Finance Minister Wagle Assures No Government Interference in Nepal Rastra Bank Autonomy

Finance Minister Dr. Swarnim Wagle has said the government will not unnecessarily interfere in the autonomy of Nepal Rastra Bank (NRB) or its Governor, emphasizing that the central bank should independently formulate monetary policy and make regulatory decisions.

Speaking during clause-wise discussions on the bill seeking to amend the Nepal Rastra Bank Act, 2058 at the Finance Committee of the House of Representatives on Friday, Minister Wagle said the government would not exert pressure on the central bank through the Finance Secretary.

He clarified that the Finance Secretary would primarily serve as a bridge for coordination between fiscal and monetary policy, rather than interfere in the central bank’s decisions or exercise a veto over the Governor.

Wagle said it is an established practice for monetary policy to be aligned with the broader objectives of the government’s budget. However, he stressed that such coordination should not be interpreted as government control over NRB.

Minister Wagle said NRB has been following a broad consultation process while formulating monetary policy. According to him, the central bank’s Research Department provides evidence and data on monetary and overall economic conditions, while consultations are held with chief executive officers of banks and financial institutions, subject experts and other stakeholders.

He said the consultation process could be incorporated into the law to some extent, but doing so should not undermine the independence of the central bank.

Wagle also noted that the Governor and Deputy Governors are members of the NRB Board of Directors, giving them direct involvement in the monetary policy process. Depending on the circumstances, expert opinions are also sought on issues such as credit, exchange rates and the balance of payments.

The Finance Minister highlighted the role of the International Monetary Fund (IMF) in discussions concerning Nepal’s monetary and economic situation. He said regular consultations, including Article IV consultations with the IMF, provide an important platform for reviewing Nepal’s economic and monetary conditions.

He also suggested that the composition of the NRB Board could be strengthened by including external and independent experts with expertise and practical experience in monetary economics.

While defending NRB’s autonomy, Wagle indicated that coordination or corrective intervention could become necessary if monetary policy were to move completely against the government’s broader policy direction.

He maintained that the Finance Secretary should not interfere in the Governor’s authority but should facilitate coordination between fiscal and monetary policies.

During the committee discussion, lawmakers also cautioned against excessive government involvement in the central bank’s affairs.

Nepali Communist Party lawmaker Parshuram Tamang argued that NRB should not be turned into a department of the Finance Ministry. He warned that unnecessary government intervention could undermine the central bank’s autonomy and suggested that NRB reports should be submitted to Parliament.

Tamang also proposed establishing a high-level mechanism to review monetary policy and incorporating such an arrangement into the law.

CPN-UML lawmaker Prof. Dr. Pushpa Raj Kandel also stressed that NRB’s powers should not be gradually restricted in the name of coordination and autonomy.

He raised concerns over the proposed three-year term for the Governor, with a possible additional two-year extension, arguing that such an arrangement could affect the Governor’s independence and create greater dependence on the government.

The Finance Committee has now completed clause-wise discussions on the bill seeking to amend the Nepal Rastra Bank Act, 2058.

Following the conclusion of the discussion, the committee has directed its secretariat to prepare the committee’s report on the proposed amendments.