KATHMANDU: The International Monetary Fund (IMF) has pointed out that Nepal should shift immediate priority on health sector as, like other countries in the world, health crisis is still looming in Nepal.
Stating that the Fund officials are well aware of the financial discipline and adequate policy space required to deal with the risks that Nepal is currently facing (including natural disasters), the IMF stressed that for the time being, Nepal should increase its expenditure in the health sector.
A joint statement from officials including IMF’s Executive Director for Nepal, Rosemary Lim, stated that Nepal, like many other parts of the world, has a deep health crisis and needs to be vigilant to protect the economy as well as the most vulnerable groups.
Although some improvements have been made in vaccination and healthcare since its inception, the IMF suggested that Nepal should increase its investment in it as it is still not enough.
The IMF assured that its officials would assist in developing revenue and revenue mobilization strategies and developing action plans to address public investment inefficiency. The Fund stated that it would provide technical assistance including tax system reform and tax policy blueprint.
NRB supervision quality not enough
Despite lauding some of the attempts the government has made to cope up with the hazards the country is facing owing to the ongoing coronavirus pandemic, the IMF raised question about the supervision standard of the Nepal Rastra Bank (NRB).
The Fund pointed out the need to closely monitor the covid-19’s long term and permanent impact in the financial sector.
In the statement the IMF urged the NRB to improve the financial sector regulation, capacity and supervision quality as well.
Monetary policy fails to control inflation
Monetary policy in the previous fiscal year had managed to keep inflation modest, despite failing to control high credit expansion. However, the IMF has indicated that the current year’s monetary policy has failed to keep inflation within the declared limits. NRB has set a target of keeping inflation within the range of 6.5 percent in the current fiscal year.
The IMF projected the global economy to grow at 4.4 percent in 2022 and slow to 3.8 percent in 2023, reflecting the multiple challenges the continuing global recovery faces.
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