KATHMANDU, Feb 22: The International Monetary Fund (IMF) has agreed to provide the remaining US$ 43.2 million, finalizing its Extended Credit Facility (ECF) arrangement.
An IMF team led by Sarwat Jahan visited Kathmandu during February 6-20, 2026. The Nepali authorities and IMF staff conducted discussions for the 2026 Article IV consultation and reached staff-level agreement on the policies and reforms needed to complete the seventh review under the ECF, according to a press release issued by the IMF.
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The IMF has stated that the completion of the review is subject to approval by the IMF Executive Board, which will give Nepal access to about US$ 43.2 million in financing. “Upon completion of the Executive Board Review, Nepal would have access to SDR 31.32 million (about US$ 43.2 million), bringing the total IMF financial support disbursed under the ECF to SDR 282.42 million (about US$ 384.4 million),” reads the statement.
The international monetary watchdog organization, however, has expressed its woes over Nepal’s slow growth in the aftermath of the Gen Z protests and worsening financial sector vulnerabilities. Protest-related damages and economic uncertainty have weighed on economic activity and private sector confidence, delaying investment decisions. The economic growth in fiscal year (FY) 2025/26 is projected at 3 to 3.5 percent.
The IMF states that growth in FY 2025/26 is projected to slow against economic uncertainty, low private sector confidence, and slow execution of public capital projects. “A peaceful political transition, supported by policy measures to accelerate capital spending, can strengthen the financial sector, and improve governance, would lay the foundation for stronger, durable and inclusive growth.”
Despite a challenging domestic environment, Nepal continues to make progress with the implementation of the ECF-supported program. According to the IMF, notable reforms that have been completed as part of the seventh review include adoption of a Customs Compliance Improvement Strategy, completion of the onsite inspection as part of the Loan Portfolio Review (LPR), and realignment of the asset classification regulations with Basel Committee on Bank Supervision (BCBS) Guidelines.
Financial sector vulnerabilities have intensified further, with non‑performing loans (NPLs) of the financial sector rising to 5.4 percent in January 2026 and are expected to be revised higher based on the recently completed LPR, impacting banks’ capital. The IMF has termed the submission of the Nepal Rastra Bank Act amendments to Parliament as a critical component of the reforms under the program.
