## Nepal: 2010 Article IV Consultation and Request for Disbursement Under the Rapid Credit Facility: Staff Report; Staff Supplements; Public Information Notice on the Executive Board Discussion; Press Release on the Executive Board Discussion; and Statement by the Alternate Executive Director and Advisor for Nepal

_IMF Staff Country Reports, July 6, 2010_

## Source details

**Canonical URL:** [Nepal: 2010 Article IV Consultation and Request for Disbursement Under the Rapid Credit Facility: Staff Report; Staff Supplements; Public Information Notice on the Executive Board Discussion; Press Release on the Executive Board Discussion; and Statement by the Alternate Executive Director and Advisor for Nepal](https://www.imf.org/en/publications/cr/issues/2016/12/31/nepal-2010-article-iv-consultation-and-request-for-disbursement-under-the-rapid-credit-24008)

## Other formats

- [Markdown version](/en/publications/cr/issues/2016/12/31/nepal-2010-article-iv-consultation-and-request-for-disbursement-under-the-rapid-credit-24008/index.md)
- [Structured JSON version](/en/publications/cr/issues/2016/12/31/nepal-2010-article-iv-consultation-and-request-for-disbursement-under-the-rapid-credit-24008/index.json)
- [Bundle manifest](/en/publications/cr/issues/2016/12/31/nepal-2010-article-iv-consultation-and-request-for-disbursement-under-the-rapid-credit-24008/bundle-manifest.json)

## Bibliographic details
- Published: July 6, 2010
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781455202416.002

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### Executive summary and macroeconomic outlook
- After years of macroeconomic stability, the global crisis is having a substantial, albeit somewhat delayed, impact on Nepal’s economy and exposing its structural weaknesses.
- The Nepalese rupee appears modestly overvalued, but maintaining the peg should remain a key near-term policy objective.
- Remittances and external balances are important vulnerability channels (subject tags include Balance of payments; Remittances; External debt).

### Financial sector risks and urgent priorities
- Risks in the financial sector are coming to a head and need to be addressed urgently.
- The Nepal Rastra Bank (NRB)’s recent directives are welcome, but enforcement is crucial to their effectiveness.
- Key areas requiring policy action:
  - Tighten bank licensing policy.
  - Incentivize banking sector consolidation.
  - Tackle reform of state-controlled banks.
- Subject tags highlighting scope: Banking; Credit; Financial sector; Money; Fiscal policy stance; Public debt.

### Policy recommendations and institutional measures
- Maintain the exchange rate peg as a near-term priority despite modest overvaluation of the Nepalese rupee.
- Strengthen enforcement capacity at the Nepal Rastra Bank to ensure recent directives achieve intended stability outcomes.
- Reform banking sector governance through:
  - Stricter licensing standards to reduce fragility.
  - Policies that encourage consolidation among banks to improve resilience.
  - Targeted measures to reform state-controlled banks to address structural weaknesses.

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## Content in this bundle

- **Nepal’s Remittances: Trends and Projections**
  - [Nepal’s Remittances: Trends and Projections (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2010/_cr10185.pdf.md){rel="alternate" type="text/markdown"}
  - [Nepal’s Remittances: Trends and Projections (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2010/_cr10185.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2016/12/31/nepal-2010-article-iv-consultation-and-request-for-disbursement-under-the-rapid-credit-24008_