Fair distribution of wealth between the haves and have-nots is key to reducing potential social conflicts in the future, according to finance minister Barshaman Pun.
"The financial institutions play a crucial role in not only facilitating financial access for supporting micro-industries for inclusive growth that could reduce tension between the rich and poor, but also for large national priority projects," he said, addressing the international conference on 'Economics and Finance and Role of Financial Sector Development in Economic Growth and Poverty Alleviation', organised by Nepal Rastra Bank here today.
With the finalisation of the constitution, the government's concentration will now shift towards the economy with proper vision, mission and plans for sectors that drive the economy, Pun added.
Economic and social problems generally have a domestic genesis but their ramifications, in almost all cases, cross the national boundaries in a globalised world, he said, adding, "Therefore, we need a better understanding on cross boundary problems and issues."
The two-day conference brings together economists and financial sector experts from 17 countries and includes sessions on a range of subjects related to macroeconomic management and the financial sector.
Earlier, welcoming the participants to the conference, central bank governor Dr Yubaraj Khatiwada said that public policy makers have been finding it difficult to find ways to promote a financial system that would sustain growth, while being both efficient and resilient.
"Even though Nepal's financial sector has expanded considerably after the liberalisation of the sector that began in the mid-1980s, even today, only 27 per cent of the rural households have access to financial services within a 30-minute walking distance," he said, adding that the 32 commercial banks, 88 development banks and 76 finance companies are serving some 89 per cent of urban households.
Though he hailed the financial sector for contributing to poverty reduction by almost one percentage point over the past 15 years, the agricultural sector has yet to benefit from formal financial services.
"Access to financial services enables the poor to build assets, raise incomes and reduce vulnerability to economic stresses," the governor said, adding that the central bank's strategy has been to consolidate institutional expansion along with ensuring better access to financial services.
He also stressed that the growth of the real sector was vital for the continued expansion of the financial sector and urged banks and financial
institutions to prioritise productive use of credit to promote the sector.
Representative of the International Monetary Fund (IMF) and guest speaker Faisal Ahmed, on the occasion, said that macroeconomic volatility affects the poor the most because they have lower coping abilities and urged a policy balance between development and stability.
This, he said, would be possible through regular policy dialogues and
discussions among countries with similar economies.
Ahmed also made a presentation on the 'Role of Financial Sector Development in Economic Growth and Poverty Alleviation: Policy Challenges Facing the Low-income Countries Financial Sector', stressing that both the level and quality of growth were important for poverty alleviation.
Deputy Governor of the central bank Gopal Prasad Kaphle while delivering a vote of thanks reiterated the importance of access to financial services for the poor, and for real sector growth.