## Steering Nepal's economy amid global challenges

_IMF News, January 13, 2026_

## Source details

**Canonical URL:** [Steering Nepal's economy amid global challenges](https://www.imf.org/en/news/articles/2026/01/13/cf-steering-nepals-economy-amid-global-challenges)

## Other formats

- [Markdown version](/en/news/articles/2026/01/13/cf-steering-nepals-economy-amid-global-challenges/index.md)
- [Structured JSON version](/en/news/articles/2026/01/13/cf-steering-nepals-economy-amid-global-challenges/index.json)
- [Bundle manifest](/en/news/articles/2026/01/13/cf-steering-nepals-economy-amid-global-challenges/bundle-manifest.json)

## Bibliographic details
- Authors: Krishna Srinivasan, Sarwat Jahan January
- Published: January 13, 2026

---

### Overview
- 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.

### Economic challenges and recent performance
- 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.

### Policy buffers and macroeconomic stability
- 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.

### Structural reforms and institutional progress
- 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.

### Policy recommendations and priorities
- 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.

### Reason for hope and IMF role
- 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.*

---


## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [NEPAL AND THE IMF](https://www.imf.org/en/countries/npl)
- [PRESS RELEASE](https://www.imf.org/en/news/articles/2025/12/08/pr-25413-nepal-imf-approves-extension-of-the-ecf-arrangement)
- [PRESS CENTER](http://presscenter.imf.org/)
- [IMF Country Focus](https://www.imf.org/en/news/country-focus)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2026/01/13/cf-steering-nepals-economy-amid-global-challenges_