Nepal is poised to secure $43.2 million in financing from the International Monetary Fund (IMF) following the successful conclusion of its final economic reform review. The payout now awaits formal approval from the IMF Executive Board.
The agreement follows a mission led by Ms Sarwat Jahan from February 6–20, 2026, which combined the final review of the Extended Credit Facility (ECF) with the 2026 Article IV consultation. Total disbursements under the current program are set to reach roughly US$ 384.4 million.
Growth slows amid uncertainty
Despite the funding breakthrough, the IMF warned that Nepal’s growth for FY2025/26 is projected to slow to 3–3.5%, significantly below its potential. The slowdown is attributed to low private sector confidence and delayed investments, slow execution of public capital projects and lingering economic uncertainty following a period of political transition.
While inflation remains low at 2.4%, the IMF noted that this reflects "subdued demand" rather than purely organic stability.
A primary concern for the mission was the rising vulnerability in the banking sector. Non-performing loans (NPLs) rose to 5.4% in January 2026, with expectations that these figures may climb higher following a recent Loan Portfolio Review (LPR).
The IMF stressed that the financial health of savings and credit cooperatives (SACCOs) remains "challenging." To combat these risks, the IMF is pushing for the urgent submission of the Nepal Rastra Bank (NRB) Act amendments to Parliament to bolster central bank independence and governance.
External strength and governance
On a positive note, Nepal’s external position remains robust. Buoyant remittances and resilient tourism receipts have bolstered international reserves, keeping them "comfortably above adequacy levels."
To unlock long-term growth, the IMF urged Nepal to accelerate capital spending, clean up balance Sheets and exit the FATF grey list and enhance Governance.
The IMF team concluded by stating that a "peaceful political transition" will be the primary catalyst for restoring business confidence and driving domestic demand in the coming year.
.
