KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economy is facing simultaneous pressures from natural disasters, market volatility, and regulatory shifts. The NEPSE’s sharp fall, erasing Rs 101 billion in market value, reflects waning investor confidence amid broader economic uncertainty. Infrastructure remains vulnerable, with monsoon-triggered floods and overuse by heavy vehicles crippling major highways.
Political delays have left 61 local bodies without budgets, further hampering governance and development. Meanwhile, the government is pushing reforms—tightening health aid eligibility through mandatory insurance, enhancing digital payment oversight, and preparing major infrastructure like dry ports and hydropower projects.
However, India’s recent GST cuts pose competitive threats to Nepali industries, just as a social media ban disrupts the digital economy and employment. Despite these challenges, international support remains strong, with the World Bank pledging $2.7 billion, signaling cautious optimism amid structural and environmental vulnerabilities.
NEPSE falls 61 points as investors lose Rs 101 billion
The Nepal Stock Exchange (NEPSE) dropped 61.23 points last week, erasing Rs 101 billion in market capitalization amid low investor confidence. The benchmark index opened at 2,781 but closed at 2,719.67, with losses in four out of five trading days. All 13 sector groups declined, led by hydropower (-3.28%) and finance (-3.15%). Turnover fell 21% to Rs 25.47 billion, although Nepal Reinsurance Company Limited topped trading with Rs 1.57 billion. Him Star Urja surged 41%, while People’s Power declined nearly 18%, highlighting the market’s volatility.
14 candidates apply for Nepal Insurance Authority chair after Ojha’s removal
Following the dismissal of former Nepal Insurance Authority chief Sharad Ojha over fraudulent documents, 14 individuals have submitted applications for the chairmanship. Candidates include Ghanashyam Budhathoki, Vikrant Pandey, Paras Kafle, Bishnu Babu Mishra, Buddha Kaji Shrestha, Damodar Basaula, Chintamani Shiwakoti, Gyanendra Adhikari, Dev Kumar Dhakal, Prof. Deepak Bahadur Bhandari, Rajendra Pandit, Yagya Prasad Neupane, Ramesh Kumar Bhattarai, and Maheshwor Neupane. The Ministry of Finance set a seven-day deadline, with a committee led by NPC Vice-Chair Prof. Shivraj Adhikari, Finance Secretary Ghanshyam Upadhyay, and expert Khomraj Kharel assigned to shortlist candidates.
Floods and landslides disrupt 12 key highways across Nepal
Monsoon-triggered floods and landslides have halted traffic on 12 major highways throughout Nepal, according to the Department of Roads. While 160 roads remain partially open with one-way traffic, vital routes such as the Karnali Highway, Koshi Highway, and Tamor Corridor are fully blocked. The Koshi Highway’s Barun River diversion was washed away, and multiple segments of the Bheri Corridor, Shahid Marga, and Jumla Road are still inaccessible. The Araniko Highway also faces interruptions due to ongoing construction. Ministry of Physical Infrastructure spokesperson Bhimarjun Adhikari said repair efforts are underway but hampered by persistent heavy rainfall.
World Bank VP pledges $2.7 billion for Nepal during first official visit
World Bank Vice President for South Asia Johannes Zutt concluded his first official visit to Nepal since taking office in July 2025. During meetings with government and central bank officials, Zutt praised Nepal’s progress in peace, service delivery, energy, and disaster recovery. He highlighted growth in tourism, IT, and agribusiness, but emphasized the need for structural reforms to accelerate development. As part of the new Country Partnership Framework aligned with Nepal’s 16th Plan, the World Bank will provide $2.7 billion from 2025 to 2031, focusing on job creation and climate resilience. Zutt stressed the urgency of reforms to address the influx of 500,000 new job seekers annually.
Nepal and India to jointly lay foundation for Dodhara-Chandani dry port
Home Minister Ramesh Lekhak announced that the foundation stone for Nepal’s largest dry port in Dodhara-Chandani will be laid during the upcoming visit of Nepal’s Prime Minister to India. Both countries’ prime ministers are expected to inaugurate the project together. At a Nepali Congress training event, Lekhak said embankments along the flood-prone Mahakali and Jogbudha rivers have been reinforced, with further protections planned. He emphasized the dry port as a landmark for trade infrastructure and reiterated his party’s role in constitution-making and strengthening Nepal’s democracy.
Nepal Rastra Bank proposes framework to identify systemically important payment systems
Nepal Rastra Bank (NRB) has introduced a framework to designate systemically important payment systems (SIPS) and tighten regulatory oversight. The criteria include handling large and time-sensitive transactions, criticality to financial infrastructure, highest transaction values, significant market share, and extensive interconnections. Systems such as Nepal Clearing House (Connect IPS, Corporate Pay), eSewa, PhonePay, and Khalti Wallet may be designated as SIPS. The initiative aims to mitigate operational risks, maintain market stability, and encourage financial inclusion and innovation. Designated systems will be subject to stricter supervision to ensure efficiency and resilience.
Madhya Bhotekoshi hydropower to start commercial operation after 14 years
The 102-MW Madhya Bhotekoshi Hydropower Project, Sindhupalchowk’s largest, is set to begin commercial power generation by mid-September after trial operations began on September 1. Developed by Chilime Hydropower Company, a Nepal Electricity Authority subsidiary, the plant is expected to produce 542 million units annually, generating Rs 2.75 billion. Construction faced 14 years of delays due to political issues, local disputes, natural disasters, the pandemic, and border closures, pushing costs from Rs 12.33 billion to Rs 22 billion with daily loan interest at Rs 2.5 million. Electricity is currently transmitted via a 40-km line to Khimti substation until the Barhabise substation is completed.
Several banks declare dividends ahead of Dashain
Ahead of Dashain, at least six Nepalese banks have announced dividend proposals for fiscal year 2081/82. Everest Bank declared a total 20% dividend (6% bonus shares and 14% cash), pending Nepal Rastra Bank and AGM approval. Machhapuchhre Bank plans to propose 4% bonus shares and 4% cash dividends at its October 10 AGM. Nepal Infrastructure Bank (NIFRA) has proposed a 6.3158% cash dividend. Other banks—including Sanima, Citizens, Kamana Sewa Bikas, and Manjushree Finance—are finalizing approvals and audits before AGM confirmation and dividend distribution.
Mustang enforces mandatory health checks for sheep and chyangra before Dashain
Mustang authorities have mandated veterinary health checks for all sheep and mountain goats (chyangra) prior to leaving the district for Dashain markets. The Veterinary Hospital and Animal Expert Centre in Jomsom issues health cards valid for 72 hours after examination. Animals without certification face fines and must return for testing. Healthy sheep receive green horn stickers, while those deemed unhealthy are marked red and treated accordingly. Approximately 15,000 animals, including imports from Dolpa and Tibet, are expected to be supplied. Demand remains strong, with chyangra prices reaching up to Rs 35,000 during the festival.
Bheri River water lifting project pipeline progresses rapidly in Birendranagar
The Bheri River Water Lifting Project, funded by the World Bank’s Water Supply Sectoral Governance and Infrastructure Support Project, is progressing quickly in Birendranagar Valley. Of the planned 35 km pipeline, seven kilometres are complete, with work ongoing in several wards. Three water treatment plants with a combined capacity of 9 million litres will be constructed at Amrit Danda. Tree-cutting approvals and site preparations are underway for affected areas. Though only 12% complete overall, Mayor Mohanmaya Dhakal confirmed acceleration in pipeline installation and water tank construction. The USD 100 million project aims to resolve Birendranagar’s drinking water shortage within the fiscal year.
BP Highway to be widened to two lanes, tunnel planned to ease eastern traffic
The flood-damaged BP Highway is slated for reconstruction and expansion from an intermediate to a full two-lane road, enhancing traffic flow for passengers and freight. The Road Division Bhaktapur awarded contracts to Khani/Kamaljit/Awan JV and Lama/Nawakantipur JV for rebuilding 19.5 km from Dalabeshi to Bhakundebesi, widening the carriageway from 5.5 to 9 metres. The government allocated Rs 8.5 billion for the project. An 8.5-km tunnel between Khurkot and Sindhuli Chiabasi is also planned to shorten the route by 22 km. The upgraded highway will improve connectivity from eastern hills and the Tarai region to Kathmandu.
Major sections of Rani-Dharan road transferred; urgent repairs needed due to heavy vehicle damage
Out of the 42-km stretch between Rani and Dharan on the Koshi Highway, 32.8 km have been officially handed over to the Road Division Office in Biratnagar by the Six-Lane Road Expansion Project Office. Although 95% of the construction is finished, two portions—1.8 km in Duhabi and 5 km through the Tarhara forest—are still incomplete. Overloaded trucks exceeding the 10-tonne axle limit have caused significant deterioration, especially between Rani and Biratnagar (Dhat), damaging the Sunsari-Morang Industrial Corridor. Authorities have requested repair funds from the Department of Roads and are planning to reinforce the western highway segment to better accommodate commercial traffic.
61 local bodies yet to submit budgets for 2025/26
Despite the legal deadline of Asar 10 (June 24), 61 local governments across Nepal have failed to present their budgets for the 2025/26 fiscal year, which began on July 17. According to the Ministry of Federal Affairs and General Administration, 692 out of 753 local units have completed their budget processes. The delays are primarily attributed to political disagreements and coordination problems. Madhes Province accounts for the largest number of defaulters (40), followed by Lumbini (7), Koshi and Bagmati (5 each), Karnali (3), and Sudurpaschim (1). Major municipalities like Itahari and Dharan are among those still pending.
Tharu cultural museum in Dang becomes top tourist attraction
The Tharu Cultural Museum, located in Chakhoura of Dangisharan-3, has become a prominent cultural and tourist site, drawing around 300 visitors daily. Operational since 2018, the museum spans five bighas and was built at a cost of Rs 200 million. It showcases Tharu heritage through replicas of traditional homes, tools for farming, fishing, and hunting, as well as community artifacts, ornaments, and furniture. With over 500 statues and artistic exhibits representing Tharu traditions from across Nepal, the museum is now a vibrant center for cultural tourism in the region.
Social media ban threatens Nepal’s digital economy, job losses feared
Nepal’s ban on platforms like Facebook, Instagram, and YouTube is causing widespread disruption to the digital economy, putting thousands of jobs at risk. IT analyst Dr. Rajib Subba warned that many small businesses relying on these platforms for marketing, communication, and sales have been severely impacted. The ban has disrupted tourism promotion, migrant communication, and emergency services. The growing creator economy is also suffering, with content creators and digital marketers losing revenue. Telecom companies, whose data revenue heavily depends on social media usage, are also reporting major losses.
Nepali industries urge VAT reform as India slashes GST rates
India’s recent overhaul of its Goods and Services Tax (GST) structure—reducing it to just two slabs of 5% and 18%—has raised alarms among Nepali industrialists. They fear an influx of cheaper Indian goods could threaten local manufacturers, especially in dairy, sugar, and consumer goods. With Indian prices now significantly lower, industry groups are calling for Nepal to revise its 13% flat VAT rate to remain competitive. While some exports like tea and cardamom remain unaffected, the change may worsen trade imbalances along the border.
Government makes health insurance mandatory for chronic illness support
From mid-October 2025, Nepal’s government will require all indigent citizens with chronic illnesses to enroll in the national Health Insurance Scheme to access financial assistance. This update comes under a recent amendment to the Indigent Citizens’ Medication Programme Operation Directive. Diseases covered include heart and kidney conditions, cancer, Alzheimer’s, Parkinson’s, spinal/head injuries, and sickle cell anaemia. With the integration of the Social Health Security Programme into a one-door system, the Health Insurance Board will be the sole agency for grant disbursement. The Ministry of Health has urged eligible patients to register promptly to avoid disruptions.
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