Nepal monetary policy 2011.12

1,868 views

Published on

  • Be the first to comment

Nepal monetary policy 2011.12

  1. 1. Highlights ofMonetary Policy For Fiscal Year 2011/12 Binamra Silwal MBA III (Finance)
  2. 2. Contents • What is Monetary Policy? • Types and Goals/Objectives Nepal Monetary Policy for F.Y. 2011/12 • Current Challenges • Objectives • Overview • Economic and monetary Targets• Instruments of Monetary Policy Operation • Summary
  3. 3. What is Monetary Policy? • Policy to manage supply of money • Issued by Nepal Rastra Bank • Achieve predetermined macro- economic goals • Policy affecting quantity of money• Determines cost and availability of credit • Create environment for economic growth
  4. 4. Types of Monetary PolicyExpansionary Contractionary
  5. 5. Goals/Objectives Theoretically………..Monetary Policy aims to achieve • Higher Economic Growth • Higher rate of employment • Price stability • Neutrality of money • Economic Stability
  6. 6. Monetary policy for F.Y. 2011/12 Source:Monetary Policy (in English) 2011-12 published by Nepal Rastra Bank on July 21, 2011 (www.nrb.org.np)
  7. 7. Current Challenges: • High Inflation rate • Balance of payment deficit • Liquidity management • Maintenance of financial stability • Weak corporate governance• Low public confidence towards the financial system
  8. 8. Objectives: • Financial sector stability • Control high inflation rate • Maintain public confidence in the financial system • Minimize impact of an increase in NPA• Maintain credit-deposit ratio within the ceiling • Increase credit to productive sector • Keeping the interest rate spread at a satisfactory level
  9. 9. OverviewOutline of Financial indicators of F.Y. 2010/11 GDP Growth Rate 3.5% Inflation Rate 9.6%Increase in Govt. Expenditure 12.5%Growth in Government Revenue 14.5% Balance of Payments 1 Billion Remittance Growth 10.8% Increase in Export 5.6%
  10. 10. Overview (Contd.) Increase DecreaseTotal Consumption Economic growthForeign Employment Capital Expenditure Wage Rate NEPSE Index Remittance Bank Deposit Rate Trade Deficit Liquid Asset
  11. 11. Economic and Monetary targets: Maintain BOP and control inflation Annual average inflation rate 7 percent BOP surplus target (approx.) Rs. 5 billion Economic growth rate 5 percent Broad money supply growth 12.5 percentDomestic credit growth (projected) 13.7 percent Total deposits of commercial 12.5 percent banks growth (projected)
  12. 12. Instruments of Monetary Policy Operation • Open market operation• Liquidity Monitoring and Forecasting Framework • Cash reserve ratio (CRR) • Statutory Liquidity Ratio (SLR) • Bank rate • Special Refinance rate
  13. 13. Summary• Expected to address current challenges • Improving the BOP imbalance • Containing inflation rate • Maintaining financial stability • Increasing access of banking services to general people • Facilitating in the achievement of targeted economic growth
  14. 14. Any Queries ?
  15. 15. Thank You !

×