Kathmandu. An International Monetary Fund (IMF) staff team, led by Ms. Sarwat Jahan, concluded a staff visit to Kathmandu from September 11 to 22, 2024, to review Nepal’s recent macroeconomic developments and the progress of the Extended Credit Facility (ECF)-supported program.
In a statement following the visit, Ms. Jahan noted that Nepal’s economy is showing early signs of recovery. Key indicators such as import growth, tax collections, and public investment have seen positive momentum.
Credit growth has also improved, although it remains below nominal GDP growth. Inflation has decelerated to around 3.6% by mid-July, benefiting from favorable commodity prices and weak demand. Meanwhile, international reserves are rising, supported by strong remittances, a tourism rebound, and subdued imports.
However, Ms. Jahan emphasized the need for Nepal to accelerate its reform efforts to ensure sustainable, strong, and inclusive economic growth. Priority areas include enhancing public investment, strengthening domestic revenue mobilization, and timely disbursement of Child Grants. The banking sector faces challenges such as elevated non-performing loans and capital constraints, necessitating continued vigilance and regulatory improvements. The IMF also stressed the importance of addressing vulnerabilities in the savings and credit cooperatives sector.
Ms. Jahan welcomed recent amendments to Nepal’s Anti-Money Laundering Act and noted the importance of further reforms, including amending the Nepal Rastra Bank (NRB) Act, completing the NRB’s external audit, and improving transparency in public enterprises. The Investment Facilitation Act was highlighted as a critical step toward improving Nepal’s investment climate.
The IMF team held discussions with key officials, including Finance Minister Bishnu Prasad Paudel, NRB Governor Maha Prasad Adhikari, and National Planning Commission Vice-Chairman Dr. Shiva Raj Adhikari. The visit also included meetings with private sector representatives and development partners.
The IMF team expressed appreciation for the cooperation and hospitality of the Nepali authorities, and the country’s performance under the ECF program will be formally assessed during the upcoming fifth review.