Steering Nepal's economy amid global challenges

IMF News, January 13, 2026

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Nepal faces a challenging transition that can progress if the people work together.
Recent youth-led protests highlighted aspirations for greater transparency, governance, and a more equal distribution of economic opportunities and resources.
The IMF emphasizes balancing prudent political, economic, and financial policies to steer an orderly transition amid lingering global uncertainty.

In 2022, stability was a top priority when authorities approached the IMF for support following the collapse of tourism due to the Covid-19 pandemic.
The IMF’s financing package supported the Covid-19 response by mitigating the pandemic’s impact on economic activity, protecting vulnerable groups, and laying groundwork for sustained growth.
Program progress: Nepal completed the sixth of seven program reviews in October, showing tangible improvement in the economy.
Real GDP growth:
- FY 2023: 2 percent
- FY 2024: 3.7 percent
- FY 2025 (estimated): 4.3 percent
- FY 2026: recovery expected to continue, though at a more moderate pace amid a complex domestic environment and global uncertainty
Remaining weaknesses:
- Domestic demand remains subdued.
- Investor confidence is waning.
- More efforts are needed to protect vulnerable people.

Foreign exchange reserves have risen to nearly $20 billion, enough to cover almost a full year of imports.
Fiscal discipline has helped stabilize public debt.
Inflation remains well below the Nepal Rastra Bank’s target.
The IMF stresses safeguarding these hard-won stability gains.

Fiscal measures:
- Publication of the domestic revenue mobilization strategy.
- Publication of the fiscal risk statement.
- Publication of the tax expenditure report.
- National Planning Commission issued revised guidelines for the National Project Bank to strengthen capital project selection and execution.
Financial sector measures:
- Improved bank supervision through the Supervisory Information System.
- Nepal Rastra Bank launched a loan portfolio review of 10 large commercial banks to provide deep insights into banking sector health.
- Measures to improve governance and transparency, including improvements to the anti-money laundering framework (implementation needs further efforts).
- Four priority nonfinancial public enterprises had their financial statements audited as part of the program.
- Work underway to amend the Nepal Rastra Bank Act to strengthen its autonomy and governance.
Capacity development: IMF support contributed to these structural reform milestones.

Near-term priorities:
- Accelerate budget execution.
- Improve project readiness—particularly in hydropower and trade-related infrastructure.
- Reduce logistics frictions to crowd-in private investment.
Medium-term priorities to unlock private sector growth and jobs:
- Strengthen governance and anti-corruption institutions.
- Improve the investment climate.
- Enhance financial oversight.
- Advance trade integration.
- Expand targeted social protection.
Overarching guidance: ensure fruits of macroeconomic stability and growth are broadly shared; safeguard macroeconomic and financial stability while laying strong foundations for durable and inclusive growth coupled with good governance.

The IMF expresses sympathy for losses during recent social unrest and is heartened by the resilience of the Nepali people.
Despite dim global prospects and uncertainty, Nepal presents an opportunity to reimagine a nation with greater equality and good governance.
The IMF stands ready to support Nepal’s journey toward continued reforms and inclusive, sustainable growth.

Steering Nepal's Economy Amid Global Challenges — Krishna Srinivasan and Sarwat Jahan, January 13, 2026.