July 19: A government study has shown that foreign aid and investment received by Nepal may be affected due to the Russia-Ukraine tension. Likewise, the study has also pointed out the need to review and revise the monetary and financial policy to deal with the effects of the Russia-Ukraine war.

A recent study by the Institute of Policy Research on the impact of events developed after Russia's attack on Ukraine has made it clear that Nepal cannot remain untouched by its multifaceted effects. The study analyzed those effects and recommended policy reforms to deal with the crisis.

“Given the possible pressure on the market due to inflation, it seems appropriate to review the monetary and financial policies carefully and modify them if necessary,” the study suggests.

The report suggests that the government should keep a buffer stock of at least three months to mitigate the problems caused by the rising price of petroleum products. For this, the government needs to start homework to increase electricity consumption, says the report.

The study concluded that since the consumer price index will increase with the increase in the price of petroleum products, the government should keep the prices of basic consumer goods stable and provide special concessions for economically weak consumers.

Since the increase in the price of petroleum products will affect transportation, agriculture and industrial production, the report suggests seeking timely solution through alternative means.

The study concluded that there may be a global shortage of chemical fertilizers due to the war and therefore Nepal should take immediate steps to address the problem as this war will make the current liquidity crisis more complicated. Likewise, it also suggests restricting the import of luxury goods and facilitating the import of essential goods.

According to the study report, defense budgets in Europe, America and some other countries are likely to increase rapidly with increasing hostility. Because of that, there may be a decrease in foreign aid and direct investment. Therefore, it is mentioned in the report that Nepal should strengthen its economic diplomacy in order not to interfere with foreign aid.

Due to this war, there is a possibility that remittances coming to Nepal will also decrease, so it is necessary to start a diplomatic dialogue with the labor destination countries, the report suggests.