The International Monetary Fund (IMF) has said that despite initial signs of improvement in Nepal's economy, reform initiatives are still needed in some areas.

The IMF team, led by Sarawat Jahan, the resident representative of the IMF for Sri Lanka, is visiting Nepal from September 11 to 22.

The main purpose of this visit is to review the status of implementation of the Extended Credit Facility (ECF) program provided by the IMF to Nepal and to get information about the macroeconomic situation. Nepal's economy is showing initial signs of recovery. The new statistics show that the growth of imports is entering a positive direction. "Tax collection is improving and public investment is increasing," said a statement issued by the IMF. According to the IMF, there are signs of improvement including the improvement in credit expansion, reduction in inflation, increase in foreign currency reserves. 

The increase in foreign exchange reserves has been attributed to the increase in remittances, the return to the rhythm of the tourism sector and the decrease in the share of imports in foreign trade. Although there are initial signs of economic reform, IMF has suggested that Nepal needs to do some important things to speed it up.

'It is necessary to speed up the pace of reforms to take the economy on the path of strong and inclusive economic development. For this, it is necessary to strengthen the implementation of public investment, to strengthen internal revenue collection, and to make grant distribution effective and quick,'' the statement said. Credit portfolio review (CPR) of 10 large commercial banks is one of the important conditions set by the IMF for the implementation of the ESF in Nepal. Although Nepal Rastra Bank has called for proposals to proceed with the CPR process, this process has been canceled as no company is found to be eligible after financial and technical evaluation.

 Rashtra Bank has started the process of calling for proposals again. But the IMF has said that 'CPR' of big banks is necessary. Continuous monitoring is necessary when banks are facing increasing bad loans and capital management problems. "It is important to further strengthen the regulation of banks and financial institutions and to complete the review of the loan portfolio of the 10 largest commercial banks," the IMF said in a statement.

The IMF has suggested to give priority to solving the problems in savings and credit cooperatives. Mentioning that the amendment of the Prevention of Money Laundering Act is positive, the IMF emphasized the need to amend the Nepal Rashtra Bank Act, increase the transparency of the public institutions, and the external audit of the Rashtra Bank. The IMF is in the process of reviewing the fifth tranche of ECF.