IMF Staff Country Reports

Nepal: Fifth Review Under the Extended Credit Facility Arrangement and Request for Modification of a Performance Criterion-Press Release; Staff Report; and Statement by the Executive Director for Nepal

March 18, 2025

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International Monetary Fund. Asia and Pacific Dept "Nepal: Fifth Review Under the Extended Credit Facility Arrangement and Request for Modification of a Performance Criterion-Press Release; Staff Report; and Statement by the Executive Director for Nepal", IMF Staff Country Reports 2025, 066 (2025), accessed March 20, 2025, https://doi.org/10.5089/9798229004336.002

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Summary

Political uncertainty remains high with another change of government in July 2024—the fifth since the beginning of the Fund-supported program. Substantial flooding and landslides in September 2024 further weighed on sluggish domestic demand, though conversely helping strengthen the external position and easing inflation pressures. Non-performing loans have risen, bank profitability has weakened, and the financial health of savings and credit cooperatives (SACCOs) has deteriorated. Growth is expected to pick up to 4.2 percent in FY2024/25, supported by further expansion in hydropower generation and a higher execution rate of public capital expenditure, including on post-flood reconstruction. Average inflation is expected to remain close to the authorities’ target of about 5 percent.

Subject: Anti-money laundering and combating the financing of terrorism (AML/CFT), Budget planning and preparation, Capital spending, Credit, Crime, Environment, Expenditure, Financial institutions, Financial sector policy and analysis, Financial sector stability, Fiscal risks, Loans, Money, Natural disasters, Public financial management (PFM), Revenue administration

Keywords: Anti-money laundering and combating the financing of terrorism (AML/CFT), Budget planning and preparation, Capital spending, Credit, Financial sector stability, Fiscal risks, Loans, Natural disasters, Nonperforming loans, Public debt

Publication Details

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