Thursday, March 13, 2008

IMF suggests banks to hike rates

The visiting International Monetary Fund (IMF) team proposed banks to raise interest rates.
Though they found the overall macro economic situation of Nepal satisfactory, they were worried over the huge losses that Nepal Oil Corporation (NOC) is incurring.
"Except for the health of NOC, a huge loss making government entity and rising debt, overall macro-economic indicators are satisfactory," said Brian J Aitken, deputy division chief at Asia and Pacific Department.
The team also held discussions with government officials, private sector and commercial banks on their priority and challenges. "We agreed on almost all the issues with the government," he said, adding that overall economic situation is satisfactory for the present situation.
The team was in Nepal for last two weeks for the broad-based economic assessment of Nepal’s economy.
Though they termed stable inflation a positive sign, they think it may not be possible to keep stable for long for the government. "We are also concerned over the Nepal Rastra Bank’s (NRB)effective monitoring and supervision capacity," he said, referring to the long time period that governor’s case is taking. "The delay in decision will hurt the effective implementation of monetary policy and monitoring and supervision activities," Aitken added. "The longer it takes to decide, the more damaging it will be for the central bank."
IMF does the broad-based surveillance of each country. The team will submit a report to IMF headquarters that will be published by the end of May.

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