THE FUND ,THE BANK and NEPAL

Political impasse, sluggish economic growth, droughts, floods and rising commodities prices have make cast a shadow on the high hope for Naya Nepal. In this time of crisis what could have offered comfort is a well-established and functioning financial sector that offers a range of products suited for the rural clientele and enables and supports those with meager incomes to tide them over tough times and secure their livelihood. Even though , in last 20 years the financial sector has flourished rapidly and the quantity and the type of financial institution have augmented ,access to financial service for low-income household in rural area has been unsatisfactory .Total number of Nepalese household bank account and borrowing from formal sector is still marginal .Inflow of domestic and foreign remittances through informal channel has mismanaged billion of dollars of remittances for consumption of imported goods and services rather than for saving and investment . With relucent of the non-state commercial banks to serve rural Nepal, and the lack of commercial orientation of MFIs; the state should be the ultimate banks for the poor. The Finance ministry, the central bank of Nepal and other states own bank with the assistance of the World Bank and The IMF should attempt to enhance the economic condition of rural Nepal, which is being hit hard by the food storage and poor infrastructure and lack of access to credit.

While addressing the annual meeting of the World Bank and IMF in Istanbul, Finance Minister of Nepal stated lack of basic infrastructure and social services ,high credit and deposit rate in the banking sector, climate change and, widening disparities between rural and urban economy as major concern of Nepalese economy . Commitment of G20 leaders, IMF and the World Bank for assisting the low income countries to overcome the global financial crisis has been very impressive. New initiatives taken by the IMF are expected to boost concessional lending to $17 billion through 2014. These low interest-rate loans now come with no strings attached. The Fund in order to make its lending procedures for flexible and fast has created a new Poverty Reduction and Growth Trust, Which includes program, likes the Extended Credit Facility (ECF), the Standby Credit Facility (SCF) and the Rapid Credit Facility (RCF).Even though ,Nepal has formally expressed it interest to join Poverty Reduction and Growth Facility ( which will be replace soon by ECF) ,a program to advert any balance of payment crisis . In addition of rejoining PRGF, Nepal should join RCF, a program which provide single, up-front payout to meet the urgent needs .RCF offer loans for countries in post-conflict or other fragile situations. In the wake of the crisis the G-20 & IMF has also addressed the issue like financial sector regulation and supervision. Developed, emerging and developing economies’ are committed to improve the capacity of national authority to respond to systemic crises. Crises often present opportunities and lead to revamping of systems and procedures, the Government of Nepal should make a good use of expertise of policy makers and economist at the fund and the bank to prevent property and stock bubble bust ......