The International Monetary Fund (IMF) has asked the Nepal government to initiate peace process to restore political stability and improve the security situation, pre-conditions for eradication of poverty in the country.
The directors of IMF has asked the government while adopting the report entitled ‘Article IV’ prepared by a team of IMF after discussion with government officials.
The agency has further requested the government to maintain fiscal transparency, improve public expenditure management and address donor concerns about the quality of spending. The agency has also called for more comprehensive reporting of security-related spending.
The agency said that the decade long conflicted has deteriorated the economic sector of the country and that to improve the situation, the government must take immediate steps to deal with the violence.
The IMF noted that Nepal is currently at a critical juncture, as political uncertainties and the ongoing insurgency continue to dampen economic growth. It has encouraged the government to resolve these uncertainties, improve security, and make progress toward peace as essential steps to support poverty reduction efforts and private sector led growth.
It has further stressed that significant loan recoveries from large, willful defaulters are required to improve the balance sheets of ailing commercial banks. ‘The delay in the restructuring of the Nepal Industrial Development Corporation should be addressed by privatizing it promptly and transparently, the report said.
A team of IMF visited Nepal between October 20 and November 2, 2005 to conduct the 2005 Article IV consultation discussions and access the economic situation of the country.
IMF is one of Nepal’s largest donors for economic development.