The International Monetary Fund's Executive Board completed Nepal's Article IV consultation and the seventh and final review under the Extended Credit Facility, allowing the authorities to draw SDR 31.32 million and bringing total disbursements under the program to SDR 282.42 million. The Board judged program performance broadly satisfactory despite successive domestic shocks and elevated global uncertainty, marking the end of the ECF-supported reform program. In its assessment, the Board said Nepal's medium-term outlook remains broadly favorable, but near-term growth is expected at 3 percent in FY2025/26 as protest-related disruptions, weaker agricultural production, subdued private investment and spillovers from the war in the Middle East weigh on activity. Directors supported an expansionary fiscal stance in the near term followed by gradual, growth-friendly consolidation, and said any support to offset energy price shocks should be temporary and targeted. They also called for stronger execution of capital spending, better budget realism, higher domestic revenue mobilization, and closer monitoring of inflation and the external sector, with monetary policy adjusted if second-round price or external pressures arise. In the financial sector, they urged stronger bank credit practices and risk-based supervision, expansion of loan portfolio review diagnostics to remaining banks, resolution of problematic savings and credit cooperatives, timely adoption of amendments to the Nepal Rastra Bank Act, and swift implementation of the Financial Action Task Force action plan to support exit from the grey list. The IMF said engagement with Nepal will continue through a Post-Financing Assessment and capacity development, and the next Article IV consultation is expected on the standard 12-month cycle. The staff report for the consultation will be published shortly with the authorities' consent.
International Monetary Fund2026-06-08
International Monetary Fund completes Nepal Article IV consultation and final ECF review allowing SDR 31.32 million disbursement
The IMF Executive Board completed Nepal’s Article IV consultation and final review under the Extended Credit Facility, approving an SDR 31.32 million disbursement and bringing total support to SDR 282.42 million, and judged performance broadly satisfactory despite shocks. Directors backed a near-term expansionary fiscal stance followed by consolidation, urged stronger capital spending, revenue mobilization, vigilant monetary policy, and reforms to bank credit practices, risk-based supervision, and legal and anti-money laundering frameworks. The IMF will maintain engagement through Post-Financing Assessment and capacity development, with the next Article IV consultation in 12 months.