DistantNews
Support us
🇳🇵 Nepal /Economy & Trade

Q&A: Nepal’s economy is on firmer footing, IMF committed to continued engagement

From Kathmandu Post · () English

Summarized and contextualized by DistantNews.

At a glance

News Named sources Outcome reported
  • Nepal's economy has stabilized and foreign exchange reserves have recovered following a $384.1 million IMF Extended Credit Facility program initiated in early 2022.
  • The program aimed to strengthen macroeconomic stability and rebuild reserves, with Nepal showing strong commitment to reforms despite government changes and external shocks.
  • The IMF is discussing a potential successor program, with structural reforms improving institutions and policymaking, though growth fell short of expectations due to successive crises.

Nepal's economy has found firmer footing after a challenging period, with the International Monetary Fund (IMF) expressing commitment to continued engagement. The country recently concluded a seven-review Extended Credit Facility (ECF) program, which provided $384.1 million in financing and was tied to a series of reform commitments.

The strong commitment of the Nepali people to implement economic reforms during the past four years, despite the many changes in government, has yielded tangible results and is testament to strong domestic ownership of the programme’s reform priorities.

— Rupa DuttaguptaDeputy director of the IMF's Asia and Pacific Department, discussing the success of the IMF-supported program in Nepal.

Approved in early 2022 amid post-pandemic stress, the IMF-supported program aimed to safeguard macroeconomic and financial stability, rebuild economic buffers, and protect vulnerable populations. Rupa Duttagupta, deputy director of the IMF's Asia and Pacific Department, highlighted the strong commitment of the Nepali people to implement reforms, which has yielded tangible results and demonstrated domestic ownership. Key macroeconomic indicators have strengthened, with international reserves rebuilt to cover over 12 months of imports, fiscal balances improved, and inflation trending downward until recent global events.

Key macroeconomic indicators have strengthened. Specifically, international reserves have been rebuilt with over 12 months of import cover; fiscal balances have also strengthened keeping public debt sustainable; and inflation had been on a downward trend until the recent war in the Middle East.

— Rupa DuttaguptaDeputy director of the IMF's Asia and Pacific Department, detailing the positive economic outcomes of the IMF program.

Despite these gains, growth fell short of expectations. The economy was hit by successive shocks, including an earthquake in November 2023, severe floods in September 2024, social unrest in September 2025, and the global energy price shock triggered by the war in the Middle East. These events prevented the nascent recovery from gaining strong traction and weighed on job creation.

Still growth fell short of expectations in part because the economy was hit by successive shocks, including an earthquake in November 2023, one of its worst floods in September 2024, social unrest in September 2025 and more recently the global energy price shock triggered by the war in the Middle East, which prevented the nascent recovery from gaining strong traction and weighed on job creation.

— Rupa DuttaguptaDeputy director of the IMF's Asia and Pacific Department, explaining why growth targets were not met.

Structural reforms implemented under the program have also strengthened institutions and improved policymaking. Key advances include modernizing monetary operations, enhancing financial sector oversight, completing a bank loan portfolio review, improving the fiscal framework and transparency, and strengthening public investment management. Governance and accountability have also been reinforced through upgrades to the anti-money laundering framework, legal reforms, enhanced external auditing of the Nepal Rastra Bank, and steps to strengthen the central bank act.

The structural reforms implemented under the programme have also strengthened institutions and improved policymaking. Key advances include the modernisation of monetary operations, improvements in financial sector oversight, the completion of a bank loan portfolio review, enhancements to the fiscal framework and transparency, and stronger public investment management.

— Rupa DuttaguptaDeputy director of the IMF's Asia and Pacific Department, highlighting institutional and policy improvements.
DistantNews Editorial

Originally published by Kathmandu Post. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

More Stories

From Our Blog