KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economy and governance are under increasing strain as structural issues intersect with short-term crises across sectors. Trade disruptions at the Tatopani border have threatened Dashain imports, while instability in the insurance regulator and politicized telecom contracts reflect weakened institutional governance.
Financial shifts are underway as falling deposit rates push investors toward debentures, while the government tries to revive confidence by restarting its concessional loan program. Meanwhile, systemic debt pressures are mounting—debt servicing now exceeds education and health budgets combined—highlighting fiscal vulnerabilities. In agriculture, declining sugarcane cultivation due to market failures and lack of subsidies mirrors broader rural neglect.
On the societal front, the Gen-Z uprising has led to nearly NPR 1 billion in damages, exposing deep political discontent, while small-scale industries like poultry farms remain vulnerable to infrastructure lapses. In culture and business, Dashain film releases have disappointed at the box office, suggesting weaker consumer confidence or engagement.
Altogether, these developments point to a fragile intersection of economic, institutional, and public trust challenges requiring urgent, multi-pronged policy attention.
Dashain imports disrupted as China slows cargo flow through Tatopani border
Traders and consumers are facing delays in Dashain-related goods due to limited cargo movement through the Tatopani border crossing with China. Although the route reopened on August 22 following a two-month closure caused by landslides, only 5–7 containers are arriving daily—far fewer than the normal 25–30.
Almost 200 cargo containers are reportedly stuck on the Chinese side, with no official explanation. Business groups blame weak customs coordination and a lack of staff on the Chinese side. The Nepal-China Chamber of Commerce has urged the government to take diplomatic action to restore normal trade flow and avoid festival shortages.
Investors shift to debentures as falling deposit rates drive bond market surge
With interest rates on fixed deposits continuing to decline, more Nepali investors are moving their money into debentures. According to Nepal Rastra Bank, the average fixed deposit rate has dropped from 9.98% in mid-2023 to just 5.79% by mid-2025. In comparison, many debentures now offer effective returns between 8% and 10%, prompting prices in the secondary market to rise above NPR 1,200 per unit in some instances.
Analysts explain that as interest rates fall, the value of bonds typically rises, making debentures more attractive than traditional deposits. As a result, investors are increasingly reallocating funds from savings accounts into corporate bonds trading above NPR 1,000.
Govt restarts concessional loan program after two-year pause
The government has reinstated its long-suspended concessional loan scheme after clearing nearly NPR 10 billion in overdue interest payments owed to banks. Finance Ministry spokesperson Tank Prasad Pandey stated that necessary procedures are now complete, and Nepal Rastra Bank will soon direct banks to resume concessional lending, which had been informally halted for two years due to unresolved subsidy issues.
The revised scheme offers subsidized loans across multiple sectors: up to NPR 50 million for agriculture and livestock, NPR 2.5 million for women-led enterprises and startups, NPR 2 million for returnee migrants, Dalit entrepreneurs, and educated youth, NPR 5 million for industrial boiler replacement, and NPR 500,000 for homes affected by disasters. The government has also reduced the interest subsidy from 5% to 3% and limited the repayment period to five years to improve transparency and reduce misuse.
Nepal Life denies insurance claim over undisclosed pre existing condition
Hira Devi Shah of Biratnagar bought a life insurance policy from Nepal Life Insurance in 2078 Kartik with a sum assured of NPR 1 crore, paying around NPR 10 lakhs as her first premium. Two months later, after her death, her nominee filed a claim. An investigation revealed that she was being treated for Motor Neuron Disease at Birat Medical College since before the policy issuance, a health condition not disclosed in the insurance proposal. Citing non disclosure and a breach of the principle of utmost good faith, Nepal Life rejected the claim. On 2080 Chaitra 18, the Insurance Board upheld that decision, affirming the insurer’s right to deny claims where pre existing conditions are concealed.
Nepal Insurance Authority sees governance instability with five chair changes in a year
The Nepal Insurance Authority has faced significant leadership turmoil, cycling through five chairpersons in just one year. Former chair Surya Prasad Silwal stepped down prematurely, followed by Madan Dahal and Sharad Ojha, the latter reportedly forced to resign. After a brief interim by Sebantak Pokharel, Janak Sharma—previously Deputy Director General at the Inland Revenue Department—now holds the position.
Employees have voiced concern to Finance Minister Rameshwar Khanal about the instability’s impact on daily operations. The Supreme Court is reviewing Ojha’s removal, and an interim order currently bars him from returning to office. The frequent turnover has disrupted continuity and raised questions about effective oversight in Nepal’s insurance sector.
Finance Ministry investigates hidden cash at homes of former PM Deuba and senior leaders
The Ministry of Finance has confirmed a money laundering investigation into large sums of unaccounted cash allegedly found at the residences of former Prime Minister Sher Bahadur Deuba and other high-level politicians. The probe falls under the Asset (Money Laundering) Prevention Act, 2008.
The ministry emphasized that while source-verified, legally obtained funds may be kept or spent freely, unexplained cash holdings are subject to legal scrutiny. The investigation gained urgency after Gen-Z protests in late August revealed charred and concealed bundles of currency. Authorities have urged citizens to avoid hoarding large amounts of cash, mandating that transactions above NPR 1 million be conducted through banks and encouraging broader use of digital payments.
Nepal’s debt servicing now exceeds education and health budgets combined
Nepal spent NPR 305.37 billion on debt repayment in fiscal year 2081/82—more than it allocated for education (NPR 203 billion) and health (NPR 100 billion). This marks the second consecutive year that debt servicing has outpaced all other individual public service sectors.
Debt repayments accounted for 23% of total government revenue, far exceeding the internationally recognized risk threshold of 10%. Although Nepal’s public debt level stands at 42% of GDP (around NPR 2.22 trillion), a figure not yet considered excessive, limited revenue growth and inefficient use of borrowed funds have heightened repayment pressure.
Borrowing surged after the 2015 earthquake and the COVID-19 pandemic, but many funded projects have yielded low returns. The growing dependence on expensive loans has raised alarm among development partners and financial analysts.
Three Nepali films debut during Dashain but underperform at box office
Three Nepali films—Balidan, Haribahadurko Jutta, and Maitighar—opened nationwide from Phulpati on October 13 to coincide with Dashain. Despite the festive launch, their box office earnings have fallen short of expectations. Over the first two days, Balidan, directed by Santosh Sen and starring Saugat Malla and Richa Sharma, earned NPR 10.56 million. Haribahadurko Jutta, featuring Haribansha Acharya in a signature role and directed by Dipendra K. Khanal, pulled in NPR 5.96 million. Meanwhile, Maitighar, under Milan Tamang’s direction, collected NPR 3.86 million in the same period. Industry insiders say that while festival releases usually boost audience turnout, these films have struggled to fully leverage the holiday market.
Over 10,000 chickens die in Kailali farm after power fault
More than 10,000 chickens died at APV Agro Poultry Farm in Lamkichuha 7, Kailali, after an electrical malfunction disrupted power supply. Farm operator Durga Bohora said a misaligned phase sequence triggered the problem on Friday night, wiping out years of investment. The farm, established in 2021 with NPR 70 million, had been home to 12,000 chickens and generated around NPR 1.5 million monthly from egg sales. Technician Dhirendra Shah explained that fan failure caused ammonia to build up in the sheds, suffocating the birds. Losses are estimated at over NPR 10 million; the farm was uninsured.
Sugarcane cultivation declining in Kailali amid lack of subsidies and markets
Sugarcane farming in Kailali, once a thriving cash crop, is steadily shrinking due to missing subsidies, support services, and reliable market access. Data from the Agriculture Knowledge Center shows cultivated area has fallen from 700 hectares about 20 years ago to just 236 hectares today. Farmers report that neither the provincial government nor local units have provided subsidies for seeds, fertilizer, or equipment. With the closure of Basuling Sugar Mill in Chuhama, demand has dropped sharply, prompting many growers to switch to other crops. Experts warn that without policy intervention—such as grants, improved seed varieties, training, and assured buyers—sugarcane farming may continue its decline.
Gen Z uprising causes nearly NPR 1 billion damage to Sudurpaschim government buildings
The Gen Z protests left the offices of the Chief Minister and the Provincial Assembly in Sudurpaschim severely damaged, with losses estimated at approximately NPR 974.5 million. Among the damage, seven government cars, 13 motorcycles, and three scooters belonging to the Chief Minister and senior ministers were destroyed. Fire gutted the first and second floors of the CM’s office—destroying furniture, electronics, and documents—and left few records intact. The Provincial Assembly building also sustained extensive damage to its chamber, committee rooms, and equipment, rendering it unusable. The Chief Minister, Kamal Bahadur Shah, has since relocated his operations to his residence. The Speaker, Bhim Bahadur Bhandari, noted that assembly meetings could resume only after repairs are completed, likely following Dashain–Tihar. Several other ministries and offices in Dhangadhi were also vandalized in the unrest.
Huawei’s dominance in Nepal Telecom billing contract halted after government change
Huawei’s attempt to gain full control over Nepal Telecom’s billing system has been suspended following a change in government. Under the previous administration led by KP Sharma Oli, with ICT Minister Prithvi Subba Gurung, the bidding process was widely seen as being structured to favor Huawei. With the arrival of new Minister Jagadish Kharel, the process has been paused for review. Sources say that Secretary Radhika Aryal was also involved in efforts to fast track the award. Concerns have been raised about vendor dependency and procurement irregularities. The Ministry has announced that the bid opening is now postponed until further notice.
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