International Monetary Fund reviews Nepal’s recovery under its program and sets priorities for macro-financial stability and inclusive growth

The International Monetary Fund published a Country Focus article on Nepal assessing the country’s recent economic stabilization and recovery under IMF support, while urging policymakers to safeguard hard-won stability and advance reforms aimed at more inclusive growth amid domestic challenges and global uncertainty. The IMF notes that Nepal completed the sixth of seven program reviews in October and points to stronger real GDP growth from 2 percent in FY 2023 to 3.7 percent in FY 2024 and an estimated 4.3 percent in FY 2025, alongside rebuilt policy buffers. Foreign exchange reserves are reported at nearly USD 20 billion, sufficient to cover almost a full year of imports, with public debt stabilised through fiscal discipline and inflation remaining well below the Nepal Rastra Bank’s target. On reforms, it highlights improved fiscal transparency tools, revised National Project Bank guidelines, enhanced bank supervision via the Supervisory Information System, a newly launched loan portfolio review covering 10 large commercial banks, steps to strengthen anti-money laundering governance, audits of four priority nonfinancial public enterprises, and ongoing work to amend the Nepal Rastra Bank Act to strengthen the central bank’s autonomy and governance. Looking ahead, the IMF expects recovery to continue in FY 2026 at a more moderate pace and frames near-term priorities around faster budget execution, improved project readiness in areas such as hydropower and trade-related infrastructure, and reducing logistics frictions to crowd in private investment. Medium-term priorities include stronger governance and anti-corruption institutions, an improved investment climate, enhanced financial oversight, greater trade integration, and expanded targeted social protection.