Economic Paradox: Liquidity Surplus Fails to Spur Investment Amid Low Demand
Summary
Nepal faces a liquidity surplus with low interest rates failing to spur private sector investment amid weak market demand and low government capital expenditure.
Key Points
- Nepal has a liquidity surplus with about 12 trillion rupees investable funds sitting idle in banks despite falling interest rates.
- Weak private sector morale and low market demand are preventing businesses from borrowing and investing.
- Government capital expenditure is significantly below targets, with only 15.62 percent spent by the end of Magh fiscal year 2082/83.
- Economists warn that the economy is stuck in a remittance-driven cycle with low production and a youth exodus worsening the economic outlook.
