KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economic, regulatory, and tourism landscapes are witnessing dynamic shifts, as record-breaking climbers kick off the Everest spring season amid a boom in tourism, even as financial institutions grapple with structural weaknesses.
While microfinance companies posted notable profits, rising non-performing loans in both microfinance and construction hint at growing financial instability, pressing the need for stronger banking governance—especially as the government seeks a new central bank governor.
Meanwhile, a sharp increase in demat accounts reflects deepening public engagement with financial markets, even as budgeting inefficiencies, weak money laundering enforcement, and new digital media regulations raise questions about institutional readiness.
Additionally, illegal satellite internet use by foreign climbers and climate-induced agricultural disruptions signal a need for tighter enforcement and environmental resilience, all as industrial zones like Bhairahawa SEZ show export potential, contrasting starkly with losses in the hospitality sector.
Spring Everest climbing season officially begins
The 2025 spring climbing season on Mt Everest has officially started after a seven-member Sherpa team from ATK Expedition fixed ropes to the summit on Friday. Similar preparations were completed for Mt Lhotse and Mt Ama Dablam a day earlier.
The Department of Tourism confirmed the season’s launch, with favorable weather expected to attract most climbers in early May. Famous climbers like Kami Rita Sherpa, Tashi Gyalzen Sherpa, and Sanu Sherpa are aiming to break their own records. So far, 421 climbers from 44 expedition groups have received Everest permits.
Microfinance profits rise 22.87%, but bad loans exceed limits in 22 firms
Thirty-six out of 50 listed microfinance companies in Nepal posted a combined net profit of Rs. 2.46 billion in the third quarter of FY 2081/82, up by 22.87% from the previous year. Despite this profit rise, 22 institutions exceeded the 5% non-performing loan limit set by NRB.
Only two companies reported losses, while the rest saw positive earnings per share (EPS). Mithila Microfinance topped the list with an EPS of Rs. 36.22. The earnings were driven by restructured loans and adjusted interest income, though rising NPLs remain a concern.
Demat accounts grow over fivefold in seven years
Nepal has witnessed a massive surge in demat account holders, increasing from 1.29 million in 2075 BS to 6.83 million by Baisakh 24, 2081 BS—a 427.26% rise, according to CDS and Clearing Ltd. The rise is largely due to improved digital infrastructure in both the primary and secondary stock markets.
Bagmati Province tops the list with over 2.48 million accounts, while Sudurpaschim Province recorded the highest growth, multiplying its demat accounts 12.69 times. Karnali Province remains the least penetrated, with 177,000 accounts. This growth reflects the increasing public interest in stock investment and digital financial services.
Constitution must guide budget implementation: Finance Minister Paudel
Finance Minister Bishnu Paudel has emphasized that the national budget must be implemented in line with constitutional provisions. Speaking at a program in Kathmandu, he noted that although the federal government prepares the budget, most implementation lies with provincial and local governments.
Paudel pointed out that when local consumer groups wait for federal decisions, projects often remain incomplete. He urged all levels of government to act within their constitutional duties and referenced the constitution’s clear power divisions and the task expansion report.
He also mentioned the ongoing mismatch between capital spending and revenue, adding that while compulsory expenses are fixed, the government is trying to reduce optional spending to ensure fiscal discipline.
Experts call for more efficient budgeting and implementation in FY 2082/83
Experts and stakeholders have stressed the need for greater efficiency in budget allocation and spending for the next fiscal year. At a pre-budget dialogue organized by the Nepal Economic Journalists Society (SEJON), former Chief Secretary Dr. Baikuntha Aryal highlighted systemic weaknesses across the budget cycle—from allocation to monitoring.
He revealed that in the past 50 years, Nepal has spent only 86.97% of its allocated budget on average. Aryal called for structural reforms to enhance implementation and improve public spending efficiency.
Government starts process to appoint new NRB governor
The government has begun the process of selecting a new Governor for Nepal Rastra Bank. A three-member committee led by Finance Minister Bishnu Prasad Paudel has been formed to recommend candidates for the post and appoint a deputy governor.
The new appointee will face the challenge of stabilizing the financial system amid rising non-performing loans and a weak investment climate. Key priorities include managing liquidity, encouraging investment, and maintaining banking sector stability.
Film bill proposes licensing for digital releases
The government has introduced the Film Bill 2024 in Parliament, requiring that movies distributed through digital platforms such as YouTube, Netflix, and local OTT apps be licensed by the Film Development Board. Unlicensed distribution could attract fines up to NPR 1 million.
The bill also introduces mandatory real-time box office tracking, rules for theater construction, and standards for cinema halls. However, filmmakers have expressed concerns, particularly over the transition from a Film Censor Board to a more government-heavy Film Certification Board and provisions allowing post-approval bans on certified films.
Construction sector tops bad loan list despite NRB relief measures
Non-performing loans (NPLs) in Nepal’s construction industry reached 7.28% in fiscal year 2023/24, the highest among all sectors, despite multiple restructuring options provided by Nepal Rastra Bank (NRB).
The industry has struggled due to economic slowdown, lingering effects of the COVID-19 pandemic, and delayed payments on government contracts. Even with NRB easing loan restructuring for public construction projects, NPLs continue to rise. By mid-January 2024, the overall NPL rate for banks stood at 4.92%. This trend raises concerns about financial stability, especially as poor debt recovery continues in both housing and infrastructure projects.
Nepal stays on FATF grey list due to poor action on money laundering
Nepal remains on the Financial Action Task Force (FATF) grey list for failing to make meaningful progress on anti-money laundering and asset recovery. Although the Mutual Legal Assistance Act was enacted in 2013, Nepal has signed only one agreement—with China.
Proposals for bilateral agreements with countries like Singapore and Malaysia have stalled. Anti-corruption chief Prem Kumar Rai noted that Nepal lacks systems for recovering or repatriating illicit wealth, damaging the country’s credibility in tackling financial crime.
Unauthorized satellite internet use in Himalayas alarms local providers
Foreign trekkers and climbers are using unlicensed satellite internet services in Nepal’s Himalayan regions, raising alarms among domestic internet service providers. The Nepal Telecommunications Authority (NTA) has warned that foreign companies like Starlink are operating without proper authorization.
Only two Nepali firms—Constellation Pvt. Ltd. and i4 Technologies—have valid GMPCS licenses. Despite earlier enforcement efforts, the illegal use of satellite SIMs and devices continues, especially as the climbing season brings more tourists to remote base camps.
New law enforces stricter action on bounced cheques
The amended Banking Offences and Punishment Act imposes harsher penalties for bounced cheques. A cheque issuer must be notified within 45 days of dishonour. If payment is still not made, banks will confirm the dishonour. Offenders must pay the amount due, plus interest and a 5% penalty. Jail terms range from one month to four years, depending on the amount involved. A formal complaint must be filed within a year, and the case must reach court within six months.
Poor rainfall reduces gucchi mushroom harvest and farmer income
Gucchi mushroom harvests have dropped sharply this year in remote districts of Nepal due to insufficient rainfall, severely affecting local incomes. Farmers in areas like Kharpunath, Sarkegad, and Chankheli say their collections are significantly lower than last year.
Tek Bahadur Budha, who collected several kilograms last year, managed only 100 grams this year. With prices ranging from Rs. 12,000 to Rs. 14,000 per kilogram, the reduced supply has also disrupted trade, according to mushroom trader Ram Bahadur Bhandari.
Bhairahawa SEZ exports goods worth Rs. 770 million in nine months
Industries based in the Bhairahawa Special Economic Zone exported Rs. 770 million worth of goods in the first nine months of FY 2024/25. Total production during the period reached Rs. 1.33 billion.
Vistaar Global Pvt. Ltd. led the exports, selling 88% of its Rs. 720 million output. Shakti Minerals and Brilliant Lighting also posted strong export figures. Comparatively, FY 2023/24 exports stood at Rs. 603.6 million. Lowered rent and export quotas have helped boost industrial activity in the SEZ, with four new factories under construction.
City Hotel posts Rs. 173.8 million loss in Q3
City Hotel Limited reported a third-quarter loss of Rs. 173.8 million in the current fiscal year, up from Rs. 153.7 million last year. Operating income dropped 31.45% to Rs. 253.8 million, and total revenue fell to Rs. 375.4 million from Rs. 420 million. Despite a decrease in financial expenses, the company’s net worth per share dropped to Rs. 79.93, and earnings per share remained negative at Rs. 10.38, reflecting worsening financial health.
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