IMF Staff Concludes Visit to Nepal
IMF News, February 12, 2024
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- Published: February 12, 2024
Key findings (IMF staff statement)
- “Nepal’s external position continues to strengthen on the back of buoyant remittances, increasing tourism activity, subdued imports, and inflation is decreasing.”
- “Weak domestic demand, large outward migration, and low credit growth despite monetary relaxation continue to weigh on near-term economic growth.”
- “Enhancing domestic revenue mobilization and accelerating the execution of capital expenditure will provide needed support to growth while securing fiscal sustainability.”
- “Increased vigilance on banks’ asset quality and stepped-up supervisory efforts are important to preserve financial stability in view of growing non-performing loans.”
- “The medium-term economic outlook remains favorable, as strategic investments in infrastructure, especially in the energy sector, are expected to support potential growth.”
- “The upcoming Investment Summit presents an opportunity to showcase Nepal’s economic potential. Timely reforms to durably improve the investment climate will help take full advantage of the Summit and pave the way to stronger growth in the future.”
Policy recommendations and priorities
- Enhance domestic revenue mobilization.
- Accelerate execution of capital expenditure.
- Increase vigilance on banks’ asset quality.
- Step up supervisory efforts to preserve financial stability.
- Implement timely reforms to improve the investment climate ahead of the Investment Summit.
Program status and next steps
- Authorities are undertaking efforts to meet key commitments under the Fund-supported program, with the support of IMF technical assistance.
- “Performance under the program will be formally assessed in the context of the fourth review of the Extended Credit Facility, which is expected to take place in the middle of the year.”
Engagements and acknowledgements
- The IMF team held meetings with:
- Honorable Minister of Finance Dr. Prakash Sharan Mahat
- Nepal Rastra Bank Governor Mr. Maha Prasad Adhikari
- National Planning Commission Vice-Chairman Dr. Min Bahadur Shrestha
- Other senior government and central bank officials
- Representatives from the private sector and development partners
- IMF participation: Ms. Gulde-Wolf, Deputy Director in the IMF’s Asia and Pacific Department, attended key meetings.
- “The IMF team is grateful to the Nepali authorities for their hospitality and constructive discussions.”
Source: IMF Staff Concludes Visit to Nepal — https://www.imf.org/en/news/articles/2024/02/12/pr2445-nepal-imf-staff-concludes-visit