Kathmandu: Chandra Prasad Dhakal, President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), emphasized that a stable and supportive policy environment for the private sector is crucial for enhancing Nepal’s economic performance. Dhakal made this statement during a recent meeting with an International Monetary Fund (IMF) mission, where he urged the IMF to gain a deeper understanding of Nepal’s unique economic and social context to offer more tailored policy advice.

“Nepal’s economic structure and characteristics are somewhat different from other nations,” Dhakal noted, stressing that delays in implementing effective reforms could arise if policies are not adapted to these specific conditions.

Dhakal also highlighted that Nepal’s banking system is currently experiencing high liquidity, but despite reduced interest rates, there remains a low demand for private sector investment. He suggested that while the FNCCI has encouraged banks to offer more flexible lending terms, excessive regulation might undermine confidence in both the banking sector and private enterprises.

Expressing optimism, Dhakal noted that recent reforms announced by the government, following private sector recommendations, could address some of these issues. He informed the IMF mission that eight laws had been amended and a draft bilateral investment agreement had been prepared in a bid to boost investment following the recent investment summit.

Furthermore, Dhakal urged the IMF to assist in promoting Nepal as a viable destination for foreign investment. Despite having substantial foreign exchange reserves and a favorable balance of payments, Nepal has struggled to attract significant foreign investment.

IMF Mission Chief Dr. Sarwat Jahan responded positively, affirming that the IMF is committed to supporting Nepal and acknowledges the importance of strengthening the private sector in the country’s economic strategy.