December 10: The major challenges faced by the country at the moment include inflation, liquidity crisis and the increasing volume of imports.

Nepal Rastra Bank’s Governor Maha Prasad Adhikari is of the view that it will be quite challenging to keep inflation within the limit of 6.5 percent if the current economic indicators are not improved.

According to Adhikari, the impact of this year's heavy rainfall on rice and other crops will reflect in inflation.

He made such remarks during a meeting of the Finance Committee of Parliament.

Nepal Rastra Bank is mobilizing all its monetary instruments for the management of financial crisis.

According to Adhikari, the central bank is planning to tighten imports of luxury items, considering its impact on the economy.  It is necessary to pay attention to the fact that imports, which were excessively high during the pandemic, may be alarming under normal circumstances, he warned.

Foreign exchange reserves have declined to Rs 131 billion from Rs 139 billion. With foreign investment and remittances declining, payments for rising import is another challenge.

The shortage of liquidity still persists. Credit worth Rs 411 billion has been disbursed until now but only Rs 64 billion has been collected as deposits resulting in the liquidity crisis. And a total of Rs 205 billion is being spent for imports.

Adhikari said the flow of remittance has not increased much and stands at an average of Rs 80 billion. Remittance inflow has not been able to cope with the high volume of import, he said. Considering the impact on liquidity, the central bank has not raised internal debt. In order to increase the flow of remittance, the central bank has floated the idea of increasing the interest on the amount deposited through remittance by one percentage points.

Similarly, a new scheme has been introduced to attract deposits from non-resident Nepalis.

He also suggested investing in the stock market after developing a good understanding about it. Investors need to have information about financial reports of companies before investing, added Adhikari. The stock market witnessed a steep rise due to lack of promising areas during the pandemic. Public awareness needs to be increased regarding this matter, he further stated.