KATHMANDU: The IMF approved a disbursement to Nepal of about USD 214 million to cover the urgent balance of payments and fiscal needs stemming from the Covid-19 pandemic.

The International Monetary Fund (IMF) said COVID-19 is having a severe impact on Nepal’s remittances, tourism, and domestic activity.

As such, it will substantially weaken the country’s GDP growth, the balance of payments, and fiscal position.

During recent months, remittances have fallen considerably, tourist arrivals collapsed and domestic activity has taken a hit amid social-distancing measures, it said.

The IMF said Nepal’s immediate priority has been to deal with the human and economic impact of the COVID-19 pandemic.

The government is increasing health spending, including by providing additional incentive pay and insurance coverage to all medical frontline personnel, importing additional medical supplies and setting up quarantine centers and temporary hospitals.

They are also strengthening social assistance by providing those most vulnerable with daily food rations, subsidizing utility bills for low-usage customers, and taking steps to partially compensate those who suffer job loss. In addition, measures are being implemented to ensure adequate liquidity in the financial system and support continued access to credit, it said.

As such, the IMF financial support will make a substantial contribution to filling the immediate external and fiscal financing needs that have emerged due to COVID-19. It is also expected to catalyze additional support from development partners, it said in a statement.