Finance Minister Dr. Swarnim Wagle Denies Government Interference in Nepal Rastra Bank Autonomy

Kathmandu. Finance Minister Dr. Swarnim Wagle has stated that the government has not interfered with the autonomy of the central bank and the governor. He said this on Friday while responding to questions raised by members of parliament during the clause-wise discussion on the bill to amend the Nepal Rastra Bank Act, 2058, in the Finance Committee. He clarified that the government would not unnecessarily interfere in the monetary policy, circulars, and decisions made by the central bank. He also urged not to fall for the misconception that the central bank is being pressured through the Finance Secretary. Stating that the post of Governor of Nepal Rastra Bank is powerful, he said that the Finance Secretary would only act as a bridge to coordinate between fiscal and monetary policies. He mentioned that it is an established practice for the monetary policy to align with the spirit of the government's budget, and that the provision related to this would be included in the budget itself. Speaking about the narrative of interference, Finance Minister Dr. Wagle said, 'It is not true that the Finance Secretary unnecessarily interferes in the central bank. Currently, an attempt is being made to create a narrative that the government interferes too much, but in reality, that is not the case.' Clarifying the coordination between monetary policy and the budget, he added, 'I have stated in my statement that the monetary policy will be supportive of the government's budget, reflecting the spirit with which the budget was formulated. This is our established practice.' Speaking about the role of the Finance Secretary, he said, 'Fiscal and monetary policies are coordinated, and the Finance Secretary acts as the bridge for that coordination. He does not obstruct, veto, or overturn the governor's decisions, nor has he done so in the past, nor will he.' He further added regarding possible steps in special circumstances, 'However, if [the central bank] says it will bring something completely against the government's policy, then a brake needs to be applied.' He stated that intervention might occur if a monetary policy is brought that is completely contrary to the government's policy. During the meeting, MPs had expressed the view that the government should not unnecessarily interfere in the central bank. They stated that the proposed bill to amend the Nepal Rastra Bank Act, 2058, brought by the government, seeks to interfere unnecessarily. Parshuram Tamang, an MP from the Nepali Communist Party, said that the central bank should not be made like a department of the Ministry of Finance. He stated that the bank's autonomy would be lost if the government unnecessarily interfered in the central bank's work. He expressed dissatisfaction, saying that the act is being drafted in a way that the central bank has to consult the government for every decision. Suggesting that the central bank's report should be submitted to parliament, he demanded the formation of a high-level mechanism to review monetary policy and its inclusion in the act. Prof. Dr. Pushparaj Kandel, an MP from CPN-UML, said that the central bank's authority should not be curtailed in the name of autonomy. He also expressed dissatisfaction with the three-year tenure for the governor. Questioning the nature of the central bank, MP Kandel said, 'Do we want the autonomy of the central bank, or is the central bank a supporting body of the Ministry of Finance? If it is to remain as a supporting body of the Ministry of Finance, it will go in a different direction.' Speaking about autonomy and tenure, he added, 'When we go to some clauses, we talk about autonomy; when we go to other clauses, we talk about coordination. The governor's tenure has also been set at three years. It is set at three years plus two years.' Commenting on the intention behind setting the tenure, he said, 'This is intended to ensure that the governor remains loyal to the Ministry of Finance or the government. This is not found anywhere in the world, nor in our other institutions in Nepal.' The clause-wise discussion on the bill to amend the Nepal Rastra Bank Act, 2058, has been completed in the committee. Following the completion of the discussion, the committee has directed the committee secretariat to prepare the report.