The Executive Board of the International Monetary Fund (IMF) has approved the seventh and final review of Nepal's Extended Credit Facility (ECF) program, paving the way for the country to receive its last installment of financial assistance under the four-year arrangement.
With the approval, Nepal will gain access to Special Drawing Rights (SDR) 31.32 million, equivalent to approximately USD 42.9 million or around NPR 6.5 billion at current exchange rates. The disbursement marks the successful completion of the ECF program that began in January 2022.
More Than NPR 58 Billion Received Under the Program
The completion of the final review brings Nepal's total access under the IMF-supported program to SDR 282.42 million, equivalent to approximately USD 384.1 million or more than NPR 58 billion.
The IMF originally approved the four-year Extended Credit Facility on January 12, 2022, allowing Nepal to access concessional financing equal to 180 percent of its IMF quota. The program's duration was later extended until May 2026 after it became clear that additional time was needed to complete the final review process.
The ECF program was introduced to support Nepal's economic recovery, strengthen macroeconomic stability, and help the country navigate both domestic and external challenges following the pandemic and subsequent global economic disruptions.
IMF Praises Nepal's Reform Progress
In its assessment, the IMF expressed satisfaction with Nepal's implementation of key reform commitments and highlighted significant progress in several critical areas of economic management.
According to the Fund, the program has helped preserve economic and financial stability, reduce vulnerabilities arising from external shocks and domestic uncertainties, and build stronger safeguards for the economy.
The IMF particularly praised improvements in public financial management, monetary policy operations, financial sector supervision, debt management, and governance reforms.
The Fund noted that Nepal Rastra Bank has modernized its monetary policy framework and strengthened banking sector oversight. Improvements in public debt management and fiscal governance were also cited as important achievements during the program period.
Additionally, reforms aimed at combating money laundering, strengthening external audit systems, and enhancing accountability in public enterprises were recognized as key milestones under the ECF arrangement.
Economic Growth Expected to Remain Weak This Year
Despite positive assessments of reform efforts, the IMF remains cautious about Nepal's near-term economic growth prospects.
The Fund estimates that Nepal's economy will expand by only around 3 percent during fiscal year 2025/26. According to the IMF, several factors have contributed to slower economic activity, including weak agricultural production, disruptions caused by protests and demonstrations, political uncertainty ahead of elections, and the impact of tensions in the Middle East on the global economy.
These challenges have weighed on domestic demand, investment activity, and overall business confidence.
Recovery Expected From Fiscal Year 2026/27
Looking ahead, the IMF expects economic activity to gradually improve from fiscal year 2026/27 onward.
The Fund believes that Nepal's newly formed majority government could provide greater policy stability and support economic reforms. Expansionary fiscal policies, increased infrastructure spending, and an improvement in private sector confidence are also expected to contribute to stronger growth in the coming years.
However, the IMF emphasized that the pace of recovery will depend heavily on the government's ability to maintain reform momentum and address long-standing structural weaknesses in the economy.
Risks Remain Despite Program Success
While the successful completion of the ECF program represents a significant achievement, the IMF cautioned that several risks continue to threaten Nepal's economic outlook.
Global economic uncertainty, a challenging investment environment, and structural bottlenecks remain major concerns. The Fund urged Nepal to continue implementing reforms and institutionalizing the gains achieved under the program rather than slowing down after the completion of the financial arrangement.
Economic experts also note that issues such as low private investment, weak capital expenditure execution, limited industrial growth, and dependence on remittance inflows continue to pose challenges for sustainable long-term growth.
IMF-Nepal Partnership to Continue
Although the Extended Credit Facility program has formally concluded, cooperation between Nepal and the IMF will continue through regular Article IV consultations, post-financing assessments, and technical assistance programs.
Officials at Nepal's Ministry of Finance believe the final installment will provide additional support to government finances and help strengthen budgetary resources and external financing capacity.
The successful completion of the ECF program is being viewed as an important milestone for Nepal's economic management, reflecting progress in policy reforms while also highlighting the need for continued efforts to achieve stronger growth, fiscal sustainability, and long-term economic resilience.
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