Following an economic slowdown last year, Nepal’s growth is projected to rebound in the current fiscal year, according to an assessment by the International Monetary Fund (IMF) released on Thursday.

The IMF said that in Nepal, inflation is expected to recede, and the external position would continue to strengthen this fiscal year.

The IMF staff team, led by Tidiane Kinda, conducted a staff visit to Kathmandu during July 20-26 to discuss the recent macroeconomic developments and the implementation of the Fund-supported programme.

“Cautious and data-driven monetary policy has set an appropriate stance to maintain price and external stability. Continued vigilance on banks’ asset quality and stepping up supervisory efforts remain key to preserving financial stability,” Kinda said in a statement at the conclusion of the visit.

The IMF said “prudent execution of the 2023-2024 budget is crucial to secure fiscal sustainability.”

“Implementing measures envisaged in the 2023-2024 budget would improve the efficiency of capital expenditure,” it added.

The IMF said performance under its fund-supported programme would be formally assessed in the context of the third review of the Extended Credit Facility, which is expected to be undertaken later this year.

The IMF team held meetings with Minister of Finance Prakash Sharan Mahat, Nepal Rastra Bank Governor Maha Prasad Adhikari, the National Planning Commission Vice-Chairman Min Bahadur Shrestha, and other senior government and central bank officials.

The IMF team also met with representatives from the private sector and development partners.