IMF Board Extends Nepal’s Credit Facility Timeline by Two Months

The Executive Board of the International Monetary Fund (IMF) has extended the timeline of Nepal’s Extended Credit Facility (ECF) arrangement by two months, allowing the program to continue until July 11, 2026.

According to a recent press release issued by the IMF, the extension provides sufficient time to complete the seventh and final review of the ECF arrangement. The 38 month program was originally approved on January 12, 2022, granting Nepal access equal to 180 percent of its Special Drawing Rights (SDR) quota, amounting to USD 282.42 million.

The IMF explained that the additional two months were necessary to ensure the final review could be completed within the framework of the program.

Through the ECF arrangement, Nepal has committed to maintaining financial stability, strengthening foreign exchange reserves, improving public financial management, and advancing economic reform programs.

The IMF noted that Nepal has made tangible progress in implementing reforms under the program, which has supported an ongoing economic recovery while preserving macroeconomic stability and protecting the vulnerable.

The IMF has advised the NRB to maintain a data-driven and accommodative stance, while limiting any regulatory forbearance to targeted and time-bound measures. It also called for vigilance to address “rising financial sector vulnerabilities,” including timely completion of the loan portfolio review and resolution of problematic cooperatives.

The Fund also encouraged the NRB to enhance its governance and independence through amendments to the central bank law and to exercise caution in establishing an asset management company. It further highlighted the need for tangible progress in implementing the anti–money laundering framework to help Nepal exit the Financial Action Task Force (FATF) grey list. – With inputs from RSS