IMF Executive Board Concludes the 2026 Article IV Consultation with Nepal and Completes the Seventh Review under the Extended Credit Facility
IMF News, June 8, 2026
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- IMF Executive Board Concludes the 2026 Article IV Consultation with Nepal and Completes the Seventh Review under the Extended Credit Facility
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- Published: June 8, 2026
Disbursement and Program Completion
- The Executive Board completed the seventh and final review under the Extended Credit Facility (ECF) Arrangement for Nepal, enabling a disbursement of SDR 31.32 million (about US$ 42.9 million).
- Total disbursements under the ECF for budget support amount to SDR 282.42 million (about US$ 384.1 million).
- The ECF arrangement for Nepal was approved on January 12, 2022 for SDR 282.42 million (180 percent of quota).
- Authorities have consented to the publication of the Staff Report prepared for this consultation.
Program Outcomes and Reform Progress
- Program has helped preserve macroeconomic and financial stability, build buffers, and protect the vulnerable.
- Tangible progress in reforms cited:
- Modernization of monetary operations.
- Improvements in financial sector oversight.
- Completion of a loan portfolio review.
- Enhancements to the fiscal framework and transparency.
- Stronger public investment management.
- Upgrades to the anti-money laundering framework and legal reforms.
- Enhanced external auditing of the NRB and improved accountability of public enterprises.
Economic Outlook and Risks
- Growth:
- Real GDP growth expected: 3 percent in FY2025/26.
- Growth projected to strengthen to 5.3 percent in 2026/27.
- Inflation:
- Headline CPI (period average) projected to pick up and remain close to the NRB’s 5-percent target.
- Headline CPI (period average): 3.1 for 2025/26; 5.0 for 2026/27.
- Headline CPI (end of period): 5.1 for 2025/26.
- Near-term headwinds:
- Protest-related disruptions, weaker agricultural production, subdued private investment amid pre-election uncertainty, and spillovers from the war in the Middle East.
- Upside support:
- Recent smooth transition of power to a single-majority government, accommodative policy stance, and an expansionary fiscal policy for FY2026/27 expected to support private sector recovery.
- Key downside risks:
- Heightened global uncertainty.
- Uncertainty around policy continuity.
- Under-execution of public capital spending.
- Risks from the global economic environment.
Policy Recommendations and Priorities (as stated by IMF management and Executive Directors)
- Fiscal policy:
- Near term: An expansionary fiscal stance is necessary to support economic recovery.
- Medium term: A growth‑friendly gradual fiscal consolidation to preserve fiscal sustainability.
- Fiscal support for energy price shock should be temporary, targeted, and designed to avoid inflationary pressures.
- Boost capital expenditure execution by strengthening Public Investment Management and enforcing revised National Project Bank guidelines.
- Improve budget realism and upgrade the medium-term fiscal framework to enhance spending efficiency.
- Implement Domestic Revenue Mobilization Strategy and use the Tax Expenditure Report to rationalize tax expenditures.
- Strengthen social safety nets through better-targeted and transparent measures.
- Monetary and financial sector policy:
- Adjust accommodative monetary stance if second-round price and external sector pressures arise.
- Monitor inflation and external sector developments closely and adjust monetary stance as needed.
- Address rising financial sector vulnerabilities by strengthening bank credit practices and risk-based supervision.
- Expand Loan Portfolio Review diagnostic to remaining banks and develop a resolution regime for problematic savings and credit cooperatives.
- Implement the Financial Action Task Force (FATF) Action Plan to strengthen the AML/CFT framework and exit from the grey list.
- Urged timely adoption of draft amendments to the Nepal Rastra Bank Act submitted to Parliament.
- Governance and structural reforms:
- Strengthen governance and institutional credibility to improve business environment, create jobs, and enhance public service delivery.
- Continue IMF Governance and Corruption Diagnostics.
- Invest in skills, technology adoption, and natural disaster‑resilient infrastructure.
Executive Board Assessment
- Directors welcomed completion of the seventh and final review and broadly satisfactory program performance, which helped preserve macroeconomic stability and rebuild buffers despite shocks.
- Directors supported continued engagement through the Post‑Financing Assessment and capacity development.
- Agreed that expansionary fiscal policy is appropriate in the near term, followed by gradual consolidation; emphasized mobilizing domestic revenues and ensuring fiscal support is temporary and targeted.
- Emphasized boosting capital expenditure execution by implementing the PIMA Action Plan and improving budget realism and the medium-term fiscal framework.
- Recommended vigilance on inflation and external sector; welcomed draft NRB Act amendments and urged timely adoption.
- Highlighted need to improve bank credit practices, risk-based supervision, expand loan portfolio diagnostics, resolve problematic savings and credit cooperatives, and implement FATF Action Plan.
- Called for strengthening governance and institutional credibility and welcomed ongoing IMF Governance and Corruption Diagnostics.
- Next Article IV consultation expected on the standard 12‑month cycle.
Selected Economic Indicators (2023/24–2027/28) — key figures preserved exactly as reported
- Output and Prices (annual percent change):
- Real GDP: 3.7 (2023/24 Est.), 4.6 (2024/25), 3.0 (2025/26), 5.3 (2026/27)
- Headline CPI (period average): 5.4 (2023/24), 4.1 (2024/25), 3.1 (2025/26), 5.0 (2026/27)
- Headline CPI (end of period): 3.6 (2023/24), 2.6 (2024/25), 5.1 (2025/26)
- Fiscal Indicators: Central Government (in percent of GDP):
- Total revenue and grants: 19.4 (2023/24), 20.0 (2024/25), 19.9 (2025/26), 21.6 (2026/27), 21.7 (2027/28)
- of which: Tax revenue: 16.5 (2023/24), 17.2 (2024/25), 17.4 (2025/26), 18.6 (2026/27), 18.8 (2027/28)
- Expenditure: 21.8 (2023/24), 22.4 (2024/25), 24.9 (2025/26), 24.8 (2026/27)
- Recurrent expenditure: 18.5 (2023/24), 18.2 (2024/25), 19.3 (2025/26), 20.1 (2026/27), 19.2 (2027/28)
- Capital expenditure: 3.4 (2023/24), 4.8 (2024/25), 5.6 (2025/26)
- Operating balance: 0.9 (2023/24), 1.8 (2024/25), 0.6 (2025/26), 1.5 (2026/27), 2.4 (2027/28)
- Net lending/borrowing: -2.5 (2023/24), -1.9 (2024/25), -3.3 (2025/26), -3.2 (2026/27)
- Money and Credit (annual percent change):
- Broad money: 13.5 (2023/24), 12.5 (2024/25), 11.0 (2025/26), 10.5 (2026/27), 10.4 (2027/28)
- Domestic credit: 6.3 (2023/24), 6.2 (2024/25), 6.1 (2025/26), 7.3 (2026/27), 8.3 (2027/28)
- Private sector credit: 8.1 (2023/24), 6.6 (2024/25), 7.8 (2025/26), 8.4 (2026/27)
- Saving and Investment (in percent of nominal GDP):
- Gross investment: 30.4 (2023/24), 31.8 (2024/25), 34.9 (2025/26), 40.5 (2026/27), 40.6 (2027/28)
- Gross fixed investment: 24.3 (2023/24), 25.7 (2024/25), 29.1 (2025/26), 34.4 (2026/27), 34.0 (2027/28)
- Private: 21.0 (2023/24), 22.0 (2024/25), 26.0 (2025/26), 29.6 (2026/27), 28.4 (2027/28)
- Gross national saving: 34.3 (2023/24), 38.5 (2024/25), 41.8 (2025/26), 42.5 (2026/27), 40.3 (2027/28)
- Balance of Payments:
- Current account (in millions of U.S. dollars): 1,663 (2023/24), 3,006 (2024/25), 3,166 (2025/26), 972 (2026/27), -162 (2027/28)
- In percent of GDP: 3.9 (2023/24), 6.7 (2024/25), 6.9 (2025/26), -0.3 (2026/27)
- Trade balance (in millions of U.S. dollars): -10,431 (2023/24), -10,651 (2024/25), -12,715 (2025/26), -15,594 (2026/27), -17,184 (2027/28)
- Trade balance (in percent of GDP): -24.3 (2023/24), -23.8 (2024/25), -27.7 (2025/26), -32.4 (2026/27), -32.5 (2027/28)
- Exports of goods (y/y percent change): 64.7 (2023/24), 19.8 (2024/25), 10.1 (2025/26), 9.0 (2026/27)
- Imports of goods (y/y percent change): 9.4 (2023/24), 19.5 (2024/25), 20.4 (2025/26), 10.0 (2026/27)
- Workers' remittances (in millions of U.S. dollars): 10,864 (2023/24), 12,636 (2024/25), 15,196 (2025/26), 15,691 (2026/27), 16,233 (2027/28)
- Workers' remittances (percent of GDP): 25.3 (2023/24), 28.2 (2024/25), 33.1 (2025/26), 32.6 (2026/27), 30.7 (2027/28)
- Gross official reserves (in millions of U.S. dollars): 14,547 (2023/24), 18,637 (2024/25), 21,827 (2025/26), 23,577 (2026/27), 24,390 (2027/28)
- In months of prospective imports: 11.4 (2023/24), 12.4 (2024/25), 12.1 (2025/26), 11.6 (2026/27)
- Memorandum Items:
- Public debt (in percent of GDP): 48.3 (2023/24), 48.1 (2024/25), 49.6 (2025/26), 49.4 (2026/27)
- Nominal GDP (in billions of U.S. dollars): 42.9 (2023/24), 44.8 (2024/25), 45.8 (2025/26), 52.9 (2026/27)
- Nominal GDP (in billions of Nepalese Rupees): 5,709 (2023/24), 6,107 (2024/25), 6,505 (2025/26), 7,148 (2026/27), 7,900 (2027/28)
- Net International Reserves (in millions of U.S. dollars): 14,016 (2023/24), 18,031 (2024/25), 21,226 (2025/26), 23,029 (2026/27), 23,906 (2027/28)
- Primary Deficit (in billions of Nepali Rupees): 58 (2023/24), 43 (2024/25), 125 (2025/26), 128 (2026/27)
- Primary Deficit (in percent of GDP): 1.0 (2023/24)
- Tax Revenue (in billions of Nepalese Rupees): 945 (2023/24), 1,050 (2024/25), 1,133 (2025/26), 1,329 (2026/27), 1,484 (2027/28)
- Private sector credit (in percent of GDP): 91.1 (2023/24), 92.1 (2024/25), 92.2 (2025/26), 90.5 (2026/27), 88.8 (2027/28)
- Exchange rate (NPR/US$; period average): 133.0 (2023/24), 136.3 (2024/25), …
- Real effective exchange rate (average, y/y percent change): -0.1 (2023/24)
Press Release No. 26/188 — IMF Communications Department — June 8, 2026.
