Washington, Nov 15: The International Monetary Fund has approved in-principle a three-year USD 72 million poverty reduction and growth facility loan for Nepal to support the country's economic reform programme through July 2006. The final decision on the IMF's financial package will be made following a review meeting of the World Bank executive board on Nepal's poverty reduction strategy paper (PRSP), scheduled for November 18.
In exchange for the loan, Nepal had agreed to overhaul its financial sector and civil service, as well as seeking to rein in corruption.
With final approval of the loan, Nepal will be able to immediately draw an amount of USD 10 million, the IMF said.
The reform programme aims at improving the conditions for sustained growth and poverty reduction, based on sound macroeconomic policies, better prioritisation and enhanced efficiency in government expenditure, deputy managing director and acting chairman of IMF Shigemitsu Sugisaki said yesterday.
The authorities have demonstrated their commitment to reforms through strong policy implementation under difficult circumstances and the broad support for the PRSP strategy represents an encouraging basis for breaking the cycle of low growth, poverty and insurgency which Nepal has faced, he said.
Nevertheless, peace and political stability will be essential to ensure that the strategy's objectives of high economic growth and broad-based poverty reduction are fully achieved and the authorities are encouraged to make strong efforts to work toward a peaceful resolution of the conflict, the IMF official said. Bureau Report