## Nepal: Third Review Under the Extended Credit Facility Arrangement-Press Release; Staff Report; and Statement by the Executive Director for Nepal

_IMF Staff Country Reports, December 6, 2023_

## Source details

**Canonical URL:** [Nepal: Third Review Under the Extended Credit Facility Arrangement-Press Release; Staff Report; and Statement by the Executive Director for Nepal](https://www.imf.org/en/publications/cr/issues/2023/12/06/nepal-third-review-under-the-extended-credit-facility-arrangement-press-release-staff-542039)

## Other formats

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## Bibliographic details
- Published: December 6, 2023
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400261305.002

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### Overview
- Presents Nepal’s Third Review under the Extended Credit Facility (ECF) Arrangement.
- Concludes that Nepal has made good progress with the implementation of the program, which has:
  - helped mitigate the impact of the pandemic and global shocks on economic activity,
  - protected vulnerable groups,
  - preserved macroeconomic and financial stability.
- Notes that Nepal’s post-pandemic rebound, fuelled by a credit boom, ended last year as growth slowed markedly.
- Highlights trade-offs: low domestic demand helped resolve external pressures but deflated government revenue and led to a widening of the fiscal deficit despite expenditure control.

### Macroeconomic developments
- Growth:
  - Post-pandemic rebound ended last year; growth slowed markedly.
- Domestic demand:
  - Low domestic demand eased external pressures.
  - Low domestic demand deflated government revenue.
- Financial stability:
  - Program actions helped preserve macroeconomic and financial stability.

### Fiscal and external position
- Fiscal:
  - Government revenue fell due to low domestic demand.
  - Fiscal deficit widened despite expenditure control.
- External:
  - External pressures were alleviated by subdued domestic demand.

### Policy priorities and structural reforms
- Fiscal policy:
  - Enhance capital expenditure while maintaining overall fiscal discipline.
- Financial sector and governance:
  - Advance reforms in banking regulation and governance.
- Business environment and inclusion:
  - Improve the business climate to foster investment.
  - Build human capital.
  - Continue improving social safety nets, in particular the coverage of the child grant program.
- Structural agenda:
  - Continued progress on the structural front is needed to foster investment and growth that is more inclusive.

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_Source: https://www.imf.org/en/publications/cr/issues/2023/12/06/nepal-third-review-under-the-extended-credit-facility-arrangement-press-release-staff-542039_