Nepal: Statement by IMF Deputy Managing Director Naoyuki Shinohara at the Conclusion of his Visit

Mr. Naoyuki Shinohara, Deputy Managing Director of the International Monetary Fund (IMF), issued the following statement today in Kathmandu at the conclusion of his visit to Nepal:

“I would like to extend my gratitude to the Nepalese authorities for their gracious hospitality and productive discussions. In particular, I wish to thank President Ram Baran Yadav for his kind hospitality and the fruitful discussion. I also wish to thank Minister of Finance Shanker Prasad Koirala and Nepal Rastra Bank Governor Yuba Raj Khatiwada for their warm welcome and frank exchange of views.

“During my stay in Kathmandu, I also participated in the 49^th SEACEN Governors’ Conference, and had opportunities to exchange views with local investors and academics on recent developments and future prospects of the Nepalese economy.

“In my meetings, I commended the authorities for their work in maintaining strong external accounts and a strong fiscal position. Our discussions focused on how to accelerate and sustain growth, and ensure macroeconomic and financial stability. In this context, I support the authorities’ aim to boost the economy’s potential, including by taking advantage of the resource inflows from remittances. Important contributions in this regard can be made by raising public capital spending and improving the business climate to create an attractive environment for private investment. The IMF also supports the authorities in their efforts to improve regulation and supervision to ensure financial stability, while expanding access to financial services. The upcoming assessment under the Financial Sector Assessment Program (FSAP) that the IMF and the World Bank will conduct jointly will contribute to mapping out further reform steps.

“In terms of macroeconomic management, some tightening of liquidity conditions is needed to guard against risks of rising inflation and reduce inflation expectations. Fiscal policies have been prudent, and revenues have been rising strongly, thanks to the authorities’ efforts at improving tax administration. In addition, Nepal’s peg to the Indian rupee has served as a valuable anchor for macroeconomic policies.

“The progress made by the Nepalese authorities in achieving the Millennium Development Goals is also laudable, particularly on poverty reduction and on health and sanitation. I would also like to congratulate the authorities and the people of Nepal on their successful conduct of the Constituent Assembly elections.

“The IMF will continue to support the authorities through policy advice and technical assistance in their work to maintain economic stability and accelerate growth. Once again, I would like to thank the authorities and the people of Nepal for their warm hospitality, and I look forward to continuing our cooperation.”