KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
The latest economic and development updates from Nepal present a mixed picture of progress and challenges. The Nepal Stock Exchange (NEPSE) saw a decline of 26.22 points, reflecting cautious market sentiment amid broader economic developments. Despite this, Nepal is making strides in the energy sector by securing approval to export an additional 200 MW of hydropower to India, marking a new milestone in electricity trade.
However, while macroeconomic indicators such as trade, industrial growth, and remittances show steady gains, government revenue collection lags behind, raising concerns over tax system efficiency and transparency, as highlighted by lawmakers urging reform. The insurance sector is recovering robustly post-pandemic, and private sector participation in electricity trading is under review, signaling potential liberalization.
Agricultural and floriculture sectors are showing promising growth, with increased domestic flower production reducing imports and farmers in Parbat achieving significant earnings from priority crops. Socially, efforts to curb youth migration focus on empowering small entrepreneurs, particularly women, to boost local opportunities. Infrastructure challenges persist, exemplified by prolonged road blockages due to landslides that disrupt daily life and transportation.
Overall, Nepal’s economy is advancing on multiple fronts, yet structural issues such as revenue collection, infrastructure resilience, and inclusive growth require continued attention to sustain progress.
NEPSE falls by 26.22 points
The Nepal Stock Exchange (NEPSE) dropped 26.22 points on Tuesday, closing at 2,796.24, down 0.92 percent from the previous day. By the end of trading, a total of 17,671,675 shares worth Rs 6.91 billion had changed hands. Out of 323 listed companies that saw activity, 24 posted gains, 225 declined, and one remained unchanged. Sector-wise, all sub-indices except for hotels and tourism ended in negative territory.
Nepal to export extra 200 MW power to India, setting new electricity trade milestone
India has approved the purchase of an additional 200 megawatts (MW) of electricity from five hydropower projects in Nepal, raising Nepal’s total export capacity to India to 1,010.9 MW—up from the previous 810.9 MW. With the existing 40 MW export to Bangladesh, Nepal’s total approved electricity export capacity now stands at 1,050.9 MW. The approval, granted by the Indian government on August 11, will remain valid until October 31, 2025. The supply will come from the Likhu (2), Likhu Khola A, Lower Solu, Thulo Khola, Super Kaweli Khola A, and Super Kaweli Khola hydropower plants.
Economic growth outpaces revenue collection
Nepal’s economy has maintained steady growth over the past decade, yet revenue collection has failed to keep pace, prompting concerns about tax leakage and the expansion of informal economic activities. According to the Ministry of Finance, indicators such as foreign trade, new industrial registrations, remittance inflows, credit flow, government spending, social security payments, and pensions have all grown consistently. Except for a few years, GDP has shown continual progress. Trade data from the past five fiscal years highlight this growth: import values rose from Rs 1.53 trillion in FY 2020/21 to Rs 1.80 trillion in FY 2024/25. However, customs revenue only increased from Rs 420 billion to Rs 477 billion during the same period.
Imports and industries rise, but Nepal’s tax revenue lags behind
While Nepal’s import volumes, industrial registrations, and remittance inflows have grown steadily in recent years, the government’s tax and customs revenue has not kept pace, sparking fresh debate over the country’s revenue system. Ministry of Finance statistics show imports climbed from Rs 1.53 trillion in FY 2020/21 to Rs 1.80 trillion in FY 2024/25, yet customs revenue rose only modestly from Rs 420 billion to Rs 477 billion. The Inland Revenue Department also reports a sharp increase in registered taxpayers, with both business and individual PAN holders, as well as VAT registrants, on the rise. New industrial registrations surged from 203 in FY 2020/21 to 622 in FY 2024/25.
Strong economic indicators fail to boost state revenue proportionally
Nepal’s macroeconomic indicators are showing positive momentum, but the government’s revenue collection is struggling to keep up, raising questions about efficiency in tax administration. Over the last decade, the country has experienced steady GDP growth, with consistent increases in trade, remittance inflows, credit flow, government expenditure, and social security payouts. Between FY 2020/21 and FY 2024/25, imports rose from Rs 1.53 trillion to Rs 1.80 trillion. However, customs revenue during the same time grew only from Rs 420 billion to Rs 477 billion. The Inland Revenue Department reports growing numbers of registered taxpayers and industries, with industry registrations tripling from 203 to 622 over five years. Even so, tax revenue climbed from Rs 429 billion to Rs 577 billion—falling short of reflecting the scale of economic growth.
Gold prices continues downward trend
Gold prices have decreased by Rs 1,300 per tola on Tuesday. According to the Federation of Nepal Gold and Silver Dealers’ Association, the price of gold was set at Rs 196,800 per tola. Likewise, the price of silver also went down by Rs 10 and was sold at Rs 2,305 per tola.
Insurance sector reports strong growth in FY 2024/25
Nepal’s insurance industry posted notable business growth in the fiscal year 2024/25, rebounding from the COVID-19 and post-pandemic economic slowdown. Data from the Nepal Insurance Authority shows that life insurers, excluding micro-insurance companies, collected premiums worth Rs 181.43 billion—up 16.05 percent from Rs 156.33 billion in FY 2023/24. This growth outpaced the previous year’s 9.81 percent rise compared to FY 2022/23, reflecting stronger momentum. Non-life insurers also improved their performance, collecting Rs 43.96 billion in premiums—an increase of 6.77 percent from Rs 41.17 billion the year before. This was a marked improvement over the modest 2.38 percent growth recorded in FY 2023/24.
Govt explores allowing private sector to trade electricity under current laws
The government, which had previously withheld electricity trading licenses pending new legislation, is now reconsidering the possibility of allowing private sector participation under existing laws. To explore this, the Ministry of Energy, Water Resources and Irrigation has formed a committee to review current legal provisions and assess whether private companies can be granted trading licenses without waiting for new laws. The Ministry of Energy, Water Resources and Irrigation has set up a study committee, led by former secretary Dinesh Kumar Ghimire, to review relevant laws including the Electricity Act 1992, Electricity Regulation 1993, and the Electricity Regulatory Commission Act 2017.
Increase in flower production reduces imports
Flower imports in Nepal dropped sharply from Rs 276.9 million in fiscal year 2080/81 to Rs 126 million in 2024/25, thanks to stricter customs, increased domestic production, and local cultivation, according to the Nepal Floriculture Association. Meanwhile, flower exports nearly doubled to Rs 21.3 million, reaching markets in Japan, Australia, Malta, and Hong Kong. Although some flowers like velvet flowers for Tihar and red roses for Valentine’s Day are still imported, rising local production is expected to reduce these imports. However, imports continue due to an annual 15-20% growth in flower demand.
FWEAN President urges support for small entrepreneurs to curb youth migration
Shova Gyawali, President of the Federation of Women Entrepreneurs’ Associations of Nepal (FWEAN), has called on the government to offer special incentives to small and medium-sized entrepreneurs as a way to tackle the rising trend of youth migration. She stressed that promoting entrepreneurship can create domestic opportunities for young people. Gyawali noted that the federation has been working at all levels—from federal to local—to foster youth-led enterprises. Pointing out that most youths going abroad are male, she added that empowering women in entrepreneurship could deliver dual benefits for the economy and job creation.
Nabil Bank’s Q4 FY 2024 net profit rises 15% to NPR 7.13 billion
Nabil Bank Limited (NABIL) has posted its financial results for the fourth quarter of fiscal year 2024 (2081/82 BS), showing a solid 15.01% increase in net profit, supported by higher operating income and a significant reduction in impairment charges. The bank’s paid-up capital remained steady at NPR 27.06 billion (about USD 203.5 million), while retained earnings jumped 54.82% to NPR 4.77 billion (USD 35.9 million). Reserves climbed 11.82% to NPR 31.91 billion (USD 239.9 million). Customer deposits grew 13.53% to NPR 524 billion (USD 3.94 billion), and loans and advances to customers rose 10.50% to NPR 412 billion (USD 3.09 billion).
Make tax system transparent: NA members
Lawmakers in the National Assembly have emphasized the urgent need for greater transparency in the country’s tax system. During Tuesday’s special session, members discussed the benefits of progressive tax systems used even in capitalist countries and noted that the lack of transparency has hindered fiscal discipline in Nepal. Narayan Dutta Mishra of Nepali Congress and Urmila Aryal of the Maoist Center both called for a more transparent tax framework. MP Mishra alleged that customs officials have been misreporting goods, such as billing bags of sugar as rice. Meanwhile, MP Aryal highlighted that women’s contributions to nation-building remain unrecognized and their rightful place is yet to be acknowledged.
Parbat farmers earn over Rs 650 million from priority crops
Parbat district has generated more than Rs 653 million from the sale of agricultural products in fiscal year 2024/25, driven by six priority crops, potato, paddy, cardamom, vegetables, maize, and citrus fruits. According to the Agriculture Knowledge Centre, the district is moving toward self-sufficiency in food and vegetables while increasing exports of key crops. Potatoes and oranges remain the district’s top export items, while paddy, seasonal and off-season vegetables, cardamom, maize, and cucumber seeds are also produced and sold in significant quantities.
Gamgadhi-Balai-Pina road blocked for two months
Vehicular traffic on the Gamgadhi-Balai-Pina road has been completely stopped for two months due to landslides and flooding caused by heavy rainfall. Debris has accumulated in multiple locations, and some sections of the road have collapsed, awaiting repair and reconstruction. This has severely disrupted transportation and limited people’s mobility. Locals are forced to take a much longer alternative route to transport food supplies and access medicines. Resident Dan Bahadur Shahi stated, “Landslides have affected most parts of the road. No efforts have been made to clear the blockage, causing daily difficulties for the community.”
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