlling inflation, stabilizing interest rates, and ensuring credit demand. The policy comes amid the government’s prudent fiscal plan aimed at rationalizing expenditure and increasing domestic revenue mobilization.
According to CareEdge Ratings, the government has set an annual expenditure target of NPR 1.75 trillion for FY24, representing a 2.4% decrease from the previous fiscal year’s allocation but reflecting a substantial increase of over 16% compared to the revised estimate. Within the allocation, NPR 1.14 trillion (65%) has been earmarked for current expenditure, NPR 302 billion (17%) for capital expenditure, and NPR 308 billion (18%) for financing.
It also noted that the government intends to achieve its revenue targets through a series of initiatives, including leveraging digital technology for revenue administration, curbing revenue leakages, broadening the tax base, and updating tax rates for certain goods. The revenue target for FY24 is NPR 1.3 trillion, indicating growth compared to the previous fiscal year’s target of NPR 1.1 trillion.
Given the fiscal policy’s prudence and the expected improvement in revenue mobilization, CareEdge Ratings predicts a decline in the fiscal deficit for FY24. This optimistic outlook is further supported by the NRB’s monetary policy measures, which include a 50 basis points reduction in the policy rate.
The revised policy rate, which now stands at 6.5%, is designed to stimulate growth amidst the prevailing economic slowdown. In its report, the rating agency highlighted that while the policy rate has been lowered, the bank rate remains
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