Washington, DC – An International Monetary Fund (IMF) staff team, led by Ms. Sarwat Jahan, conducted a staff visit to Kathmandu during September 11-22, 2024, to discuss recent macroeconomic developments and the implementation of the Extended Credit Facility (ECF)-supported program.
At the
conclusion of the visit, Ms. Jahan issued the following statement:
“Nepal’s economy
is showing early signs of recovery. Incoming high-frequency data shows import
growth is entering into positive territory, tax collections are improving, and
public investment is picking up. Credit growth is recovering while remaining appropriately
below nominal GDP growth. Inflation continued to decelerate to around 3.6 percent by mid-July, partially
reflecting favorable commodity prices and weak demand. International reserves
continued to rise, underpinned by robust remittances, recovering tourism, and
still subdued imports.
“Accelerating
the reform momentum is critical to put the economy on a path towards sustainable,
strong, and inclusive economic growth. This will require enhancing public
investment execution, further strengthening of domestic revenue mobilization,
and prompt disbursement of Child Grants. As banks deal with elevated
non-performing loans and capital constraints, continued vigilance is necessary,
including by continuing to strengthen regulation and completing the loan
portfolio review of the largest 10 banks. Addressing vulnerabilities among the
savings and credit cooperatives remains a priority. The recent amendments to
the Anti-Money Laundering Act are a welcome step. Amending the Nepal Rastra
Bank (NRB) Act, completion of NRB’s external audit and increasing public
enterprise’s transparency will enhance governance and accountability. The
Investment Facilitation Act will bolster Nepal’s investment climate.
“The
authorities’ ongoing efforts in meeting key commitments under the
Fund-supported program, with the support of IMF’s technical assistance, are
welcome. Performance under the program will be formally assessed in the context
of the fifth review of the program.
“The IMF team held meetings with the
Honorable Deputy Prime Minister and Minister of Finance Mr. Bishnu Prasad
Paudel, the Nepal Rastra Bank Governor Mr. Maha Prasad Adhikari, the National
Planning Commission Vice-Chairman Dr. Shiva Raj Adhikari, and other senior
government and central bank officials. The IMF team also met with
representatives from the private sector and development partners. Ms. Duttagupta,
Deputy Director in the IMF’s Asia and Pacific Department, attended key meetings.
“The IMF team is grateful to the Nepali
authorities for their warm hospitality and for constructive discussions.”
.jpg)
.jpg)
