May 5: The Federation of Nepalese Chamber of Commerce and Industry (FNCCI) has requested the government to initiate reform initiatives as soon as possible as the recent data released by the National Statistics Office indicated that the economy is headed for recession.

Issuing a statement, the FNCCI urged the government and Nepal Rastra Bank (NRB) to prevent the economic situation from turning more complicated.

The National Statistics Office predicted that Nepal's economic growth (in terms of consumer prices) will be 1.86 percent this year. Along with this, the data shows that the economy has been negative in the last three quarters.

The statement issued by FNCCI stated, “The latest figures reflect the long-standing recession in the market. The negative growth rate of the manufacturing industry, construction and trade sectors is a sign that the private sector is shrinking. For a year, FNCCI has been drawing the attention of the stakeholders to the recession of the economy due to the increased prices in the international market and policy changes within the country. The FNCCI would like to draw serious attention to the fact that there is pressure on the economy due to lack of initiative from the relevant agencies.”

The FNCCI has emphasized on the need to increase the demand in the market to bring the economy out of recession. The umbrella body of private sector suggested that the government should reduce unnecessary expenses and increase capital expenditure in order to increase the demand in the market.

Similarly, the federation suggested that NRB should to take initiatives to reduce the interest rate, mainly by reducing the policy rate, bank rate, mandatory cash ratio, etc, by adopting necessary measures.

In the same way, as the borrowers are unable to pay the principal and interest, the bad loans of the banks have reached 4 percent, and the federation has demanded to facilitate the restructuring and rescheduling of the loans.

The federation said that the purchasing power of the common consumers is gradually decreasing as inflation has been more than 7 percent for the past nine months. As the private sector is not able to work uninterruptedly, the government and the common consumers are also being affected.

Therefore, the federation has drawn the attention to the fact that without immediate reforms, the recession of the economy will be prolonged.