Nepal

Global developments have impacted Nepal’s import-dependent economy—particularly through higher commodity prices. The current account weakened and reserves declined in the first half of 2022. Pressure on has subsided since then, thanks part to monetary policy tightening cooling domestic demand, but inflation remains elevated. Fiscal been less expansionary than projected, a recent fall revenues is adding near-term fiscal pressures. Non-performing loans are increasing, while capital adequacy ratios remain above regulatory minima. Risks downside.