KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economic landscape this week reflects a mix of volatility, structural developments, and sectoral challenges. The NEPSE index fell 23.8 points, shedding Rs 30 billion in market capitalization, as political uncertainty and economic conditions outweighed supportive policies, while gold and silver prices surged sharply, signaling investor caution amid market instability.
Key infrastructure and energy projects, such as the Huaxin cement substation in Dhading and the second phase of the petroleum pipeline, are expected to improve power supply and reduce costs, demonstrating continued public-private investment momentum. Meanwhile, regulatory oversight and governance remain under scrutiny, highlighted by the NRB’s role being questioned following the CIB’s unilateral arrest of Prabhu Bank executives and the NRB’s draft AI guidelines promoting ethical use in financial institutions.
Agricultural and industrial sectors face operational and financial pressures, from rotting timber in Bara and rising egg production costs to low insurance payouts for apple farmers and health insurance shortfalls.
In contrast, initiatives like concessional loans for returnee innovators, high festival-driven economic activity in Baglung, and oversubscribed IPOs suggest pockets of growth and investor confidence. Overall, the economy is navigating a tension between structural opportunities, regulatory challenges, and lingering fiscal and market vulnerabilities.
NEPSE index drops 23.8 points; market capitalization falls by Rs 30 billion
The Nepal Stock Exchange (NEPSE) index declined by 23.8 points this week, falling on four of the five trading days and reducing market capitalization by Rs 30 billion. Weekly trading volume fell to Rs 20.77 billion from Rs 21.26 billion. The manufacturing sector rose 2.39% and life insurance 0.69%, but the finance sector led losses with a 2.56% drop. Analysts attribute market volatility to economic conditions and political uncertainty, despite favorable policies such as relaxed banking lending limits.
NRB drafts AI guidelines for financial institutions to ensure ethical use
The NRB has released a draft Artificial Intelligence guideline to regulate responsible, transparent, and ethical AI use in financial institutions. The rules cover all licensed banks (Class A-D), Nepal Infrastructure Bank, and all Payment System Operators and Payment Service Providers. The draft emphasizes that the Board of Directors and senior management are accountable for AI outcomes, requiring institutions to conduct risk assessments, adopt ethical practices, and inform customers when AI is involved in decisions.
Gold price jumps by Rs 3,500 on Friday
Gold and silver prices rose sharply on Friday. The Federation of Nepal Gold and Silver Dealers’ Association reported gold at Rs 256,600 per tola (11.66 grams), up Rs 3,500, and silver at Rs 3,905 per tola, up Rs 100. Internationally, gold traded at USD 4,275 per ounce and silver at USD 62 per ounce.
Petroleum pipeline project enters second phase, could save rs 5-6 billion
The second phase of the petroleum pipeline project, a joint venture between Nepal Oil Corporation (NOC) and Indian Oil Corporation (IOC), is now underway. IOC has called for tenders for the Jhapa-Siliguri section. The overall project, including the Amlekhgunj-Lothar pipeline, the Jhapa depot, and the Siliguri-Charali line, is expected to cost Rs 15 billion with technical and financial support from IOC. NOC Executive Director Dr. Chandika Bhatta said the project, along with a proposed LPG pipeline, could save Rs 5 to 6 billion annually in transportation costs. Separately, NOC is investing Rs 9 billion to construct a 100,000-kiloliter storage terminal in Lothar, Chitwan.
NRB role questioned as CIB detains Prabhu Bank CEO and executives
The Nepal Rastra Bank (NRB) is under scrutiny after the Central Investigation Bureau (CIB) arrested Prabhu Bank CEO Ashok Sherchan and other senior executives for nearly two weeks without involving the banking regulator. The detentions, beginning November 30 and continuing with the arrest of the Head of Remittance on Wednesday, relate to a loan dispute involving former chairman Devi Prakash Bhattchan and Prabhu Management. Unlike previous banking cases, the CIB acted independently without an NRB recommendation. Senior NRB officials warned that the unilateral action could have triggered a bank run and said the regulator’s silence has caused unease in the financial sector.
Over 40,000 cubic feet of timber rotting in Bara
More than 40,000 cubic feet of timber harvested last year in three partnership forests—Gadimai, Tamagadhi, and Halkhoriya—in Bara district is deteriorating due to delays in management plan approval from the Forest Office. Gadimai alone has 28,896 cubic feet from the previous year and 6,444 cubic feet of Sal wood from the 2023/24 fiscal year rotting. Officials estimate around 10,000 cubic feet of Sal wood cut between 2015 and 2020 has already decayed. Consumers, who pay up to Rs 2,010 per cubic foot for A-grade Sal wood, are frustrated, with one local leader noting he has been seeking timber for construction for over a year.
33 bridges completed on rs 16.995 billion Narayangarh-Butwal road project
The eastern section of the Narayangarh-Butwal Road Expansion Project has finished 33 of 34 planned bridges. According to project information officer Shiva Khanal, the final bridge at Arunkhola is nearing completion. The 113-kilometer road project, which began on December 10, 2018, has missed its original August 7, 2022, deadline three times but has achieved 76% physical progress. The total cost, funded by an ADB loan, is Rs 16.995 billion.
Cabinet approves Gen Z agreement; report cites Rs 84.457 billion in damages
The Cabinet approved a 10-point agreement between the Prime Minister and Gen Z protest representatives, expanding the Judicial Inquiry Commission’s jurisdiction. The agreement will be published in the Gazette and implemented immediately. A committee assessing the September 8–9 protests estimated total physical damage across 54 districts and 262 local units at Rs 84.457 billion, reporting 77 deaths and 2,429 injuries during the movement.
ADBL and KOICA offer concessional loans to returnee innovators
The Agricultural Development Bank Limited (ADBL) and Korea International Cooperation Agency (KOICA) have agreed to provide concessional loans to Nepali youth returning from Korea who start innovative businesses. Part of the K-We project under the Returnee Innovators for Nepal program, the initiative will run from 2024 to 2028, providing training, consultancy, and startup loans to 50 returnees annually, based on business concepts and investments.
Jumla apple farmers protest low insurance payout
Apple farmers in Jumla are protesting after receiving less compensation than the premium paid for drought and hailstorm insurance. Farmers paid Rs 36 per plant to Shikhar Insurance but are receiving only Rs 24 per plant, leaving a Rs 12 deficit. Last year, 5,350 farmers insured 1.2 million apple saplings worth Rs 400–500 million in exports. Padam Bahadur Dangi of the Apple Insurance Victims Action Committee said farmers are struggling to recover premiums due to over Rs 320 million in pending government subsidy payments to the insurer.
Gandaki Province reports over rs 5 billion in Gen Z protest damages
Gandaki Province suffered more than Rs 5 billion in damages during the Gen Z protests, ranking third among provinces. The Nepal Insurance Authority reported 222 insurance claims worth Rs 1.653 billion, but only Rs 305.7 million has been paid as of December 3. The provincial government estimated Rs 3 billion in private property losses and over Rs 2 billion in government property damage. Total property insurance claims across all provinces reached Rs 19 billion.
Cost of egg rises to Rs 19.12 per piece
The production cost of an egg has increased to Rs 19.12, up from Rs 16.56 three years ago, according to Agriculture and Forestry University experts reporting for the Poultry Entrepreneurs Forum. The calculation covers raising 10,000 layer chickens until 80 weeks old, with total production and delivery costs at Rs 49.8 million. Feed costs Rs 34.8 million, while labor, electricity, and maintenance add Rs 6 million. The findings will be submitted to the Ministry of Agriculture for approval.
Health insurance program faces rs 14 billion shortfall
The national health insurance program faces a Rs 14 billion payment shortfall to hospitals, while annual premium collections are only Rs 3.75 billion. The Health Insurance Board warned that the Rs 10 billion annual deficit threatens the program’s sustainability. Despite financial strain, 12.5 million hospital visits were recorded last fiscal year, averaging five visits per person. Executive Director Raghu Raj Kafle said efforts are underway to expand coverage, amend the Health Insurance Act, 2017, and improve service quality.
Huaxin cement substation boosts power supply in Dhading
The Huaxin Narayani Cement Industry, a Chinese-backed project in Malekhu, Dhading, has invested Rs 1.5 billion to build a 132 kV substation, improving electricity quality in the district. Though constructed by the industry with the expectation of later government reimbursement, the substation has addressed long-standing low-voltage and outage issues. The facility now ensures stable supply for 66,180 customers and supports smaller hydropower integration. Deputy General Manager Dilliraj Pokharel said it has strengthened the district’s distribution network, benefiting the Nepal Electricity Authority.
Baglung festival targets Rs 100 million in transactions
The 8th Baglung Festival, organized by the Baglung Chamber of Commerce and Industry from December 26 to January 5, 2026, aims to boost local trade and domestic tourism. This year’s event at Banghechaur Playground seeks to generate over Rs 100 million in economic activity and attract 800,000–1 million visitors. The festival’s theme, “Tourism, Agriculture, Art, Culture, Industry, and Trade: The Foundation for Prosperous Baglung,” includes social initiatives such as donating Rs 10 per ticket to the human service ashram and allocating Rs 500,000 to the Chamber’s member welfare fund. Activities feature cultural performances, a ‘Made in Baglung’ exhibition, and tourism promotion.
Reliance Spinning Mills mutual fund IPO oversubscribed 18 times
Reliance Spinning Mills’ mutual fund IPO was oversubscribed 18 times. Of 57,798 units allocated for mutual funds (5% of the total 1,155,960 units), 45 schemes applied but only 41 received shares. Applications totaled Rs 759 million, far exceeding the required Rs 47.4 million, leading to a refund of Rs 711.6 million. The cut-off price for institutional investors was Rs 912, while the public issue price was Rs 820.80 per share.
Shivam Cement approves 10% cash and 2.5% bonus dividend
Shivam Cement approved a 10% cash dividend and 2.5% bonus shares at its 10th AGM. Following the bonus issuance, paid-up capital will rise to Rs 5.59 billion. The AGM also confirmed the appointment of an auditor for fiscal year 2025/26.
Siddharth Premier Insurance proposes 25% cash dividend despite quarterly loss
Siddharth Premier Insurance has proposed a 25% cash dividend, subject to approval from the Insurance Authority and General Assembly. This is lower than last year’s 30% dividend. The company reported a net loss of around Rs 300 million in the first quarter of fiscal year 2025/26, while shares are trading at Rs 714 each.
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