Nepal Rastra Bank Governor Bishwanath Poudel has said that the increase in fuel prices and disruptions in the supply chain due to geopolitical tensions in West Asia will negatively impact the economy by shrinking activities in sectors such as agriculture, tourism, and industry. He said that this is likely to directly and indirectly affect financial stability. 

Referring to the International Monetary Fund's projection, Governor Poudel also predicted that there may be some slowdown in the global economy. The global economy is projected to grow by 3.1 percent in 2026 and 3.2 percent in 2027. He said that there is a risk that the geopolitical tensions in West Asia, the increase in fuel prices, and disruptions in the supply chain could negatively impact Nepal's agriculture, tourism, and industry sectors. 

Despite the current unexpected price impact, the average inflation rate in the current fiscal year is expected to remain below the target, Governor Poudel said at a program organized at the central office of the Rastra Bank on Monday to mark its 71st anniversary. He said that the country's economic indicators are satisfactory. He said that consumer inflation is within the target range of the monetary policy. The average consumer inflation for the first eight months of the fiscal year 2082/83 is 2.1 percent, compared to 4.7 percent in the previous year. Balance of payments situation: The balance of payments surplus is further strengthening. 

Former Finance Minister Yubaraj Khatiwada said that although the current economy has improved somewhat in terms of external indicators, it is still unhealthy in reality. He said that although the external sector is currently balanced, inflation is under control and economic growth is around 2-3 percent, it is not that positive. ‘The solution to the current problems is not possible with small monetary measures like ‘physiotherapy’, major structural reforms or ‘surgery’ are necessary,’ he said. He said that if the government fails to create an investment-friendly environment, credit flow will not increase by reducing interest rates alone.  

‘The health of the economy that we call is not the natural health of the economy. There are problems. We have not been able to create a business environment. Until we create an environment that encourages investors and ensures that investment is safe, the small physiotherapy provided by the National Bank will not work. Physiotherapy will not do much, there is a situation where surgery has to be done. There is a situation where a larger operation has to be done,' Khatiwada said. 

Stating that the investment environment has deteriorated due to arrests and insecurity of businessmen in the past, Khatiwada said that economic activity will not increase unless it is improved. According to Khatiwada, there is a big challenge to the quality and productive use of credit. 

Giving an example of how economic growth was limited to 2-4 percent even when credit increased by 25 percent in the past, he mentioned that the effectiveness of credit is weak. He said that a review of all the working capital, TR loans, loans to the disadvantaged groups and the directed credit program is necessary. Khatiwada suggested that instead of dividing the directed credit program into small segments, the credit should be distributed in a comprehensive 'packaging' to productive sectors.