The International Monetary Fund (IMF) has approved a disbursement of $214 million to Nepal under the rapid credit facility to help cover the urgent balance of payments and fiscal needs stemming from the Covid-19 pandemic.

The Covid-19 pandemic is having a severe impact on Nepal’s economy. During recent months, remittances have fallen considerably, tourist arrivals collapsed, and domestic activity has taken a hit amid social distancing measures, the IMF said in a press statement.

The authorities’ immediate priority has been to deal with the human and economic impact of the Covid-19. The authorities are increasing health spending, including by providing additional incentive pay and insurance coverage to all medical front-line personnel, importing additional medical supplies, and setting up quarantine centres and temporary hospitals.

"They are also strengthening social assistance by providing those most vulnerable with daily food rations, subsidizing utility bills for low-usage customers, and taking steps to partially compensate those who suffer job loss," the IMF said.

"In addition, measures are being implemented to ensure adequate liquidity in the financial system and support continued access to credit."

The IMF financial support will make a substantial contribution to filling immediate external and fiscal financing needs that have emerged due to Covid-19. It is also expected to catalyze additional support from development partners, it said.