December 14: The Federation of Nepalese Chamber of Commerce and Industry (FNCCI) has suggested the Nepal Rastra Bank (NRB) to take special initiatives for managing the liquidity crunch and to ensure interest rate stability and price stability as the economy is being affected by internal and external factors.

A delegation led by FNCCI President Sekhar Golchha met with high-ranking officials of NRB, including Governor Maha Prasad Adhikari, on Tuesday and made such request.

"The private sector of Nepal is probably going through the most difficult situation," Golchha said, adding, "The central bank should make the economy viable through measures such as interest rate stability, and suspension of new arrangements related to current capital loans."

Delegates of FNCCI, with its goal to 'Save the Economy', are meeting the top leaders of the country's major political parties, the head of government and the finance minister, requesting them to solve the problem.

A statement issued by the FNCCI says that Golchha has urged the NRB governor to create a conducive environment for the entire private sector.

Likewise, FNCCI has suggested that the government and the central bank should adopt various measures to protect the economy since the increase in the interest rates has affected the entrepreneurs while multi-faceted risks have increased in about a year since they started to control the market.

FNCCI has urged central bank to postpone the implementation of the Current Working Capital Guidelines 2079 for at least two years as it will harm the country's business sector.  

The monetary policy mandates that the average spread rate (interest rate gap) of commercial banks should be maintained at 4 per cent and 4.6 per cent for development banks and finance companies. FNCCI appreciated the central bank for maintaining the spread rate, stating that it would help the economy against risk factors. 

Likewise, the FNCCI has suggested reducing the base rate of the banks and financial institution in order to decrease the interest rate. Therefore, both the government and the central bank should find ways to inject liquidity into the market and reduce interest rates, the FNCCI statement reads.

Similarly, FNCCI has asked for at least a one-year loan renewal facility, and to reduce the mandatory cash ratio by one percentage point.

FNCCI has also requested the NRB to take special initiatives to increase capital expenditure.

“Government should provide loans to manufacturing industries at lower interest rates, as mentioned in the budget,” the statement added.