Nepal’s monetary and fiscal policies work together to maintain economic stability and promote growth, especially in response to inflation and budget deficits. Monetary Policy (Managed by Nepal Rastra Bank - NRB) Inflation Control: NRB sets an inflation target (around 6.5%) and adjusts interest rates to stabilize prices Liquidity Management: The central bank uses tools like open market operations and reserve requirements to regulate money supply. Foreign Exchange Reserves: Nepal maintains reserves to cover imports for 7 months, ensuring economic stability. Interest Rate Adjustments: NRB lowers rates to encourage borrowing and investment when growth slows. Fiscal Policy (Managed by the Government) Budget Deficit Management: Nepal faces challenges with expenditures exceeding revenues, leading to fiscal deficits. Public Investment: The government prioritizes infrastructure and social programs to stimulate growth. Taxation & Revenue Collection: Import restrictions were lifted to b...