Sunday, 3 March, 2024

Nepal's economy in far better position than Sri Lanka's: former Governor Nepal

Nepal's foreign exchange reserve is more than double of IMF suggestion


By TRN Online, Kathmandu, Apr. 12: Former Governor Chiranjibi Nepal has said that Nepal's economic condition is in a far better position in comparison to that of Sri Lanka.

Speaking at an interaction programme in the capital on Tuesday, the former governor of Nepal Rastra Bank, the central bank of Nepal, viewed that Sri Lanka drifted into the current crisis due to sharp decline in the foreign exchange reserve and rising outstanding debt.

He made it a point that Sri Lanka's foreign debt has risen to 60 per cent of gross domestic product (GDP) while in comparison Nepal's foreign debt consists of only 22 per cent of the GDP.

Though trade deficit is widening, Nepal still possess the foreign exchange reserve equivalent to import of good and service for 6.7 months which is above the International Monetary Fund (IMF) suggestion of 3 months for a developing country like Nepal.

He attributed the current liquidity shortage to the sudden rise in the credit expansion which rose above 32 per cent against 18 per cent as targeted by monetary policy. He termed the credit expansion a historically high one.

Foreign exchange reserve of Nepal declined in comparison to COVID period due to slid in remittance and tourism, he said.

He also predicted that Russia-Ukraine crisis could stoke up the fuel and a few commodities' price, which ultimately could lead to inflation.