Nepal Government to Create Special Investment Fund “Sovereign Wealth Fund” Using Extra Foreign Money

The government of Nepal is preparing to launch a special state owned investment fund, known as a Sovereign Wealth Fund, to help grow the country's economy. The decision comes because Nepal currently has much more foreign money (foreign currency reserves) than it actually needs to run its daily operations.

Speaking at a post budget press conference organized by the Ministry of Finance, the Governor of Nepal Rastra Bank, Dr. Bishwanath Paudel, explained that Nepal's current reserves are high enough to cover the country's import bills for more than 18 months. Normally, having enough foreign money to cover just 7 months of imports is considered perfectly safe for a country like Nepal. Because the reserve is so high, keeping all that extra cash idle is not bringing in much benefit. Currently, the country is only earning about a 4% return on these funds.

To fix this and get a better return, the government plans to take a portion of this extra foreign money and place it into the newly proposed Sovereign Wealth Fund. Instead of letting the money sit in low yielding accounts, this special fund will make long term investments in key national areas.

According to Governor Paudel, the primary goal of this fund will be to boost the country's economic development by directly investing in major infrastructure, energy projects, and other productive sectors that can create jobs and long-term growth for Nepal.