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🇳🇵 Nepal /Economy & Trade

IMF: Nepal's economy more stable, needs to boost investment

From Kathmandu Post · () English

Translated from English, summarized and contextualized by DistantNews.

At a glance

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  • Nepal's economy has become more stable since 2022, with lower inflation and increased international reserves, according to the IMF.
  • Despite government transitions, natural disasters, and social unrest, Nepal's reform efforts stayed on track, supported by consistent policy and capacity development.
  • The country must now leverage this stability to boost private investment, create jobs, and foster more inclusive growth.

Nepal's economy has achieved significant stability, marked by a sharp decrease in inflation and a substantial rise in international reserves, according to Sarwat Jahan, Nepal Mission Chief at the International Monetary Fund.

Inflation has fallen sharply, international reserves have increased, and the primary fiscal deficit is lower. Equally important, the country has improved some of the institutions that support economic policymaking.

— Sarwat JahanIMF Nepal Mission Chief Sarwat Jahan describing the progress made in Nepal's economy.

Jahan noted that Nepal successfully completed its first IMF-supported program in nearly two decades, demonstrating resilience amidst numerous economic, political, and natural challenges. "Inflation has fallen sharply, international reserves have increased, and the primary fiscal deficit is lower," she stated, highlighting improvements in economic policymaking institutions as well.

The progress is particularly noteworthy given Nepal's experience with frequent government changes, severe natural disasters like earthquakes and floods, and large-scale anti-corruption protests. Jahan attributed the program's success to a consistent policy anchor, adaptability to Nepal's political shifts, and strong capacity-development support.

Despite that difficult environment, the reform effort stayed on track.

— Sarwat JahanIMF Nepal Mission Chief Sarwat Jahan on the resilience of Nepal's reform efforts amidst various crises.

While macroeconomic indicators have improved broadly, with inflation dropping significantly and reserves now covering over 12 months of imports, Nepal's recovery remains vulnerable to external shocks. Recent pressures include higher energy prices due to the conflict in West Asia, which impacts fuel costs, migrant workers, and tourism. The IMF emphasizes that translating this stability into sustained private investment, job creation, and inclusive growth is the next critical challenge for Nepal.

These are not just abstract figures. Lower inflation protects people’s purchasing power, larger reserves guard against currency and trade pressures, and healthier public finances give the government a buffer to respond when the next crisis hits.

— Sarwat JahanIMF Nepal Mission Chief Sarwat Jahan explaining the real-world impact of improved macroeconomic indicators.
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Originally published by Kathmandu Post in English. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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