Loan disbursement, which has been slowing down for a few years, has started to increase. The total credit disbursement of the banks till October 14 of the previous financial year was only 31 billion, but during the same period of this financial year, the loan reached about 84 billion rupees. In the past few years, as the Nepali economy was showing laxity, investable funds were piling up in banks and financial institutions.

As in last June, 8 billion loanable amount was accumulated in the bank. This credit disbursement data is before the natural disaster in the second week of October. Therefore, it is difficult to estimate the impact of the disaster on credit demand. However, according to the data so far, the increase in loan demand is positive. It can be expected to play a role in moving the Nepalese economy from stagnation to prosperity. Therefore, the government should make every possible effort to make the current positive signs long-term.

It has been analyzed that three aspects have directly played a positive role in the increase in credit flow. First, stable government. At the end of last June, two major parties in the House of Representatives formed a government promising stability. Because of that, investors now expect the government and the government's policies to be stable and supportive. Secondly, banks and financial institutions were piling up loanable funds. Earlier it was not easy to get a loan, but now it is easy to get a loan because of the money accumulated with the banks. Thirdly, interest rates are falling. The highest average interest rate reached 13.03 percent in February 2079, and since then it has been continuously decreasing. The weighted average interest rate on commercial bank loans was 12.24 percent in July 2080. Since then, it has decreased to 9.68 percent in July 2081. At the same time, interest rates of development banks and finance companies are also decreasing. Interest rates are not expected to rise for the next few months. Disbursing loans according to

targets is a challenge. Because, in the previous financial year, while the target was set to expand the credit by 11.5 percent, only 7 percent i.e. 3 trillion 44 billion 72 crores of credit was disbursed. But last July, the National Bank introduced a monetary policy with an ambitious target of 12.5 percent credit expansion. In order to fulfill that target, banks and financial institutions have to extend loans by an additional 6 trillion 54 billion 75 crore rupees this year. Rashtra Bank claims that credit expansion will be significant this year due to some stimulus policies introduced through monetary policy. The improvement seen in the last two months is a positive sign. The government also needs to work hard to maintain this trend of improvement throughout the year.

Not only the disbursement of loans, there has also been an improvement in revenue collection in the two months of the current financial year (July and August). During this period, the government has collected 1 trillion 66 billion 38 million revenue. Which is 11.72 percent of the annual target and about 18 percent more than the same period last year. Therefore, the recent forecasts of the Asian Development Bank (ADB) and the World Bank that the economic growth rate will be 4.9 and 5.1 percent respectively in the next financial year show signs of improvement in the economy compared to the last financial year. Taking all these backgrounds as energy, the government also 

needs to intensify its initiative. The main responsibility of the government is to continuously motivate the private sector, which contributes 80 percent to the national capital investment. Because, although the government has a 20 percent share in the overall investment, it is the main driver. The strategy and discretion of the government remains decisive in which direction to take the economy.

The latest credit expansion is positive, but it should also be noted in which sector the credit flowed. Especially now, it is being analyzed that the loan has not increased in the construction and industry sector. He points out that infrastructure construction and manufacturing continue to contract. Therefore, the government needs to come up with plans to boost the morale of the private sector. For that, an investment environment should be created to increase investment in that sector. To encourage them, schemes including tax breaks and subsidies can be announced. Efforts should also be made to receive foreign investment and aid. Along with