Nepal: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Nepal

IMF Staff Country Reports, February 17, 2019

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Nepal: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Nepal

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Bibliographic details

• Published: February 17, 2019
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9781484399774.002

Key findings

• Following a prolonged period of tepid growth, economic activity in Nepal has picked up, reflecting cyclical factors and some structural improvements, especially in electricity supply.
• Discussions focused on policies needed to:
  • stem rising balance of payments pressures,
  • safeguard financial stability,
  • implement structural reforms to ensure high, sustainable and inclusive growth.
• Continued improvements in revenue performance are seen as important to:
  • maintain a strong fiscal position,
  • meet capital spending needs.
• The IMF staff welcomed the authorities’ efforts to increase domestic revenue mobilization.
• The authorities broadly agreed with the IMF staff’s assessment and fiscal policy advice.
• Progress has been made with putting in place a fiscal federal framework, but more needs to be done to:
  • ensure sustainability,
  • make budgets more realistic and spending more efficient,
  • build implementation capacity.
• The authorities noted the transition to fiscal federalism and the pickup of reconstruction.

Policy recommendations and priorities

• Strengthen domestic revenue mobilization to support capital spending while maintaining fiscal strength.
• Address balance of payments pressures through appropriate macroeconomic and external sector policies.
• Safeguard financial stability, including through relevant financial sector policies and stress testing.
• Advance structural reforms to sustain higher, inclusive growth—examples include reforms tied to electricity supply improvements and broader structural changes.
• Enhance the fiscal federal framework to ensure long-term sustainability, realistic budgeting, efficient spending, and sufficient implementation capacity.

Thematic coverage and subject areas

• Credit
• Expenditure
• External debt
• Financial sector policy and analysis
• Money
• Public debt
• Stress testing
• Keywords explicitly included: CR, Credit, credit policy, deficit, GDP, government, headline inflation, IMF Debt Sustainability Analysis, ISCR, Nepal, Nepalese authorities, Nepali authorities, private sector credit, Stress testing, widening current account deficit

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