Nepal | August 05, 2020

IMF projects economic growth at 6pc

Sujan Dhungana
Share Now:
  • Slower growth of Indian economy, sluggish remittances, and weaker agro production to keep growth moderate

Kathmandu, 17

An International Monetary Fund (IMF) mission, which recently concluded its discussions for 2020 Article IV consultation in Nepal, has projected economic growth of six per cent in the ongoing fiscal year.

The IMF mission led by Laura Jaramillo concluded that though Nepal’s economy, supported by greater political stability, improved electricity supply and reconstruction activities, is growing above its long-term average in the last few years, the economic growth in 2019-20 fiscal year would be moderate amid slower growth in India (the country’s main trading partner), sluggish remittances, and weaker agricultural production.

Despite this, IMF believes that narrowing of the current account deficit, stabilisation of gross official reserves and slower credit growth will support economic growth further.

The fund sends Article IV mission to its member nations regularly to assess the economic and financial developments.

“Building on the growth and reform momentum, additional policies needs to be continued to support inclusive growth while safeguarding macroeconomic and financial stability,” said Jaramillo.

Citing that the transition to fiscal federalism is a monumental challenge that the Nepali economy faces today, the IMF mission has suggested the government to gear fiscal policies towards containing external pressures and protecting fiscal sustainability. “A fiscal deficit of 4.5 per cent of the gross domestic product would be prudent,” states IMF.

In a bid to protect fiscal sustainability, the fund has said that the overall expenditure envelope of sub-national governments needs to be aligned with available funding, with tight limits on any sub-national borrowing.

Praising the Nepal Rastra Bank (NRB) for its appropriately taken macro-prudential measures to limit the buildup of systemic risks in the financial sector, the IMF has urged the central bank to continue to closely monitor asset quality of banks and improve monitoring of concentration risk. “A priority reform for the NRB is to strengthen the implementation of monetary policy by putting in place a well-functioning interest rate framework that reduces volatility in short-term interest rates,” said the IMF mission.

Informing that reform efforts in recent years have helped improve the investment climate in Nepal, the IMF said that new legislation and regulations need to be supported by an enabling implementation environment to boost foreign investment further.

Adequate staffing, better skills matching and aligning incentives across and within ministries to ensure high-quality projects move forward in a clear and timely manner would enhance the implementation capacity of legislations, as per IMF.

Slower growth of Indian economy, sluggish remittances and weaker agro production to keep growth moderate.


A version of this article appears in print on January 18, 2020 of The Himalayan Times.


Follow The Himalayan Times on Twitter and Facebook

Recommended Stories:

More from The Himalayan Times:

Former king Juan Carlos decides to leave Spain amid corruption allegations

Prosecutors looking into bribe allegations Pressure had been building on royals to take action Former king remains "at the disposal" of prosecutors The 82-year-old helped guide Spain back to democracy MADRID: Spain's former king Juan Carlos has decided to leave his country, a drama Read More...

Ruling party co-chairs stick to their guns

Oli to remain PM till general election, co-chair till General Convention: NCP leader Gokul Baskota Kathmandu, August 3 Co-chairs of the ruling Nepal Communist Party (NCP) Pushpa Kamal Dahal and KP Sharma Oli held talks today in an attempt to break the current impasse in the party, but failed to Read More...

Airlines seek permission to resume flights

Airline companies have to resubmit their proposal for slots if flight operations are halted for more than 60 days Kathmandu, August 3 The government's decision to resume domestic and international flights from August 17 has prompted airline companies to start submitting their proposals to the Ci Read More...

Dhading bans sand mining during monsoon

Dhading, August 3 In view of increasing deaths related to river mining, the authority in Dhading decided to impose a complete ban on sand mining from rivers in the district during the monsoon season. There is already a rule that bans mining of river products using heavy equipment during the ra Read More...

File photo of Melamchi Water Supply Project tunnel.

‘Technical error caused Melamchi tunnel accident’

Kathmandu, August 3 A committee formed to investigate Melamchi tunnel incident has concluded that one of the sluice gates on the tunnel of the Melamchi Water Supply Project had broken due to a technical error. A project engineer and a driver had died due to the flood resulting from the breakag Read More...

reproductive health, Minister of State for Health and Population, Padma Kumari Aryal

Work responsibly, Minister Aryal directs employees

Kathmandu, August 3 Minister of Land Management, Cooperatives and Poverty Alleviation Padma Kumari Aryal has directed government employees to work responsibly as the ministry has the responsibility of protecting the property of over 30 million people of the country. She said this at the annual Read More...

PM visits under-construction museum at his private residence

Bhaktapur, August 3 Prime Minister and Co-chair of the ruling Nepal Communist Party (NCP) KP Sharma Oli today visited his private residence at Balkot and met with people from different walks of life. This is the third time the prime minister has visited his private residence after being electe Read More...

‘Harsher punishment against acid attackers’

Kathmandu, August 3 Women and Social Welfare Committee of the House of Representatives has directed the home ministry to make some amendments to the legal arrangement and punishment related to incidents of acid attack, pointing out the need of timely revision. After the discussion held on ‘a Read More...