IMF Completes Fifth Review, to Disburse NPR 5.81 Billion to Nepal

The International Monetary Fund (IMF) has completed the fifth review of Nepal’s Extended Credit Facility (ECF), paving the way for the disbursement of approximately NPR 5.81 billion (USD 41.8 million). According to the IMF, despite political instability and last October’s floods, Nepal has made notable progress. Increased capital expenditure, post-flood reconstruction, flexible monetary policies, and hydropower growth are expected to bolster economic growth this year.

Nepal accessed the ECF worth USD 395.9 million in 2022 after foreign exchange reserves dwindled, equivalent to 180% of its Special Drawing Rights quota. An IMF team, led by Sarwat Jahan, visited Nepal in late December. The IMF projects a 4.2% economic growth rate this fiscal year, with inflation hovering around the Nepal Rastra Bank’s 5% target. However, delays in capital spending, financial sector weaknesses, and political instability remain risks.

IMF Deputy Managing Director Bo Li noted progress in reforms but highlighted persistent risks. The IMF recommends boosting revenue, strengthening the central bank’s autonomy, and reforming the financial sector. It also urged regulatory improvements to exit the FATF grey list and emphasized mitigating climate change impacts through institutional strengthening and better governance.