Government takes stock of liquidity crisis

The finance ministry today held discussion on current economic crisis and liquidity crunch.
The meeting held at the deputy prime minister and finance minister Bharat Mohan Adhikari's office in the finance ministry took stock of the magnitude of current liquidity crunch apart from suggestions for the next fiscal year, according former governor Deependra Bahadur Chhetry.
The government should immediately flow the money it has in its treasury back to banks to ease the current liquidity crunch, the participants suggested.
Private sector, economists and bureaucrats also suggested the minister and finance secretary the necessary measures to be taken in the budget for the next fiscal year to improve capital market, financial market and overall economy.
Representatives of Federation of Nepalese Chambers of Commerce and Industry, Confederation of Nepalese Industries, Nepal Chambers of Commerce apart from bankers, real estate entrepreneurs told the finance minister that people have lost their confidence on banking sector. "The government's inability to explain the necessity of self declaration while depositing over Rs 1 million in the banks," entrepreneur and CA member Rajendra Kumar Khetan said, adding that people doubted use of self declaration under the Anti-Money Laundering, an international obligation that Nepal has to comply.
The consumer spending has also slowed down in the recent time that might lead to another crisis, he added.
Similarly, market analyst Rabindra Bhattarai suggested to bring margin lending policy to boost the secondary market confidence. "The Securities Board of Nepal should start awareness campaign and the brokers should have a counseling desk at their firms," he suggested, adding that the next budget should relax capital gain tax and government should flow loan in low rates to the institutional investors that can invest in the market to lubricate it.
"Liquidity is directly related to the capital market, and if the capital market starts upward trend the liquidity situation will also start easing," he suggested.