Kathmandu: Nepal's economy is showing early signs of recovery, according to the International Monetary Fund (IMF). In a statement following a staff visit to Nepal from September 11-22, 2024, IMF official Sarwat Jahan highlighted improving economic indicators, such as positive import growth, rising tax collections, and increasing public investment.

The IMF noted that credit growth is recovering, albeit below nominal GDP growth, while inflation has eased to around 3.6% by mid-July, driven by favorable commodity prices and weak demand. Strong remittances, a recovering tourism sector, and subdued imports have bolstered the country’s international reserves.

To sustain recovery, the IMF stressed the need for accelerating reforms in public investment execution, domestic revenue mobilization, and social grant disbursement. Vigilance over non-performing loans in banks, further strengthening of financial regulations, and completing a loan portfolio review of the 10 largest banks were also highlighted.

Recent amendments to the Anti-Money Laundering Act were welcomed, but the IMF urged additional reforms, including changes to the Nepal Rastra Bank (NRB) Act and enhancing transparency in public enterprises. The ongoing efforts of the Nepali government to meet key program commitments with IMF technical assistance were praised.

The IMF’s formal assessment of Nepal's performance will be conducted during the fifth review of the Extended Credit Facility (ECF)-supported program.