At an interaction organized by Revenue Training Center on Current Liquidity Crisis on Sunday, Vice-President of Nepal Bankers´ Association Rajan Singh Bandari said there were enough indications on the ground last year to suggest that there would be Balance of Payment (BoP) crisis. [break]
“We could have easily sensed that there would be a BOP problem in future when imports were rising at multifold and exports were constantly shrinking,” Bhandari said, and asked why the government agencies failed to reckon such a simple looming problem.
Finance Minister Surendra Pandey also said the government was not expecting such dramatic changes in the major macro-economic indicators. At the budget preparation time, Ministry of Finance was briefed by government´s chief financial advisor -- Nepal Rastra Bank -- that it did not expect any remarkable change in growth of remittance and major indicators, Minister Pandey said.
He also said that there have been overflow of financial institutions, resulting in unhealthy competition to invest in the sub prime borrowers. "In the past, these banks made higher investments than the growth seen in deposit mobilization and concerned agencies couldn´t predict what impacts such mismatch would bring," he said.
Chief economic advisor at the Ministry of Finance Keshab Acharya blamed long-running political instability in the country for the current crisis and added that as long as the country failed to create investment friendly environment, it can´t correct the current crisis seen in the BOP.
He stressed that the BOP crisis is the most serious problem that the economy is comforting and said that a series of steps that the government and central bank have jointly taken will bring positive results. Acharya also said that latest amendment tabled at the parliament will bar investors to be engaged in interest contradicting businesses like banks, insurance companies, finance companies and industries, among others.
Deputy Governor of NRB Bir Bikram Rayamajhi said that the central bank is taking all possible steps to deal with the problems and expressed the hope that the latest policy changes will yield positive results. He also urged the government to do more to improve business doing environment, which can bring additional investments to create jobs and lower current BOP deficit.
Related story
Pope lands in Bangladesh with Rohingya crisis looming large
