KATHMANDU, Sept 25: The International Monetary Fund (IMF) has urged the authorities in Nepal for constant monitoring of banks, as the country recovers from its economic slowdown.
The international monetary watchdog in its press release has come up with the cautionary note following the visit to Nepal by an IMF team led by Sarwat Jahan during September 11-12. The IMF team visited the Himalayan country to discuss recent macroeconomic developments and the implementation of the programs supported by the Extended Credit Facility.
The IMF has also suggested the need for the government’s actions for keeping a close eye on the country’s largest banks along with solving ongoing problems in the cooperative sector. “As banks deal with elevated non-performing loans and capital constraints, continued vigilance is necessary, including by continuing to strengthen regulation and completing the loan portfolio review of the 10 largest banks. Addressing vulnerabilities among the savings and credit cooperatives remains a priority,” reads the press statement issued by the IMF.
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The IMF has been pressing Nepal’s central bank to carry out an in-depth study of the quality of credits issued by a number of big banks of the country. Although Nepal Rastra Bank (NRB) through a tender call had initiated the process to appoint an international auditor for the purpose, the central bank last month canceled the process.
The IMF however has expressed its satisfaction over the signs of recovery seen in Nepal’s economy of late. “Incoming high-frequency data shows import growth is entering into positive territory, tax collections are improving, and public investment is picking up. Credit growth is recovering while remaining appropriately below nominal GDP growth.”
Stating the recent amendments to the Anti-Money Laundering Act a welcoming move, the IMF however urged for completing the external audit process of NRB along with amending the NRB Act. “Amending the Nepal Rastra Bank (NRB) Act, completion of NRB’s external audit and increasing public enterprises’ transparency will enhance governance and accountability. The Investment Facilitation Act will bolster Nepal’s investment climate.”
The IMF in its report stated that Nepal’s economy is showing early signs of recovery.
During their visit, the IMF team members held meetings with Deputy Prime Minister and Minister for Finance Bishnu Prasad Paudel, the NRB Governor Maha Prasad Adhikari, the National Planning Commission Vice-Chairman Shiva Raj Adhikari, and other senior government and central bank officials. The IMF team also met with representatives from the private sector and development partners.
