Let's find a way to manage our economy through pandemic

Banks and other financial institutions were unable to expand their business as the interest rate in loans had increased four times and economic activities had not significantly increased. Returns had decreased significantly. We were hopeful of an economic dispersion after formation of a two-third majority government and political stability. However, the world has been taken aback by a sudden coronavirus crisis. Nepal cannot become an exception during such a crisis. Due to the lockdown, entire economic activities have come to a halt, and therefore, there was no way banks and other financial institutions would be immune to the crisis. Looking at the quarterly report that arrived at mid-April, we can see that banks and other financial institutions have been pushed toward a grave situation. If the government and the central bank are unable to provide aid to these institutions, this industry will face problems which will ultimately make the economy unstable.

Due to the limited economic activities, the government had previously decreased the expected rate of economic growth, and the Central Bureau of Statistics has further downgraded the projected growth rate to around 2 percent following extended nationwide lockdown. This shows how scary the situation will be. There is a state of confusion as to when the lockdown will end and how we should move ahead with it. Economic activities have remained at a standstill with just emergency and essential services carrying on. People have stopped going to the hospitals even for regular checkup. In absence of any economic activity, a decrease in the banks’ profit was expected. They have not been able to earn back the loan interests. During such circumstances, banks have been forced to manage their loss with provisioning. This was until the April. Lockdown has been extended multiple times since then and it is still unknown when it will end. Due to this, interest collection for the month of Ashadh (ending mid-july) also seems to pose many challenges.