KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economic landscape reflects a mix of market unease, policy resets, and sector-specific pressures. The stock market continued its sixth day of decline amid political uncertainty, while the government moved to clear Rs 5 billion in overdue export incentives and the central bank advanced regulatory modernization through AI governance guidelines and a contributory pension scheme for new staff.
Tourism showed strong post-pandemic recovery, with the Annapurna region surpassing last year’s arrivals in just 11 months, contrasting sharply with the chronic inefficiencies in public enterprises, where outstanding loan dues have crossed Rs 408 billion and nearly Rs 47 billion in investments remain unaccounted for.
The real economy shows both strain and adaptation: the sugar industry has stalled amid farmer protests over support prices, the construction sector is increasingly reliant on foreign labor, and state agencies like FMTC continue large-scale paddy procurement despite market distortions. Infrastructure progress is uneven—projects like Upper Myagdi-1 advance steadily, while others suffer delays—yet initiatives such as Kathmandu’s underground wiring and new urban markets in Birgunj signal localized improvements.
Investor appetite remains evident in the rapid oversubscription of Reliance Spinning Mills’ IPO, even as commodity prices fluctuate and businesses push for policy moves like direct Nepalgunj–Delhi flights.
NEPSE declines for sixth day as turnover hits Rs 4.66 billion
The stock market fell for the sixth straight session on Monday, with the Nepal Stock Exchange (Nepse) index slipping 3.02 points to close at 2,606. Over the past week, the index has dropped a total of 170 points from 2,776 on November 27. Analysts attribute the continued downturn to political uncertainty and election-related volatility, which have dampened investor sentiment despite some supportive policy measures. Sectoral indices posted mixed results, with all changes staying within one percent. Daily trading volume fell to Rs 4.66 billion from Rs 5.33 billion the day before. Four companies—among them Upper Syange Hydropower and Swastik Laghubitta—saw their share prices surge by 10 percent. Ngadi Group, Sagar Distillery, and Pure Energy topped the trading charts.
Govt to release Rs 5 billion in pending cash incentives to exporters
The government has decided to clear long-pending export subsidy payments from previous fiscal years, even though the scheme was discontinued in the 2025/26 budget. Finance Minister Rameshore Prasad Khanal confirmed that the dues will be released. Ministry of Finance spokesperson Tanka Prasad Pandey said that the ministry has received the proposal from the Ministry of Industry, Commerce, and Supplies and will expedite approvals. According to Naresh Lal Shrestha, president of the Nepal Export Council, roughly Rs 5 billion in subsidies has been withheld for two years. The government plans to shift future incentives toward production-based rather than export-based support.
Gold price rises by Rs 700 while silver declines
Gold prices increased in the domestic market on Monday, according to the Federation of Nepal Gold and Silver Dealers’ Association. The price of fine gold climbed by Rs 700 from Sunday to Rs 252,900 per tola, compared to Rs 252,200 the previous day. Meanwhile, silver prices dropped by Rs 20, settling at Rs 3,585 per tola.
NRB drafts guidelines to regulate use of AI in financial institutions
Nepal Rastra Bank (NRB) is moving to oversee the growing use of artificial intelligence in banks and financial institutions through a new comprehensive guideline. The central bank has released a draft for public feedback until December 30. The proposed rules aim to ensure transparency, accountability, and strong data protection in AI deployment. They specify that boards and senior management will be responsible for risks and decisions arising from AI systems. The draft categorizes AI tools by risk level, with high-risk systems—such as those handling biometric data or large financial exposures—requiring enhanced oversight. Institutions must also inform customers when AI influences decisions and set up dedicated grievance-handling mechanisms.
Annapurna region records tourism surge with over 273,000 visitors in 11 months
The Annapurna Conservation Area (ACAP) has witnessed an exceptional rise in tourism this year, welcoming 273,646 foreign trekkers between January and November. This exceeds the total 2024 figure of 244,045, marking an increase of over 29,000 visitors within just 11 months. According to Dhaka Bahadur Bhujel, Chief of the ACAP Manang Conservation Office, 2025 has become a notable year for tourism revival after the pandemic. Of the total arrivals, 115,555 were from SAARC nations, while 158,091 came from other countries. April was the busiest month, drawing 44,763 tourists. In November alone, Manang saw 6,703 international visitors.
Public enterprises’ outstanding loan dues surpass Rs 408 billion
Government investment in 159 state-owned enterprises and bodies reached Rs 930.88 billion by the end of fiscal year 2024/25, according to the Public Debt Management Office’s annual report. The figure consists of Rs 404.814 billion in equity and Rs 526.66 billion in loans. Despite this large investment, returns remain weak, and unpaid dues have ballooned. Total overdue principal and interest have now reached Rs 408 billion. Additionally, 21 public entities have yet to complete mandatory annual audits—some, such as Nepal Orind Magnesite, have not undergone an audit since 2007/08—reflecting deep-seated issues in financial discipline.
NRB implements contributory pension scheme for new employees
Nepal Rastra Bank has introduced a contributory pension system by amending its Employee Bylaw 2002. The scheme applies to permanent staff recruited through open competition notices published after July 17. Under the new plan, six percent of an employee’s monthly salary will be deducted, with the bank contributing an equivalent amount to a separate fund. Employees who serve 20 years or longer may choose between a monthly pension or a lump-sum payment. Those leaving before completing the required tenure will receive the full accumulated amount—along with interest and profit—except individuals dismissed in ways that bar them from future NRB employment.
Sugar industry grinds to a halt as farmers demand Rs 750 minimum support price
The 2025/26 sugarcane crushing season has stalled nationwide due to widespread protests, policy uncertainty, and government delays, severely impacting one of the Terai region’s key income sources. Farmers are calling for the reinstatement of the Rs 70 per quintal subsidy—reduced to Rs 35—and a minimum support price of Rs 750 per quintal. They argue that rising living costs and expensive agricultural inputs make the higher price necessary. With the ongoing agitation, the country’s 13 sugar mills, including Everest Sugar Mill in Mahottari, are unlikely to begin operations before the March election. This delay risks major economic losses and threatens the livelihoods of 150,000 farmers, who may see reduced recovery from over-mature cane.
Foreign workers account for 45 percent of construction labor in Nepal
Although around 2,223 Nepali youths depart daily for overseas jobs, Nepal’s construction sector is grappling with a severe labor shortage and depends heavily on foreign workers. The Federation of Contractors’ Associations of Nepal (FCAN) estimates that more than 500,000 Indian and other foreign laborers are employed in the sector. The industry needs roughly 2.5 million workers, 45 percent of whom are Indian. Skilled Indian laborers—earning between Rs 50,000 and Rs 200,000 monthly—are filling the vacuum as Nepali workers shy away from skill-based training despite similar or even lower wages abroad. Contractors increasingly prefer returnee migrants for their better work discipline and productivity.
FTMC purchases 82,000 quintals of paddy so far
The Food Management and Trading Company (FMTC) has bought 82,000 quintals of paddy in the past one and a half months since procurement began on October 28 in Dhangadhi. FMTC has allocated Rs 700 million and aims to purchase 190,000 quintals this year. Unlike last year—when private traders offered higher prices—this year traders are paying Rs 800 to Rs 1,000 less than the government support price, making it easier for FMTC to reach its target. The support price has been fixed at Rs 3,463 per quintal for coarse paddy and Rs 3,628 for medium paddy for FY 2025/26. FMTC has requested reimbursement from the Ministry of Industry, Commerce, and Supplies because it is buying above market rates.
Upper Myagdi-1 hydropower project reaches 30 percent completion
The 53.5-MW Upper Myagdi-1 Hydropower Project—located in Dhawalagiri and Malika rural municipalities of Myagdi—has achieved 30 percent physical progress. Project Chief Jyoti Kumar KC reported 30.94 percent physical and 30.80 percent financial completion within one year. Construction crews are excavating tunnels from four points, completing 2,360 meters out of the total planned 5,789.71 meters. The plant aims to begin generating electricity by 2027. The Rs 11.232-billion investment is backed by Upper Myagdi Hydropower Limited, a consortium of six banks led by Sanima Bank, and public shareholders.
Minister Kharel inspects damaged Ncell office
Communication and Information Technology Minister Jagadish Kharel visited Ncell’s Nakkhu office to review the destruction caused during the Gen Z protests. Ncell Chairman Satish Lal Acharya and CEO Michael Foley briefed him, estimating losses of around Rs 650 million from vandalism, looting, and arson at the central Lainchaur office and other sites. Since the September 9 incident, company operations have been shifted to the Nakkhu location. Minister Kharel welcomed Ncell’s plan to launch a new Gen Z-focused package and announced a Rs 10 million Gen Z scholarship program for 100 students. He also said the government is willing to help resolve policy hurdles and lingering disputes involving the company.
Minister Kulman orders immediate restart of underground wiring project
Work to install underground electricity cables within Kathmandu Metropolitan City will resume without delay. During a meeting held Sunday at the Ministry of Energy, Water Resources, and Irrigation, Minister Kulman Ghising reached an agreement with stakeholders to restart the stalled project. Ghising—who is also temporarily handling the Ministry of Physical Infrastructure—directed officials to finish the remaining underground wiring, particularly in areas like Putalisadak, before the next monsoon season. He also instructed coordination with internet, telephone, and cable TV providers to clear overhead cables once the underground network is operational. About 80 percent of the Valley already has underground infrastructure, which is expected to improve safety and enhance the city’s appearance by removing cluttered overhead wires.
Birgunj Metropolis opens new market built for Rs 7 million
Birgunj Metropolitan City has inaugurated a fruit and vegetable market in Chhapkaiya along Railway Road, addressing the long-standing lack of a wholesale market in the city. Mayor Rajesh Man Singh said the market—delayed for over a year and a half due to issues such as congestion in the informal BP Garden market—will significantly benefit Chhapkaiya residents. Chief Administrative Officer Arvind Lal Karna explained that the first phase, costing Rs 7 million, includes 14 units and 28 shutters equipped with electricity, water, and security. A second phase, also budgeted at Rs 7 million, will expand the facility and separate wholesale and retail services.
Nepalgunj businesses urge government to start direct flights to Delhi
The private sector in Nepalgunj has requested that the government establish direct air services between Nepalgunj and Delhi. On Sunday, Tanka Dhami, President of the Nepalgunj Chamber of Commerce and Industry, submitted a 21-point memorandum to Prime Minister Sushila Karki through Finance Minister Rameshore Khanal, noting that efforts to secure the route have gone on for a decade. Dhami said direct flights would boost trade, industry, and tourism, emphasizing that necessary infrastructure already exists. Minister Khanal responded that with only about three months left before the March 5, 2026 election, the current government is limited in its ability to implement major decisions. The Chamber also urged reductions in customs duties to curb smuggling that harms local enterprises.
Reliance Spinning Mills IPO for migrant workers oversubscribed within 30 minutes
Reliance Spinning Mills’ IPO allotment for Nepali migrant workers was oversubscribed within half an hour of opening on Monday. The company offered 115,596 shares for Nepalis working abroad—10 percent of the total 1,155,960 units issued. Within an hour, 1,970 investors from 36 banks applied for 118,340 units. The application window for overseas workers remains open until Thursday.
Nearly Rs 47 billion of government investment in public enterprises unaccounted for
Roughly Rs 46.87 billion in government investment in public enterprises cannot be traced due to mismatched records between the Ministry of Finance, the Public Debt Management Office (PDMO), and the enterprises’ own financial statements. The discrepancy includes Rs 26.342 billion in equity and Rs 20.531 billion in loans. Major institutions such as the Civil Aviation Authority of Nepal (CAAN), Nepal Electricity Authority (NEA), and Nepal Airlines Corporation are among those affected. The issue stems from poor accounting integration, weak internal controls, and unclear legal provisions regarding loan repayment and interest. The PDMO has instructed institutions to reconcile their records by December 15.
Nepal Bank introduces special healthcare discounts for staff and clients
Nepal Bank Limited has partnered with Cura Health in Jwagal, Lalitpur, to offer discounted medical services to its employees and customers. The agreement was signed by Nirmal Subedi, Head of Nepal Bank’s Marketing and Research Division, and Sheetal Prasad Pokharel, Manager at Cura Health. Under the partnership, bank staff and account holders will receive reduced rates on various health services provided by Cura.
Comment