Kathmandu: Governor of the Nepal Rastra Bank, Dr Bishwanath Poudel, has announced that the central bank is moving forward with a plan to establish a Sovereign Wealth Fund to better manage the country’s growing financial assets.
Speaking at a press conference held at the Ministry of Finance on Sunday, Dr Poudel explained that the decision stems from a need to strategically utilize Nepal’s substantial foreign exchange reserves, which have now reached levels far exceeding the nation’s immediate requirements for stability.
The Governor highlighted a significant imbalance between the sheer volume of these reserves and the relatively low returns they currently generate. He noted that while a reserve sufficient to cover seven months of imports is generally considered an adequate safety net for the country, Nepal is currently sitting on a massive stockpile capable of sustaining imports for more than eighteen months.
Dr Poudel pointed out that despite this abundance, the current yield on these funds remains stagnant at around 4 percent, suggesting that the capital is not being utilized to its full potential.
By transitioning a portion of these excess reserves into a Sovereign Wealth Fund, the central bank aims to shift toward a more proactive investment strategy. This approach is intended to secure higher returns on national savings by diversifying into more profitable global or domestic investment opportunities. The ultimate goal of the fund is to ensure that the nation’s idle wealth is actively contributing to economic growth and providing a stronger financial return for the country’s future development.
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