Economists have pointed out that the economy cannot improve unless the money (excess liquidity) accumulated in banks and financial institutions is invested in productive sectors. They say that even though interest rates are at an all-time low and the external sector is very strong, the economy is not improving because investment in productive sectors is not increasing.

In an interaction on the topic of ‘Economic and Financial Situation and Monetary Policy Direction’ organized by Nepal Rastra Bank on Wednesday, economists said that investment in the productive and infrastructure sectors should be expanded.

Former Vice Chairman of the National Planning Commission and economist Prithviraj Legal said that while the total national savings are increasing, the investment ratio is weak. ‘Although the external sector appears to be strong, other indicators of the economy are very weak,’ he said, ‘The economy will not improve unless the current excess liquidity is invested in the productive sector.’ Economist Govinda Nepal opined that the government should make efforts to mobilize foreign exchange reserves in the productive and infrastructure development sectors.

‘As interest rates continue to fall, it may encourage capital flight.’ Therefore, there is a need to increase investment in infrastructure projects using the available financial resources,’ said economist Kalpana Khanal.

Former member of the National Commission and Associate Professor Ramesh Chandra Poudel emphasized that the country's economy is sluggish and stressed the need for a strong fiscal policy to mobilize foreign investment and increase production and productivity.

At the program, Governor Bishwanath Poudel, noting that the state of infrastructure development in the country is weak, pointed out the need to enhance institutional capacity for infrastructure expansion. 'The policy and structural environment should be conducive for the mobilization of foreign investment in infrastructure development,' he said.

Ram Sharan Kharel, Executive Director of the Economic Research Department of the National Bank, presented a working paper covering the economic and financial situation and the direction of monetary policy. In the working paper, Kharel discussed the background of the macroeconomic environment, the state of the economy and the financial sector, existing challenges, the policy efforts made by the government and the National Bank to address them, and the roadmap for long-term reforms.