aig to avoid panic and financial ruin then turned out to be much more expensive for taxpayers. fortunately we avoided this in europe. let me move on to my third and last thought. it concerns the post - crisis period. the industrialised countries are emerging from the crisis poorer, more indebted and with lower prospects for growth. the process of fiscal consolidation must remain the cornerstone of economic policy and form the basis for a radical overhaul of the economies in order to create more growth. but in the current environment i see two risks facing our democracies in the coming years. the first one is the illusion that this crisis is cyclical rather than structural, that it has no impact on the long - term growth potential of our economies. we may, in this case, be deluding ourselves that traditional macroeconomic policies ( monetary and fiscal ) are per se able to restore growth to pre - crisis levels. thus there is a risk of triggering again unsustainable policies which in turn create new imbalances that sooner or later implode. the second risk is an attitude of resignation, of being resigned to not having the capacity and strength to untie the knots that restrict our growth potential, or of being resigned to economic stagnation. this state of mind is associated with the politician ’ s dilemma neatly articulated by the president of the eurogroup, jean - claude juncker : “ we all know what to do, but we don ’ t know how to get re - elected once we have done it ”. this type of reasoning occasionally leads some people to argue that democratic systems are not up to making our societies swallow the medicine needed in order to grow again. structural reforms in fact involve a redistribution of income to the detriment of the less efficient sectors, which are characterised by monopolistic rents and are strongly opposed to change. the idea is often floated that some emerging countries are better able to manage the current crisis because they have “ stronger ” regimes, which do not need to justify their actions vis - a - vis their electorates very often. these are dangerous positions in my view and are not justified by empirical evidence. juncker ’ s provocative remark is not in fact substantiated by the facts. he himself is one of europe ’ s veteran political leaders, who has brought rigour and development to his country and was re - elected three times in a row. an analysis of the correlation between economic variables and political popularity in europe reveals that, contrary to what

46th acu board of directors meeting colombo, sri lanka / 13 july 2017 address delivered by dr. chiranjibi nepal, governor of nepal rastra bank honorable chairperson mr. indrajit coomaraswamy, fellow governors and members of the acu board of directors, acu secretary general mrs. lida borhan - azad, distinguished delegates and observers, ladies and gentlemen, 1. it gives me immense please to participate and address this 46th annual meeting of board of directors of the asian clearing union in this beautiful city of colombo. at the outset, i would like to extend my sincere appreciation to governor mr. indrajit coomaraswamy and the entire team of central bank of sri lanka for the warm hospitality extended to us and also for the excellent arrangements made for this meeting in colombo. fellow governors and distinguished delegates 2. allow me now to shed some light on some current developments of the nepalese economy. after almost 20 years, elections for the local governments concluded recently following the promulgation of constitution of federal democratic republic of nepal. the provincial and national level elections are to be held within 21 january 2018. the political uncertainty has now vanished and the economy is now ready for high growth trajectory. 3. most of the macro - financial data of the first ten months of 2016 / 17 show that the economy is gaining traction. nepal is the third fastest growing economy in the world in 2017 according to a report of the world economic forum. the economy rebounded strongly in 2016 / 17 following a good monsoon, reconstruction efforts after the 2015 earthquake and normalization of trade with india. the gdp growth estimate of 6. 9 percent demonstrates optimistic growth outlook at least in the short term. 4. the government is targeting a growth of 7. 2 percent in 2017 / 18 as economic activities are expected to expand due to increased government expenditure from the elected local governments. acceleration in reconstruction works will potentially increase trade deficit further at least in the near term. expected increase in foreign aid and foreign direct investment will, however, be instrumental in keeping the country ’ s balance of payments in surplus. decelerated growth in migrant workers'remittances is moderating deposit growth. going forward, bridging the gap between deposit and credit growth is the key for reducing the financial frictions. 5. the consumer price inflation has been hovering below 4 percent since the last six months. this is attributed to the previous year's base price effect and improved supply situation. 6