## IMF Staff Concludes Visit to Nepal

_IMF News, September 23, 2024_

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## Bibliographic details
- Published: September 23, 2024

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### Mission timing and scope
- IMF staff visit to Kathmandu conducted during September 11-22, 2024.
- Staff team led by Ms. Sarwat Jahan.
- Visit focused on recent macroeconomic developments and implementation of the Extended Credit Facility (ECF)-supported program.
- Mission will not result in a Board discussion; views expressed are those of IMF staff.
- Press Release No. 24/339 dated September 23, 2024.

### Macroeconomic assessment and recent indicators
- Nepal’s economy is showing early signs of recovery.
- Incoming high-frequency data indicate:
  - Import growth is entering into positive territory.
  - Tax collections are improving.
  - Public investment is picking up.
- Credit growth is recovering while remaining appropriately below nominal GDP growth.
- Inflation continued to decelerate to around 3.6 percent by mid-July, partially reflecting favorable commodity prices and weak demand.
- International reserves continued to rise, underpinned by:
  - Robust remittances,
  - Recovering tourism,
  - Still subdued imports.

### Financial sector and governance vulnerabilities
- Banks are dealing with elevated non-performing loans and capital constraints; continued vigilance is necessary.
- Recommended actions for the banking sector:
  - Continue to strengthen regulation.
  - Complete the loan portfolio review of the largest 10 banks.
- Addressing vulnerabilities among the savings and credit cooperatives remains a priority.
- Governance and transparency measures highlighted:
  - Recent amendments to the Anti-Money Laundering Act are a welcome step.
  - Amending the Nepal Rastra Bank (NRB) Act is recommended.
  - Completion of NRB’s external audit is recommended.
  - Increasing public enterprises’ transparency will enhance governance and accountability.
  - The Investment Facilitation Act will bolster Nepal’s investment climate.

### Policy priorities and program implementation
- Accelerating reform momentum is critical to put the economy on a path towards sustainable, strong, and inclusive economic growth.
- Key reform priorities identified:
  - Enhancing public investment execution.
  - Further strengthening domestic revenue mobilization.
  - Prompt disbursement of Child Grants.
- Authorities’ ongoing efforts in meeting key commitments under the Fund-supported program, with IMF technical assistance, are welcome.
- Performance under the program will be formally assessed in the context of the fifth review of the program.

### Engagement and meetings
- IMF team held meetings with:
  - Honorable Deputy Prime Minister and Minister of Finance Mr. Bishnu Prasad Paudel.
  - Nepal Rastra Bank Governor Mr. Maha Prasad Adhikari.
  - National Planning Commission Vice-Chairman Dr. Shiva Raj Adhikari.
  - Other senior government and central bank officials.
  - Representatives from the private sector and development partners.
- Ms. Duttagupta, Deputy Director in the IMF’s Asia and Pacific Department, attended key meetings.
- IMF team expressed gratitude to the Nepali authorities for their warm hospitality and for constructive discussions.

*Source: IMF Press Release No. 24/339 — IMF Staff Concludes Visit to Nepal (September 23, 2024).*

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## References

- [Nepal and the IMF](http://www.imf.org/external/country/NPL/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Extended Credit Facility (ECF)-supported program](https://www.imf.org/en/Publications/CR/Issues/2024/07/15/Nepal-Fourth-Review-Under-the-Extended-Credit-Facility-Arrangement-Press-Release-Staff-551887)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2024/09/23/pr24339-imf-staff-concludes-visit-to-nepal_