The IMF analyzes economic recovery in Nepal.

Following a staff visit to Nepal, an International Monetary Fund (IMF) official declared that the country's economy is beginning to show early indications of recovery.

September 11–22, 2024, saw a staff visit to Kathmandu by an IMF staff team under the direction of Ms. Sarwat Jahan. The purpose of the visit was to discuss recent macroeconomic developments and the implementation of the program funded by the Extended Credit Facility (ECF).

Incoming high-frequency data, according to Jahan, indicates that public investment is increasing, tax revenues are getting better, and import growth is starting to move into positive territory. She added that although credit growth is rebounding, it is still suitably below nominal GDP growth. By mid-July, inflation had further decreased to about 3.6 percent, which she attributed in part to low demand and favorable commodity prices. Strong remittances, rebounding tourism, and still modest imports supported the growth of international reserves.

"It is imperative that the reform momentum picks up speed in order to steer the economy toward robust, inclusive, and sustainable growth. This will necessitate improving the execution of public investments, fortifying domestic revenue mobilization even more, and expeditiously disbursing Child Grants," she stated. She also mentioned that ongoing vigilance is required as banks deal with elevated non-performing loans and capital constraints, which includes tightening regulations and finishing the loan portfolio review of the top ten banks.

Vulnerabilities within the credit and savings cooperatives continue to be a top concern. We applaud the latest changes made to the Anti-Money Laundering Act. Governance and accountability will be improved by amending the Nepal Rastra Bank (NRB) Act, finishing the NRB's external audit, and enhancing the openness of state enterprises. Nepal's investment climate will be strengthened under the Investment Facilitation Act.

The IMF representative praised the authorities' continued efforts to fulfill their major program-related obligations with the help of the IMF's technical support. The program's fifth review will serve as the formal setting for evaluating participant performance.

The National Planning Commission Vice-Chairman Dr. Shiva Raj Adhikari, the Governor of Nepal Rastra Bank Maha Prasad Adhikari, the Deputy Prime Minister and Minister of Finance Bishnu Prasad Paudel, and other top government and central bank officials were among those with whom the IMF delegation met.

The IMF delegation also had meetings with development partners and members of the private sector. Ms. Duttagupta, Deputy Director of the Asia and Pacific Department of the IMF, was present at important gatherings.

"The IMF team is grateful to the Nepali authorities for their warm hospitality and for constructive discussions."