KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economy is showing signs of strain amid political uncertainty and weak investor sentiment, with the NEPSE index falling for a second straight day and commercial banks’ profits plunging nearly 19% due to rising bad loans. The World Bank’s downgrade of Nepal’s growth outlook to 3.1%—following Gen Z–driven unrest—reflects waning business confidence and sluggish investment, as over Rs 1.1 trillion remains idle in banks.
While gold prices and smartphone imports surged, signaling shifts in consumer and external demand, trade disruptions at border points and widening deficits highlight structural bottlenecks. Policy responses are mixed: new agricultural subsidies, telecom offers, and infrastructure inspections aim to boost productivity and connectivity, yet environmental backtracking on vehicle imports and delayed labour and LDC transition strategies reveal governance inconsistency.
Meanwhile, administrative reforms—such as land registration resumption, SEBON’s dispute resolution, and NRB’s regulatory actions—show partial efforts to restore stability, but overall, Nepal’s short-term economic trajectory remains fragile amid fiscal stress and social unrest.
NEPSE index falls for second straight day
The Nepal Stock Exchange (NEPSE) index continued its downward trend for the second consecutive day this week. After dropping 30.02 points on Sunday, it declined by another 5.80 points on Monday, closing at 2,560.29. The day’s total trading volume reached Rs 4.51 billion. Out of all listed companies, share prices fell for 151, rose for 90, and remained unchanged for 11. Only the hotel and tourism, investment, and trading sub-indices managed to post gains.
Gold price rises by Rs 2,900 per tola
Gold prices surged by Rs 2,900 per tola on Monday, reaching Rs 241,500 compared to Rs 238,600 on Sunday, according to the Federation of Nepal Gold and Silver Dealers’ Association. Silver prices also rose by Rs 50 to Rs 3,065 per tola. The increase reflects a significant rise in the domestic precious metals market.
Rising bad loans cut commercial banks’ profits by nearly 19%
Nepalese commercial banks are facing a sharp increase in non-performing loans (NPLs), according to unaudited reports from 20 banks. Average NPLs rose to 4.86% from 4.04% last year, with nine banks exceeding 5% and Himalayan Bank reporting 7.39%. Banks have set aside Rs 11 billion for loan-loss provisioning in the first quarter of FY 2025/26. Weakened performance in sectors such as real estate, SMEs, and construction, along with political instability, has slowed debt recovery. Net profits for 20 banks fell by 18.67% to Rs 13.14 billion, and analysts warn this could limit dividend payouts in upcoming quarters.
Gen Z protests dent business confidence as Nepal’s growth outlook dips to 3.1%
Business sentiment in Nepal has weakened sharply following the Gen Z protests, dragging down lending activity and private sector confidence. Around Rs 1.1 trillion is sitting idle in banks due to low demand for loans, signaling sluggish investment. Investor concerns over instability have led to fears of capital flight. Reflecting this downturn, the World Bank has revised Nepal’s economic growth forecast for FY 2025/26 to 3.1%, down from the previous 5.2%, citing the negative effects of social unrest and political uncertainty.
Smartphone imports surge as China dominates Nepal’s market
Nepal imported 804,860 smartphones worth over Rs 13.62 billion in the first quarter of FY 2025/26 — a 23% increase in quantity and a 38.55% rise in value compared to the same period last year, according to the Department of Customs. Import-related revenue climbed to Rs 2.5 billion, up from Rs 1.83 billion a year earlier. China remains Nepal’s main supplier, providing 87% of total imports by volume and 79% by value, followed by India. Smartphones arrived from 38 countries, including the UAE, Japan, and the US. The steady rise highlights Nepal’s growing demand for mobile technology.
Securities Board resolves employee dispute after 47 days
Operations at the Nepal Securities Board (SEBON) are set to resume after a 47-day disruption caused by staff protests. A full board meeting at the Ministry of Finance resolved the dispute by forming a study committee to assess the ministry’s previous decision on staff benefits. The committee, chaired by Joint Secretary Binod Kumar Bhattarai and including SEBON Director Ananda Wagle and Executive Director Binaydev Adhikari, must submit its report within three days. Based on its recommendations, SEBON will finalize its response and submit it to the Finance Ministry. Striking employees have agreed to return to work.
Private sector calls for delay in Nepal’s 2026 LDC graduation
Nepal is set to graduate from least developed country (LDC) status to developing country status in November 2026. However, the private sector has urged the government to seek an extension, citing ongoing political unrest and economic risks. The Nepal Industrial and Commerce Federation warned that losing preferential trade benefits could hurt exports, particularly in non-India markets. While the government maintains that the economy is stable and that a three-year transition period will reduce the impact, businesses are calling for stronger policy and diplomatic measures to protect investment and production.
Over 600 containers stuck at Nyalam as Tatopani trade route slows
More than 600 containers headed for Nepal are stranded near Nyalam, Tibet, because of slow customs inspections, disrupting trade through the Tatopani border point. According to Sindhupalchok Chamber of Commerce President Buddharaj Basnet, cargo worth billions of rupees is stuck in Nyalam, Khasa, and Ramite. Customs officials are reportedly prioritizing electric vehicle checks, delaying the release of essential goods. Since the July floods damaged the Kerung route, all trade has shifted to Tatopani, worsening congestion. While roads are clear on the Nepali side, Nyalam Customs is processing only about 15 containers a day, down from 50–60 previously.
2% of insurance payments to go to health insurance fund
The Health Insurance Board of Nepal has announced that 2% of approved health insurance claim payments received by service providers will now be deducted and deposited into the Health Insurance Fund. The new rule, endorsed at a board meeting on Chaitra 19, 2081, aims to strengthen the fund’s long-term sustainability. The fund, which had remained largely inactive despite provisions in the Health Insurance Act, has previously relied on government financing. Officials believe the move will improve the stability and efficiency of health insurance services nationwide.
Nepal temporarily allows import of old, polluting vehicles
Despite introducing Euro-6–equivalent emission standards under the Nepal Vehicle Emission Standards, 2082, the government has temporarily permitted the import of thousands of old vehicles from India that were previously banned there. The decision will allow roughly 9,000 motorcycles, 3,000 cars, and several thousand commercial vehicles to enter Nepal, increasing air pollution levels. Environmental experts warn this move contradicts Nepal’s clean transport policies and could make the country a dumping ground for obsolete vehicles. Critics question the government’s consistency as it simultaneously promotes electric mobility.
Rs 75.2 million raised for reconstruction after Gen Z protests
A total of Rs 75.2 million has been collected in the national reconstruction and rehabilitation fund established after the Gen Z protests. The Physical Reconstruction Committee, chaired by Finance Minister Rameshwar Khanal, approved the spending plan on Monday. About Rs 35 million will go toward detailed engineering designs and reconstruction reports for damaged public infrastructure, Rs 30 million will be used for immediate repairs, and Rs 5 million will support economic recovery programs. A dedicated website will soon launch to ensure transparency and public accountability in fund use.
Land registration resumes nationwide after new regulation
The government has reopened land registration (kittakāt) across Nepal through the third amendment to the Land Use Regulation, 2082, ending a months-long halt in 500 municipalities. Out of 753 municipalities, only 253 had completed land classification, delaying registration processes. Earlier amendments in Jestha 2079 and Bhadra 2081 gave local bodies time to categorize land as agricultural or non-agricultural. With Monday’s cabinet approval, municipalities can now proceed with registrations and complete pending classifications, easing administrative bottlenecks.
Government announces subsidy to boost buffalo rearing and meat exports
The Ministry of Agriculture and Livestock Development has introduced a new scheme providing up to a 50% subsidy for buffalo and heifer purchases, shed construction, and fodder cultivation under the Buffalo Promotion Program. Managed through District Livestock Service Offices, the initiative requires mandatory livestock insurance and purchase from approved centers. The program aims to commercialize buffalo farming, enhance disease control, and support Nepal’s meat export potential.
Bagmati government’s Rs 67.47 billion Chitwan road projects under scrutiny
The Bagmati Province government has allocated Rs 67.47 billion for road and infrastructure development in Chitwan for FY 2025/26. However, many of the listed projects are missing from the official Provincial Project Bank, raising transparency concerns. Although provincial guidelines require all major projects to be registered in the Project Bank Management Information System (PPBMIS), ministries have been bypassing it, entering projects through other systems instead. Experts warn that poor coordination, political interference, and the fragmentation of thousands of small projects — many worth under Rs 1 million — have made provincial planning ad hoc and politically driven.
Home secretary inspects Korala border point, pledges upgrade to international checkpoint
Home Secretary Rameshwor Dangal, accompanied by Immigration Department Director General Ramchandra Tiwari, inspected the Korala checkpoint on the Nepal-China border in Mustang to review immigration, customs, and Armed Police Force operations. Local officials highlighted challenges such as inadequate infrastructure and visa processing barriers. Rural Municipality Chair Lopsang Chhompel Bista urged the government to allow Chinese visa processing from Mustang and remove the entry fee for foreigners to boost tourism. Dangal pledged to develop Korala as a full-fledged international border point, noting that Rs 30 million has been allocated for a permanent immigration building and promising improved access to Kailash Mansarovar, Shigatse, and Lhasa.
Nepal Telecom launches student-friendly fiber internet offer
Nepal Telecom has launched the ‘NT Fiber Student Offer’ targeting students born in 1997 or later. Inaugurated by Minister of Communication and Information Technology Jagadish Kharel, the plan promotes affordable digital access for students. For Rs 4,999 (including tax), subscribers receive a 30 Mbps internet connection for one year, a free dual-band router (CPE), and 100 meters of fiber cable. The offer is valid until February 5, 2026.
India eases restrictions on Nepali plywood exports
India has begun facilitating the import of Nepali plywood following the approval of ISI certification by the Bureau of Indian Standards (BIS) for seven additional Nepali manufacturers. This move resolves earlier trade barriers that stemmed from Indian concerns about the possible use of Chinese raw materials. The breakthrough follows recent diplomatic efforts involving Nepal’s finance minister and ambassador to India, paving the way for more Nepali plywood producers to access the Indian market.
Trade deficit widens as exports fall and imports rise at Mechi border
Trade data from the Mechi Customs Office shows a widening deficit, with exports down 21.08% and imports up 13.31% in the first quarter of the current fiscal year. Imports reached Rs 12.28 billion, while exports fell to Rs 4.80 billion from Rs 6.08 billion a year earlier. Officials cited India’s non-tariff barriers as a key challenge for major export items such as tea, cardamom, and plywood.
Revenue office intensifies investigation into Rupandehi casinos
The Revenue Investigation Office (RIO), Butwal, has tightened scrutiny on casinos in Rupandehi amid allegations of tax evasion and irregularities in capital gains payments. The RIO issued a nine-point directive requiring casinos to submit detailed financial reports for FY 2024/25 and the current year within three days. The probe focuses on the use of restricted Indian currency and possible unauthorized entry of Nepali citizens into casino premises.
Nepal Rastra Bank cautions Prime Commercial and Kumari Bank
The Nepal Rastra Bank (NRB) has issued warnings to Prime Commercial Bank and Kumari Bank for regulatory non-compliance during the first quarter of FY 2025/26. Prime Commercial Bank’s CEO was cautioned for misclassifying overdue loans and failing to correctly calculate loan-loss provisions and risk weights. Kumari Bank was also flagged for conducting banking transactions with blacklisted individuals and entities. The NRB emphasized stricter adherence to prudential norms going forward.
Lumbini rice farmers suffer Rs 134 million in losses from unseasonal rain
Unseasonal rainfall has destroyed rice crops worth an estimated Rs 134.3 million across seven districts of Lumbini Province. According to the Directorate of Agriculture Development, 3,800 tons of rice over 896 hectares were damaged—equivalent to 0.3% of the total cultivated area. Rupandehi district reported the highest losses, with 240 hectares completely ruined. Local authorities are assessing relief measures for affected farmers.
Dolpa apple production rises sharply, revenue hits Rs 22 million
Apple production in Dolpa district has surged, with exports reaching 400 metric tons and generating around Rs 22 million under the National Agriculture Modernization Program. This is a major jump from last year’s 100 tons. Farmers benefited from a Rs 6 per kg transport subsidy for shipments to Surkhet and Kathmandu. With an annual budget of Rs 36.05 million, the program aims to expand apple-growing zones, modernize orchards, and promote other high-value crops.
China invests Rs 20 billion in Nepal’s buffalo meat processing plant
China’s Chengdu Jian Food Company has pledged Rs 20 billion in foreign direct investment (FDI) to establish a cooked buffalo meat processing plant in Sindhuli in partnership with Himalaya International. Infrastructure work has begun, with factory construction expected to start in December. The plant aims to export 500 tons of processed meat daily within a year, connecting buffalo farmers across multiple districts by mid-December.
Minister Ghising urges Helambu to lift blockade at Melamchi water source
Minister of Energy, Water Resources, and Irrigation Kulman Ghising has appealed to Helambu Rural Municipality to remove the blockade at the Melamchi Drinking Water Project. The obstruction, set up by project-affected locals demanding compensation and development benefits, has disrupted water supply to Kathmandu Valley. Minister Ghising said the government is open to dialogue but stressed the urgency of restoring supply, as the capital faces a severe water shortage.
Singapore Airlines upgrades Kathmandu route to Boeing 737-8 MAX
Singapore Airlines has permanently upgraded its Kathmandu-Singapore service to the Boeing 737-8 MAX, replacing the older 737-800 NG. The aircraft offers lie-flat business class seats, free in-flight Wi-Fi for all passengers, and greater fuel efficiency. The change underscores the airline’s commitment to comfort, sustainability, and enhancing Nepal’s connectivity to global destinations.
Nepal-Malaysia labour agreement renewal stalled
The 2018 Nepal-Malaysia labour Memorandum of Understanding (MoU), which safeguards the rights of more than 358,000 Nepali workers, has been pending renewal for two years. Despite repeated diplomatic efforts by Nepal, Malaysia has not responded. Officials blame reduced demand for workers and lobbying from recruitment syndicates for the delay. Nepal has rejected Malaysia’s proposed 10-point criteria, calling them restrictive to fair recruitment practices.
Korala Pass to close for winter despite generating Rs 3 billion revenue
The temporary Korala trade route, opened on September 16 after closures at Rasuwagadhi and Tatopani, will shut in December due to extreme cold. Despite operating for just over a month, the route generated Rs 3.02 billion in revenue and facilitated Rs 5.27 billion in imports—including nearly 1,500 electric vehicles. Chinese authorities cited sub-zero temperatures and freezing diesel at the 4,000-meter altitude as reasons for the four-month winter closure.
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