Nepal Ready to Enter into IMF's PRGF Program

Nepal has formally expressed its interest to rejoin Poverty Reduction and Growth Facility (PRGF), a program sponsored by International Monetary Fund (IMF) to avert any unexpected Balance of Payment crisis.

According to a high level government official participating at the annual meeting of the World Bank and the IMF being held at Istanbul, Turkey, the Nepali delegation headed by Finance Minister Surendra Pandey made the request during a meeting with high-level IMF officers.

"We formally declared Nepal´s interest in IMF´s PRGF program to mitigate any contingency that might arise in case of remittances during a meeting with IMF´ deputy managing director Takatoshi Kato," said the official. Nepal had joined the three-year IMF´s PRGF program in November 2004. But the program expired in 2007.

During the meeting, Kato assured the Nepali delegation that the IMF has taken the request positively and instructed its Asia Pacific Division (APD) right away to begin the work on designing a program for Nepal.

Later, the director of APD informed the Nepali delegation that the division will soon start working the PRFG program for Nepal.

As entry into the PRGF certifies that financial discipline of the country is at par with international standard, it sends a positive signal to donor agencies that Nepal has prudent policies, and qualifies for more assistance and investments.

Similarly, the Nepali delegation also met World Bank Managing Director Ngozi Okonjo-Iweala and Vice President Isabell Guerrero and requested them to scale up support to Nepal.

"During the meetings we highlighted the need for a pragmatic performance evaluation for Nepal, as the country is trying hard to emerge from conflicts and fragile political situation," the official said.

At the meeting, Nepal informed the WB officials that there can be food shortage in the range of 300,000 tons this year and apprised that the country might need additional financial assistance to ensure food security.

"We also asked additional funding for cross-border transmission with India and the WB positively responded to Nepal´s request," informed the official.

During the meeting, both sides also exchanged views on possible impacts of climate change to Nepal. "Managing Director Ngozi said that Nepal can get support from a new window called Weather Vulnerability Support to mitigate possible impacts of climate change,” the official added.

The Nepali delegation also met Indian Finance Minister Pranab Mukherjee and held discussion on simplifying quarantine procedures at the border points, speeding up Tarai roads construction and implementing better arrangements on duty refund procedures. Nepal also requested Mukherjee to allow food exports from India to Nepal in the context of swelling trade deficit and put in place a mechanism whereby Reserve Bank of India accepts Indian 500-rupee note forwarded by Nepal Rastra Bank, according to the official.

Similarly, the delegation also met with Chinese Finance Minister Xie Xuren and requested the latter to grant zero tariff access to Nepali products into Chinese market. "We requested the Chinese government to help Nepal in promoting tourism and improving road connectivity through Tibet," said the official.