Nepal's Economy Rebounding: International Monetary Fund
Nepal's economy is rebounding after a slowdown caused due to 2015 earthquakes and trade disruptions at the southern border, the International Monetary Fund has said.
File photo: A man stands near a wall with a painting of a Nepali national flag as he waits for a bus in Kathmandu. (Image: Reuters)
Washington: Nepal's economy is rebounding after a slowdown caused due to 2015 earthquakes and trade disruptions at the southern border, the International Monetary Fund has said.
"Growth is projected to reach 5.5 per cent in 2016-17 and inflation is expected to undershoot the central bank's mid-2017 target of 7.5 per cent," the International Monetary Fund (IMF) said on Monday in its latest annual report on Nepal.
The report said inflation had been decelerating due to base effects related to last year's trade disruption but is expected to remain above India's inflation.
"More recently, the authorities have also been able to advance reforms in a number of areas," it said.
The report said it expected growth to reach 5.5 per cent in 2016-17, supported by a good monsoon, accommodative monetary policy, and rising government spending.
Nepal is now one of the largest recipients of remittances in the world, it said, adding that at 30 per cent of GDP in Fiscal Year 2015-16, remittances helped to reduce poverty, support the balance of payments, and boost the fiscal accounts through higher import-related revenues.
The top financial institution also said political uncertainty was likely to persist with several elections to be held in the coming months.
The normalisation of economic activity, a favourable monsoon season, improved power supply, accommodative monetary policy and rising government spending in part due to the disbursement of housing grants to earthquake-affected households and a hike in government wages and pensions are spurring a cyclical rebound, as evidenced in recent months by rising imports and tax revenues," it said.
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