An International Monetary Fund (IMF) team, led by Ms. Sarwat Jahan, concluded its visit to Kathmandu from January 8 to January 19, 2025. The purpose of the visit was to engage in discussions with Nepali authorities regarding the fifth review under the Extended Credit Facility (ECF). At the end of this mission, a staff-level agreement was reached on policies and reforms necessary for completing this review.
Ms. Jahan stated, “The Nepali authorities and IMF staff reached staff-level agreement on the policies and reforms needed to complete the 5th review under the ECF.” She noted that this agreement is pending approval by the IMF’s Executive Board. If approved, Nepal will gain access to Special Drawing Rights (SDR) worth approximately US$40.6 million.
Nepal has made progress in implementing its ECF-supported program, meeting most performance criteria and targets for July 2024 except for revenue collection and child welfare grants. Key reforms achieved include amending anti-money laundering laws and enhancing financial oversight of public enterprises.
The country's economic recovery faced challenges due to severe floods in September 2024, which affected critical sectors and increased inflation rates due to rising food prices. However, remittances remained strong while imports were subdued.
Growth projections for FY2024/25 exceed four percent, driven by increased public capital expenditure focused on flood recovery efforts. Despite positive indicators, risks remain such as potential under-execution of growth projects and vulnerabilities within the financial sector.
“The IMF team held meetings with... Mr. Bishnu Prasad Paudel... Dr. Shiva Raj Adhikari... Mr. Maha Prasad Adhikari...” These discussions involved senior government officials as well as private sector representatives.
In conclusion, Ms. Jahan expressed gratitude towards Nepali authorities for their hospitality during these constructive discussions.