IMF urges Nepal to safeguard central bank autonomy

The International Monetary Fund has urged authorities in Nepal to protect and maintain the autonomy of Nepal Rastra Bank. Speaking on the matter, IMF Deputy Director Sonali Jain-Chandra noted that safeguarding achievements made concerning central bank independence during the country's ECF programme remains extremely important. A legislative amendment bill was initially registered in Parliament to reinforce the central bank's independence as part of commitments under the facility. Nepal had committed to legal revisions that would exclude the Secretary of the Ministry of Finance from the bank's board of directors and scrap legal provisions enabling the executive government to issue direct instructions to the monetary authority. Concerns arose after the parliamentary finance committee proposed amendments that could undermine central bank autonomy. Under these altered proposals, the government would retain powers to issue directions to the central bank. Additionally, the revised provisions seek to make supporting government economic policy an official central bank objective, alongside restructuring the governor's tenure to an initial three-year term with an option for the government to grant a two-year extension.