NEPAL: ECONOMIC RECOVERY CONTINUES AMID IMF DEAL AND NEW INFRASTRUCTURE PROJECTS
Tue, 04 February 2025
Nepal’s economic recovery is gaining momentum, supported by an International Monetary Fund staff-level agreement for a USD 40.6 million disbursement, a renewed Belt and Road Initiative (BRI) framework with China, and increased foreign direct investment (FDI) pledges. While GDP growth is expected to exceed 4 percent in FY2024/25, structural weaknesses persist, such as fiscal underperformance, financial sector vulnerabilities, and reliance on remittances. Political instability and geopolitical competition, particularly India’s opposition to Chinese-backed projects, could hinder BRI implementation. FDI commitments have increased, but low realisation rates reflect persistent regulatory and infrastructure challenges.
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