Nepal : Recent Economic Developments

The government of Nepal has pursued policies intended to promote a modern market-oriented economy with the purpose of improving growth performance and prospects. Although the fiscal deficit remains sustainable, financed primarily by foreign aid, budget performance has reflected the prevailing weaknesses in overall fiscal policy implementation. Some progress has been made in the areas of price reform, privatization, and financial sector reform. However, weaknesses in the legislative framework, limited skilled labor, and inadequate basic infrastructures continue to impede private sectoral development.