The International Monetary Fund (IMF) has expressed concern regarding a decreasing development budget, the absence of good governance, non-implementation of institutional reforms and the deteriorating law and order situation in Nepal. An IMF team is here to evaluate Nepal's six-month performance on the Poverty Reduction Growth Facility (PRGF), under which it has committed loans of more than Rs 5 billion for the next three years. To get the facility, Nepal had made commitments including institutional reforms. The team is said to be dissatisfied with the country's performance, especially in the reform areas and has stressed on anti-corruption measures. A high-level government official said that the team has asked the government to stop increasing the defence budget under different headings and to keep expenditure within the determined limits. He said the IMF officials wanted the government to gradually withdraw from public enterprises and prioritise privatisation. They have also asked the government to discontinue subsidies on petroleum products and to revise prices in line with those at the Nepal-India border. The government has assured the team that the petrol prices would be reviewed and that a cabinet decision would be taken soon.

The IMF team has drawn the attention of the government for not being serious on the financial sector reforms program under the World Bank loan. Similar to World Bank's complaint, the IMF team has also charged the government of not cooperating with the Nepal Bank Limited and the Rastriya Banijya Bank to collect loan repayments from blacklisted debtors. "The team has even cited an incident when Rastriya Banijya Bank officials were chased away when they had visited the office of Maha Laxmi Sugar Mills to recover the loan," the official said. "They have also marked the fact that the government was unable to provide security to the bank officials."