IMF Staff Country Reports

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

July 15, 2024

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International Monetary Fund. Asia and Pacific Dept "Nepal: Fourth Review Under the Extended Credit Facility Arrangement-Press Release; Staff Report; and Statement by the Executive Director for Nepal", IMF Staff Country Reports 2024, 225 (2024), accessed November 21, 2024, https://doi.org/10.5089/9798400282331.002

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Summary

This paper focuses on Nepal’s Fourth Review under the Extended Credit Facility (ECF) Arrangement. Nepal has made good progress with implementation of the program, despite a challenging political environment. With growth below potential, executing the planned increase in capital spending, as envisaged in the FY24/25 budget, while maintaining fiscal discipline through domestic revenue mobilization and rationalization of current spending remains critical to boost growth and preserve medium-term fiscal sustainability. Monetary policy should maintain the current cautious, data-driven approach to preserving price and external stability. Avoiding further boom-bust credit cycles is critical to establish a more stable, pro-growth equilibrium. Continued progress on the structural front remains needed to foster investment and more inclusive growth. These include improving the business climate, building human capital, and continuing to improve social safety nets, in particular aiming for full execution of the child grant budget, followed by an expansion of the program to all districts in Nepal.

Subject: Asset and liability management, Credit, Debt Relief, External debt, Money, Public debt, Revenue administration

Keywords: Accommodative monetary policy stance, Asia and Pacific, Credit, Debt relief, ECF arrangement, ECF program implementation, Global, Nepali authorities, UML-NC coalition

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