NRB
·

By Sandeep Chaudhary

Analysis of Nepal's Financial and Monetary Policies from 2016 to 2024

Analysis of Nepal's Financial and Monetary Policies from 2016 to 2024

Kathmandu, Nepal – Nepal's financial and monetary landscape has experienced several key shifts over the years, reflecting both internal policy adjustments and external economic pressures. This analysis delves into the trends and changes in key financial indicators from 2016 to 2024.

Policy Rates: The Fixed Repo Rate remained stable at 5.0% until mid-2018, after which it began to decrease, reaching 3.0% by mid-2019. This rate remained consistent until a hike in mid-2021 to 7.0%, indicating a tightening of monetary policy. This was likely a response to rising inflation or attempts to stabilize the economy. As of mid-2024, the rate stands at 5.5%, suggesting efforts to balance economic growth and inflation control.

Standing Liquidity Facility (SLF) Rate and Bank Rate: Both the SLF and the Bank Rate saw a similar trajectory, reducing gradually from 7.0% in 2016 to 5.0% by 2020. This downward adjustment aimed to enhance liquidity in the financial system. The SLF rate increased sharply in mid-2021 to 8.5%, aligning with the tightening monetary stance reflected in other policy rates.

Refinance Rates: Special and General Refinance Rates maintained stability, with slight increases observed from 2021 onwards. The introduction of the MSME Refinance in 2020 at 2.0% aimed to support small and medium enterprises during the pandemic, which later increased to 4.0% in 2022.

Government Securities: Interest rates on Treasury bills of various maturities (28, 91, 182, and 364 days) have shown volatility. A significant upward trend is seen from 2021, with rates peaking around 10-11% in mid-2022. This reflects increased borrowing costs for the government and heightened investor demand for higher returns amidst economic uncertainties.

Commercial Banks' Interest Rates:

  • The Weighted Average Interbank Rate fluctuated widely, peaking at 6.91% in mid-2019, followed by a sharp decrease in 2020 due to the pandemic, and again rising to 8.5% by mid-2021.

  • The Weighted Average Deposit Rate increased steadily from 3.30% in 2016 to around 8.0% in 2021, driven by competitive pressures and the need to attract deposits.

  • The Weighted Average Lending Rate exhibited a steady increase, reaching 13.03% by 2023, indicating higher borrowing costs.

Development and Finance Companies' Rates: Development banks and finance companies also reflected similar trends, with deposit rates peaking around 10% and lending rates around 14-15% by mid-2023. This aligns with the broader tightening monetary policy to curb inflationary pressures.

Interpretation

Over the past eight years, Nepal's financial policies have oscillated between easing and tightening to manage inflation, economic growth, and liquidity. The consistent adjustments in policy rates indicate proactive measures by the Nepal Rastra Bank to stabilize the economy amidst varying domestic and global challenges. The increase in deposit and lending rates by commercial banks reflects rising costs of funds and a more cautious lending environment. The volatility in government securities rates underscores the fluctuating confidence and risk perceptions in the market.

The significant shifts in 2021 and 2022, particularly the tightening of policy rates and the increase in refinance rates, suggest responses to inflationary pressures and efforts to stabilize the financial system post-pandemic. The support extended to MSMEs indicates targeted interventions to sustain economic segments crucial for growth and employment.

As Nepal moves forward, maintaining a balance between promoting growth and controlling inflation will be key. The current stance of slightly reduced rates in 2024 compared to the peaks of 2021-2022 suggests a cautious optimism, with policymakers likely monitoring global economic trends and domestic fiscal conditions closely.

Conclusion

Nepal's financial landscape from 2016 to 2024 has been marked by strategic policy shifts aimed at economic stabilization. The fluctuations in key interest rates and the introduction of targeted support measures highlight the dynamic approach adopted by the central bank. As the country navigates through post-pandemic recovery and global economic uncertainties, continued vigilance and adaptive policy measures will be essential to sustain growth and stability.

Related Blogs

Nepal’s Foreign Trade Shows Signs of Recovery, but Structural Challenges Persist
Top

4 min read

Nepal’s Foreign Trade Shows Signs of Recovery, but Structural Challenges Persist

Nepal’s Foreign Trade Shows Signs of Recovery, but Structural Challenges Persist Nepal’s foreign trade, which had been grappling with a prolonged contraction until recently, is exhibiting signs of recovery, according to the latest data released by the Bhansar Department (Department of Customs). The figures for the first eight months of the current fiscal year (mid-July 2024 to mid-March 2025) indicate a significant uptick in both imports and exports, resulting in an overall expansion of the country’s total foreign trade volume. However, a deeper analysis reveals that this growth masks underlying structural weaknesses that continue to hinder Nepal’s economic self-reliance.

DIPESH TOP 10 RESEARCH TOP 10 RESEARCH

·

30 Mar, 2025

Gold Prices in Nepal Soar to Record Highs: Economic Implications and Smuggling Concerns Rise
Top

4 min read

Gold Prices in Nepal Soar to Record Highs: Economic Implications and Smuggling Concerns Rise

Gold Prices in Nepal Soar to Record Highs: Economic Implications and Smuggling Concerns Rise The price of gold in Nepal has witnessed unprecedented fluctuations in recent years, reaching historic highs and raising concerns about the country’s economy and the growing shadow of gold smuggling. From 2075–76 BS (2018–19 CE) to 2081–82 BS (2024–25 CE), the price per tola (approximately 11.66 grams) has skyrocketed, reflecting both global trends and local policy challenges. On Chaitra 2, 2081 (March 16, 2025), the price hit Rs 175,200 per tola, only to climb further to Rs 176,000 the very next day, according to the Federation of Nepal Gold and Silver Dealers’ Association. While a slight decline is anticipated in the coming days, the rapid rise and fall of gold prices in such a short span have sparked debates about economic stability.

DIPESH TOP 10 RESEARCH TOP 10 RESEARCH

·

26 Mar, 2025

Nepal Faces Budget Crunch as Mandatory Liabilities Outpace Revenue, Ministries Brace for Cuts
Top

4 min read

Nepal Faces Budget Crunch as Mandatory Liabilities Outpace Revenue, Ministries Brace for Cuts

Nepal Faces Budget Crunch as Mandatory Liabilities Outpace Revenue, Ministries Brace for Cuts Nepal’s government is grappling with a growing fiscal challenge as mandatory expenditures, such as public debt servicing and social security payments, continue to rise while revenue collection falls short of targets. This imbalance has cast a shadow over the budget for the upcoming fiscal year (FY) 2082-83 (2025-26), with the National Resource Estimation Committee setting a budget ceiling of NPR 1.965 trillion. While this is slightly higher than the current FY 2081-82’s allocation of NPR 1.860 trillion, the increase is insufficient to offset escalating obligatory costs, leaving most ministries—particularly those reliant on capital expenditure—facing potential budget cuts.

DIPESH TOP 10 RESEARCH TOP 10 RESEARCH

·

24 Mar, 2025

Nepal’s Economic Journey: The Promise and Challenges of Liberal Policies
Top

4 min read

Nepal’s Economic Journey: The Promise and Challenges of Liberal Policies

Nepal’s Economic Journey: The Promise and Challenges of Liberal Policies The question of "Who is the government for?" remains a perennial debate across the globe, and Nepal is no exception. As political systems evolve, they attempt to answer this through governance structures and economic policies. Ideally, a government represents all citizens of a nation, tasked with safeguarding their economic, social, and political rights. However, in practice, not all governments succeed in fulfilling this mandate. Some lack the capacity to address citizens’ aspirations, while others fail due to insensitivity, leading to widespread discontent. Nepal’s own history and its ongoing economic transformation provide a lens to examine this dynamic.

Dipesh Ghimire

·

24 Mar, 2025

Nepal Faces Growing Budget Deficit as Government Prepares for FY 2082/83
Top

5 min read

Nepal Faces Growing Budget Deficit as Government Prepares for FY 2082/83

Nepal Faces Growing Budget Deficit as Government Prepares for FY 2082/83 Nepal’s government is gearing up to present yet another deficit budget for the upcoming fiscal year (FY) 2082/83, with an estimated shortfall of approximately NPR 700 billion (7 kharba). The National Planning Commission (NPC) has set a budget ceiling of NPR 1.906 trillion (19 kharba 6 arba 50 crore), but revenue projections and grants fall significantly short, forcing the government to rely heavily on internal and external borrowing to bridge the gap. This persistent trend of deficit budgeting, a practice spanning the last 15 years, underscores the country’s struggle to expand its revenue base and manage escalating debt obligations.

Dipesh Ghimire

·

23 Mar, 2025

Nepal’s Loan Growth Continues Despite Weak Demand, Sectoral Disparities Emerge
Top

4 min read

Nepal’s Loan Growth Continues Despite Weak Demand, Sectoral Disparities Emerge

Nepal’s Loan Growth Continues Despite Weak Demand, Sectoral Disparities Emerge Nepal’s banking and financial institutions have witnessed a sustained increase in annual loan growth, with a notable expansion in key sectors such as electricity, hotels, agriculture, real estate, consumption, and construction. According to data released by Nepal Rastra Bank (NRB), the country’s central bank, overall loan disbursement rose by 6.90% in the current fiscal year up to mid-February (Magh), despite a lack of strong demand for credit. However, while 10 out of 15 tracked sectors showed robust investment growth, five sectors experienced a contraction, raising concerns about uneven economic progress.

Dipesh Ghimire

·

22 Mar, 2025

Nepal’s Parliament Swiftly Passes Bills to Boost Economic Development and Investment
Top

4 min read

Nepal’s Parliament Swiftly Passes Bills to Boost Economic Development and Investment

Nepal’s Parliament Swiftly Passes Bills to Boost Economic Development and Investment Dipesh Ghimire has emerged as a prominent figure in Nepal’s journalism landscape, particularly renowned for his incisive reporting on the stock market. With a career marked by dedication, he has conducted over 5,000 interviews, including more than 100 with stock market investors, showcasing his deep engagement with the financial sector. His work has become a vital resource for investors seeking to navigate the complexities of Nepal’s share market, offering insights into trends, challenges, and opportunities. Currently, Ghimire serves as the operator and editor of Nepse Trading (https://www.nepsetrading.com/), a leading platform that delivers news, analysis, and updates on Nepal’s stock exchange. The website has established itself as a go-to source for investors, providing detailed reports on market movements, company performances, and investment prospects. Complementing this, his YouTube channel (https://www.youtube.com/@news.nepsetrading) offers visual and audio content, including interviews and market breakdowns, making stock-related information accessible to a broader audience. Through these platforms, Ghimire has played a pivotal role in enhancing transparency and awareness in Nepal’s financial ecosystem. Ghimire’s journalistic approach is rooted in facts, impartiality, and professionalism. His extensive interviews with investors not only highlight their personal experiences—successes and struggles alike—but also shed light on the broader dynamics of the stock market. This has proven invaluable for both novice and seasoned investors, helping them understand market intricacies and devise informed strategies. His efforts have bridged the gap between the technical world of stock trading and the general public, fostering a culture of informed investment in Nepal. On a personal note, Dipesh Ghimire is married to Simrita Pokharel, and the couple has a daughter named Shridi Ghimire. Balancing his family life with a demanding career, he continues to contribute tirelessly to financial journalism. His commitment has earned him credibility and respect among peers and investors alike, cementing his reputation as a trusted voice in the field. As Nepal’s stock market sees growing participation, the role of journalists like Ghimire becomes increasingly significant. With the rise in retail investors, there is a pressing need for reliable information and analysis— a gap that Ghimire effectively fills through Nepse Trading and his YouTube channel. His platforms empower investors to make sound decisions by demystifying market trends and offering real-time updates. This accessibility has not only boosted confidence in the stock market but also contributed to the development of a more robust investment culture in the country. Ghimire’s work stands out in Nepal’s financial journalism for its depth and reach. By leveraging both written and multimedia platforms, he has set a new standard for reporting on the stock market. His contributions have added a fresh dimension to the field, and there is widespread anticipation that he will continue to shape the discourse around Nepal’s financial markets in the years ahead. For now, Dipesh Ghimire remains a key figure driving awareness and accountability in the nation’s stock trading community.

Dipesh Ghimire

·

21 Mar, 2025

Nepal Attracts Rs 44.66 Billion in Foreign Investment Commitments in First Eight Months of FY 2081/82
Top

4 min read

Nepal Attracts Rs 44.66 Billion in Foreign Investment Commitments in First Eight Months of FY 2081/82

Dipesh Ghimire has emerged as a prominent figure in Nepal’s journalism landscape, particularly renowned for his incisive reporting on the stock market. With a career marked by dedication, he has conducted over 5,000 interviews, including more than 100 with stock market investors, showcasing his deep engagement with the financial sector. His work has become a vital resource for investors seeking to navigate the complexities of Nepal’s share market, offering insights into trends, challenges, and opportunities. Currently, Ghimire serves as the operator and editor of Nepse Trading (https://www.nepsetrading.com/), a leading platform that delivers news, analysis, and updates on Nepal’s stock exchange. The website has established itself as a go-to source for investors, providing detailed reports on market movements, company performances, and investment prospects. Complementing this, his YouTube channel (https://www.youtube.com/@news.nepsetrading) offers visual and audio content, including interviews and market breakdowns, making stock-related information accessible to a broader audience. Through these platforms, Ghimire has played a pivotal role in enhancing transparency and awareness in Nepal’s financial ecosystem. Ghimire’s journalistic approach is rooted in facts, impartiality, and professionalism. His extensive interviews with investors not only highlight their personal experiences—successes and struggles alike—but also shed light on the broader dynamics of the stock market. This has proven invaluable for both novice and seasoned investors, helping them understand market intricacies and devise informed strategies. His efforts have bridged the gap between the technical world of stock trading and the general public, fostering a culture of informed investment in Nepal. On a personal note, Dipesh Ghimire is married to Simrita Pokharel, and the couple has a daughter named Shridi Ghimire. Balancing his family life with a demanding career, he continues to contribute tirelessly to financial journalism. His commitment has earned him credibility and respect among peers and investors alike, cementing his reputation as a trusted voice in the field. As Nepal’s stock market sees growing participation, the role of journalists like Ghimire becomes increasingly significant. With the rise in retail investors, there is a pressing need for reliable information and analysis— a gap that Ghimire effectively fills through Nepse Trading and his YouTube channel. His platforms empower investors to make sound decisions by demystifying market trends and offering real-time updates. This accessibility has not only boosted confidence in the stock market but also contributed to the development of a more robust investment culture in the country. Ghimire’s work stands out in Nepal’s financial journalism for its depth and reach. By leveraging both written and multimedia platforms, he has set a new standard for reporting on the stock market. His contributions have added a fresh dimension to the field, and there is widespread anticipation that he will continue to shape the discourse around Nepal’s financial markets in the years ahead. For now, Dipesh Ghimire remains a key figure driving awareness and accountability in the nation’s stock trading community.

Dipesh Ghimire

·

19 Mar, 2025

Nepal’s Public Debt Climbs to 46.91% of GDP, Rises by Rs 241.93 Billion in Eight Months Amid Dollar Surge
Popular News

3 min read

Nepal’s Public Debt Climbs to 46.91% of GDP, Rises by Rs 241.93 Billion in Eight Months Amid Dollar Surge

Dipesh Ghimire has emerged as a prominent figure in Nepal’s journalism landscape, particularly renowned for his incisive reporting on the stock market. With a career marked by dedication, he has conducted over 5,000 interviews, including more than 100 with stock market investors, showcasing his deep engagement with the financial sector. His work has become a vital resource for investors seeking to navigate the complexities of Nepal’s share market, offering insights into trends, challenges, and opportunities. Currently, Ghimire serves as the operator and editor of Nepse Trading (https://www.nepsetrading.com/), a leading platform that delivers news, analysis, and updates on Nepal’s stock exchange. The website has established itself as a go-to source for investors, providing detailed reports on market movements, company performances, and investment prospects. Complementing this, his YouTube channel (https://www.youtube.com/@news.nepsetrading) offers visual and audio content, including interviews and market breakdowns, making stock-related information accessible to a broader audience. Through these platforms, Ghimire has played a pivotal role in enhancing transparency and awareness in Nepal’s financial ecosystem. Ghimire’s journalistic approach is rooted in facts, impartiality, and professionalism. His extensive interviews with investors not only highlight their personal experiences—successes and struggles alike—but also shed light on the broader dynamics of the stock market. This has proven invaluable for both novice and seasoned investors, helping them understand market intricacies and devise informed strategies. His efforts have bridged the gap between the technical world of stock trading and the general public, fostering a culture of informed investment in Nepal. On a personal note, Dipesh Ghimire is married to Simrita Pokharel, and the couple has a daughter named Shridi Ghimire. Balancing his family life with a demanding career, he continues to contribute tirelessly to financial journalism. His commitment has earned him credibility and respect among peers and investors alike, cementing his reputation as a trusted voice in the field. As Nepal’s stock market sees growing participation, the role of journalists like Ghimire becomes increasingly significant. With the rise in retail investors, there is a pressing need for reliable information and analysis— a gap that Ghimire effectively fills through Nepse Trading and his YouTube channel. His platforms empower investors to make sound decisions by demystifying market trends and offering real-time updates. This accessibility has not only boosted confidence in the stock market but also contributed to the development of a more robust investment culture in the country. Ghimire’s work stands out in Nepal’s financial journalism for its depth and reach. By leveraging both written and multimedia platforms, he has set a new standard for reporting on the stock market. His contributions have added a fresh dimension to the field, and there is widespread anticipation that he will continue to shape the discourse around Nepal’s financial markets in the years ahead. For now, Dipesh Ghimire remains a key figure driving awareness and accountability in the nation’s stock trading community.

Dipesh Ghimire

·

18 Mar, 2025

Maha prasad Adhikari’s Leadership at Nepal Rastra Bank: Experience Overshadowed by Weak Support
Top

3 min read

Maha prasad Adhikari’s Leadership at Nepal Rastra Bank: Experience Overshadowed by Weak Support

Dipesh Ghimire has emerged as a prominent figure in Nepal’s journalism landscape, particularly renowned for his incisive reporting on the stock market. With a career marked by dedication, he has conducted over 5,000 interviews, including more than 100 with stock market investors, showcasing his deep engagement with the financial sector. His work has become a vital resource for investors seeking to navigate the complexities of Nepal’s share market, offering insights into trends, challenges, and opportunities. Currently, Ghimire serves as the operator and editor of Nepse Trading (https://www.nepsetrading.com/), a leading platform that delivers news, analysis, and updates on Nepal’s stock exchange. The website has established itself as a go-to source for investors, providing detailed reports on market movements, company performances, and investment prospects. Complementing this, his YouTube channel (https://www.youtube.com/@news.nepsetrading) offers visual and audio content, including interviews and market breakdowns, making stock-related information accessible to a broader audience. Through these platforms, Ghimire has played a pivotal role in enhancing transparency and awareness in Nepal’s financial ecosystem. Ghimire’s journalistic approach is rooted in facts, impartiality, and professionalism. His extensive interviews with investors not only highlight their personal experiences—successes and struggles alike—but also shed light on the broader dynamics of the stock market. This has proven invaluable for both novice and seasoned investors, helping them understand market intricacies and devise informed strategies. His efforts have bridged the gap between the technical world of stock trading and the general public, fostering a culture of informed investment in Nepal. On a personal note, Dipesh Ghimire is married to Simrita Pokharel, and the couple has a daughter named Shridi Ghimire. Balancing his family life with a demanding career, he continues to contribute tirelessly to financial journalism. His commitment has earned him credibility and respect among peers and investors alike, cementing his reputation as a trusted voice in the field. As Nepal’s stock market sees growing participation, the role of journalists like Ghimire becomes increasingly significant. With the rise in retail investors, there is a pressing need for reliable information and analysis— a gap that Ghimire effectively fills through Nepse Trading and his YouTube channel. His platforms empower investors to make sound decisions by demystifying market trends and offering real-time updates. This accessibility has not only boosted confidence in the stock market but also contributed to the development of a more robust investment culture in the country. Ghimire’s work stands out in Nepal’s financial journalism for its depth and reach. By leveraging both written and multimedia platforms, he has set a new standard for reporting on the stock market. His contributions have added a fresh dimension to the field, and there is widespread anticipation that he will continue to shape the discourse around Nepal’s financial markets in the years ahead. For now, Dipesh Ghimire remains a key figure driving awareness and accountability in the nation’s stock trading community.

Dipesh Ghimire

·

17 Mar, 2025