KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economy is displaying a mix of forward momentum and structural strain, with major hydropower projects like Upper Arun advancing through domestic financing even as external funding remains uncertain, and public-sector investment surpassing Rs 930 billion.
Infrastructure progress, however, is uneven—delays in the Hetauda–Pathlaiya highway upgrade, stalled license renewals for Japan-focused manpower agencies, and politically driven slowdowns in provincial projects highlight persistent governance and coordination gaps. Meanwhile, reforms in the energy sector, including NEA’s automation of old substations and new hydropower developments such as the Tila project, signal modernization efforts aimed at long-term efficiency.
Tourism shows an uneven recovery, with Lumbini’s international arrivals rising modestly but domestic and Indian visits falling sharply, while cultural events like the Pokhara Street Festival and strong trekking revenue from Manaslu offer localized growth pockets.
Consumer markets reflect volatility—gold prices dipped and high-value Indian currency notes were reinstated—adding to a landscape where provincial spending controls and administrative shifts underscore broader fiscal tightening.
Nepal advances with domestic financing plan for Upper Arun project
The government is proceeding with a domestic funding model for the 1,063 MW Upper Arun Hydropower Project amid ongoing uncertainty over World Bank financing. The project in Bhotkhola Rural Municipality, Sankhuwasabha, is estimated to cost USD 1.75 billion (Rs 214 billion), including interest and inflation. The proposed investment structure allocates 70 percent debt and 30 percent equity, with institutional promoters holding 51 percent (Rs 36.67 billion) and the general public holding 49 percent (Rs 35.23 billion).
Govt investment in public entities reaches Rs 930 billion
By the end of fiscal year 2024/25, the government’s total investment—comprising equity and loans—in 159 state-owned enterprises and public bodies reached Rs 930.88 billion. Data from the Public Debt Management Office shows that equity investment in 116 institutions amounted to Rs 404.814 billion. The Nepal Electricity Authority (NEA), Civil Aviation Authority of Nepal (CAAN), Nepal Telecom, Rastriya Banijya Bank, and the Agricultural Development Bank hold the largest share of these investments.
Gold price drops by Rs 900 on Friday
Gold prices in Nepal’s domestic market decreased by Rs 900 per tola (11.66 grams) on Friday, according to the Federation of Nepal Gold and Silver Dealers’ Association. Gold was traded at Rs 252,400 per tola, down from Thursday’s price of Rs 253,300. Silver prices also slipped by Rs 70 per tola, reaching Rs 3,555 on Friday.
License renewal stalled for 126 Japan-focused manpower firms
Renewal of licenses for 126 manpower agencies sending workers to Japan has been stalled for four months due to poor coordination between the Department of Foreign Employment and the Ministry of Labor. The delay is linked to replacing the outdated 2009 directive based on the former JITCO model. Despite agencies having paid renewal fees, confusion over new regulations has halted the process.
NEA automates seven old substations to upgrade power system
The Nepal Electricity Authority has automated seven aging grid substations—Panchkhal, Banepa, Patan, Lainchaur, Balaju, Chapali, and Bhaktapur—marking a major push toward a modern, automated power network. These stations will now be centrally operated from a new control room at NEA’s Minbhawan headquarters. The automation aims to reduce power interruptions, cut maintenance costs, and ensure efficient load management. The project, costing Rs 610 million, will ultimately automate 13 substations and is financed through an Asian Development Bank concessional loan.
Tilaganga hydropower project cost estimated at Rs 7.567 billion
The 38.07 MW Tila Hydroelectric Project—located at the border of Tila Rural Municipality in Jumla and Tilagupha Municipality in Kalikot—is projected to cost Rs 7.567 billion. The project includes a 7-meter dam on the Tila River and a 289-meter steel penstock pipe leading to a powerhouse. Electricity generated will be connected to the Jumla Bazaar substation via a 132 kV single-circuit line. Construction will require 7.585 hectares of land and is expected to create 30–320 direct local jobs.
AmCham Nepal explores opportunities for US investment
The American Chamber of Commerce in Nepal held discussions in Washington, D.C., highlighting opportunities for American investment in Nepal. Officials from the U.S. Department of State, Department of Commerce, and the U.S. Chamber of Commerce participated. AmCham Nepal emphasized the potential for USD 10 billion in hydropower investment, noting that 92 percent of the sector’s capacity remains undeveloped. Both sides agreed to hold follow-up webinars and U.S.-based roadshows to attract investors.
High-value Indian currency notes reinstated for use in Nepal and Bhutan
The Reserve Bank of India has authorized the circulation of Indian notes above INR 100 in Nepal and Bhutan, reversing the restrictions imposed during India’s 2016 demonetization. A Gazette notification states that travelers between the two countries may now carry up to INR 25,000 in cash, including higher denomination notes. Nepal Rastra Bank will issue a formal directive to implement the decision but confirmed that demonetized notes from 2016 will remain invalid.
IndiGo disruptions in India cause delays in Nepal flights
Operational disruptions at IndiGo Airlines in India have affected its Nepal-bound flights, despite assurances that cancellations would be unlikely in Nepal. On December 4, flight 6E-1155 from Delhi, scheduled to land at 4 p.m., reached Kathmandu at 7:30 p.m. IndiGo’s on-time performance dropped to 35 percent on December 2. According to its Nepal office, the delays stem from an emergency software update affecting the crew-scheduling system for Airbus A320 aircraft.
Bagmati cuts Dolakha infrastructure budget by up to 30 percent
Bagmati Province has reduced Dolakha’s infrastructure budget for the 2025/26 fiscal year by up to 30 percent, slashing over Rs 350 million across four key government bodies. The Dolakha Infrastructure Development Office saw the largest cut—Rs 28.8 million—from its original Rs 1.487 billion allocation. This reduction is expected to slow major road, drinking water, and irrigation projects. Contractors for the long-delayed Mude-Baghkhore-Shailung and Bhatmas-Jilu roads have already been fined for repeated failures to meet deadlines.
NBA appoints four new executive committee members
The Nepal Bankers’ Association (NBA), the umbrella body for commercial banks, elected four new members to its Executive Committee during its annual general meeting on Wednesday. The newly appointed members are Ram Kumar Tiwari (CEO, Nepal SBI Bank), Manoj Gyawali (CEO, Nabil Bank), Ajay Bikram Shah (CEO, Laxmi Sunrise Bank), and Sanjiv Manandhar (CEO, Prime Bank), who secured a second term. These appointments replace the outgoing members whose seats had become vacant.
Karnali sets spending caps for vehicles and mobile phones for officials
Karnali Province’s new expenditure guidelines cap the maximum vehicle cost for the Chief Minister and Speaker at Rs 15 million, and at Rs 12 million for ministers and the deputy speaker. The Chief Secretary and provincial secretaries may purchase mobile phones priced up to Rs 30,000 and Rs 25,000 respectively. Any foreign training, study visits, or travel funded by the province now require Cabinet approval and are limited to five participants.
Sudurpaschim construction projects begin eight months late
Infrastructure projects in Sudurpaschim Province that received multi-year approvals eight months ago have only now begun construction. The delay is attributed to inadequate preparation—such as incomplete designs and cost estimates—prior to budgeting, a problem linked to political pressure. Chief Minister Kamal Bahadur Shah laid the foundation stone for seven such projects (five roads and two bridges) on December 4, despite the original plan to start work in the first month of the fiscal year.
Domestic and Indian tourist numbers fall in Lumbini
Lumbini experienced a drop in both domestic and Indian tourist arrivals in November 2025 compared to the same month last year. Indian visitors totaled 30,072—around 2,500 fewer than the 32,468 recorded in November 2024. Domestic tourism saw a more significant decline, with only 87,740 Nepali visitors in November 2025, a sharp fall from 169,575 in the previous year. Domestic arrivals from January to November 2025 stood at 640,279.
International tourist arrivals in Lumbini decline
Lumbini welcomed 19,509 international visitors from third countries (excluding India) in November. Although this marks an increase of nearly 1,000 compared to November 2024 (18,539), it remains far below the pre-pandemic figure of 26,772 recorded in November 2019. From January to November 2025, the total number of third-country tourists reached 105,779. In November, Sri Lanka topped the list of foreign arrivals (4,352), followed by Thailand (2,665), China (1,766), and Vietnam (1,661).
Pokhara Street Festival to run for five days in January
The 27th Pokhara Street Festival, organized by REBAN Pokhara, will take place from December 28 to January 1, 2026, in celebration of the New Year. Spanning approximately 3 kilometers, the event will showcase local and international cuisine, musical performances, boat and waiter races, and street plays under the theme “Eat on the Street, Enjoy on the Street.” REBAN President Bishwaraj Paudel said the festival boosts local economic activity, foreign currency earnings, and employment opportunities.
Manaslu Conservation Area earns over Rs 80 million in revenue
Chumanubri Rural Municipality in northern Gorkha generated more than Rs 80 million in revenue from tourists visiting the Manaslu Conservation Area in the first four months of fiscal year 2025/26. Of the visitors, 7,900 were foreigners and 950 were domestic tourists. The rise in earnings is credited to the growing popularity of the Manaslu trekking route. The municipality plans to allocate an additional Rs 23 million for infrastructure upgrades, including trail and bridge development, as well as cultural heritage conservation.
Tanahun distributes Rs 9.7 million in milk subsidies
The Veterinary Hospital and Livestock Service Expert Center in Tanahun distributed Rs 9.7 million in milk subsidies during fiscal year 2024/25 through 11 cooperatives—more than double the Rs 4.3 million provided in 2023/24. The subsidy rate of Rs 3 per liter is designed to encourage higher milk production by rewarding farmers based on output.
Milk production and livestock numbers rise in Tanahun
Tanahun district recorded an increase in milk production in fiscal year 2024/25, reaching 74,755 metric tons—up by 1,182 metric tons from the previous year. The Veterinary Hospital and Livestock Service Expert Center attributed the rise to government subsidies encouraging farmers to enter livestock farming. The district saw an increase of 304 milking cows and 261 buffaloes. While Tanahun is self-sufficient in milk, meat, and eggs, per capita fish availability remains at just 0.28 kg, far below the seven kilograms required.
Paddy production increases in Tanahun despite recent crop losses
Tanahun district harvested 35,422 metric tons of paddy from 8,512 hectares this fiscal year, higher than last year’s 33,292 metric tons from 8,120 hectares. The Agriculture Development Office reported, however, that unseasonal rainfall caused an estimated Rs 10 million in crop damage. Despite the year’s overall production increase, 13,551 hectares of cultivable land in the district remain unused.
Funding shortfall delays Hetauda–Pathlaiya highway upgrade
The planned upgrade of the 27-kilometer Hetauda–Pathlaiya segment of the East-West Highway to a four-lane standard has been delayed by two years due to insufficient government funding. While the Narayangarh–Pathlaiya corridor was intended as a single integrated project, only the Narayangarh–Hetauda section is expected to move forward, with a tender anticipated by mid-March. The Hetauda–Pathlaiya delay stems from a Rs 16 billion shortfall needed for two major flyovers—at Tikauli in Chitwan and Amlekhganj in Bara—as well as design revisions for a Hetauda bypass.
River erosion control project launched on the Kaligandaki in Myagdi
A riverbank protection project has begun along the Kaligandaki River at the border of Beni Municipality-8 (Kalipul) and Jaljala Rural Municipality-3 (Bagarphant) in Parbat. The Rs 29.8 million project, led by the Gandaki Province Water Resources and Irrigation Management Project Office, involves constructing an 80-meter composite wall—4 meters wide and 3 meters high—topped with a gabion structure to safeguard the Kalipul settlement from flooding, according to engineer Narang Gurung.
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