Nepal governor sees no need for IMF loan as earnings rise

Nepal sees no need to approach the International Monetary Fund (IMF) for a fresh loan as pressure on foreign exchange reserves is easing after a pick up in tourism, its central bank governor said on Monday.

“At present, our focus is on managing demand to reduce pressure on foreign (exchange) reserves,” Maha Prasad Adhikari, governor of the Nepal Rastra Bank (NRB) told Reuters in an interview, noting that rising workers’ remittances and tourist arrivals offered a “silver lining” for the economy.

Tourism earnings increased more than three times to 25.52 billion Nepali rupees ($201.8 million) in the 11 months to end mid-June, compared with the same period a year earlier, though they are still well below pre-pandemic levels.

Remittances from overseas workers, meanwhile, rose 1.5 per cent to $7.5 billion during the same period, government data showed.

“It is expected that these developments will help ease external sector pressure in a few months,” Adhikari said, when asked about the possibility of seeking an additional loan from the Fund.

His comments came after Finance Minister Janardan Sharma was reinstated on Sunday, after a parliamentary probe found no evidence to prove that he was involved in making illegal changes to the budget.

Many economies in South Asia including Sri Lanka, Pakistan and Bangladesh have sought IMF assistance to reduce risks of defaults on external payments following a jump in the prices of imported fuel and grain, while export earnings have been much more muted.