KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economic and financial landscape shows a mix of resilience and caution amid lingering political and environmental challenges. The NEPSE index recorded modest gains despite volatility, while select stocks surged 10%, signaling targeted investor optimism. The World Bank forecasts a slowdown in national growth to 2.1% in 2026, reflecting political instability, though reconstruction efforts may support a rebound in 2027.
Key financial developments include rising gold prices, a policy revision on institutional fixed deposits by NRB, and increased NPLs in development banks, highlighting liquidity and credit concerns. Infrastructure and industrial recovery are progressing, with NEA restoring power to industries and the Physical Infrastructure Reconstruction Fund allocating Rs 75 million for post-protest repairs.
Regional economies show mixed performance, with Madhesh Province growing 3.88% while Bagmati Province faces agricultural losses due to unseasonal rain. Tourism and aviation are gradually expanding, exemplified by Pokhara’s skydiving promotion and Resunga Airport’s resumption of flights.
Meanwhile, tax administration efforts, MCC contractor exemptions, and corporate financial decisions, such as Kumari Bank not declaring dividends, reflect ongoing policy and regulatory adjustments in response to economic pressures.
NEPSE closes week with 1.13-point gain; six companies see 10% surge
The Nepal Stock Exchange (NEPSE) index ended the final trading day of the week with a modest gain of 1.13 points, closing at 2,545. The market experienced fluctuations, hitting a low of 2,530 at 12:31 PM and a high of 2,559 at 2:06 PM. Despite the marginal increase, six companies, including Mabilung Energy and Shwetganga Hydropower, saw their shares jump by 10%. Trading volume fell to Rs 3.49 billion from Rs 3.84 billion the previous day.
World Bank projects Nepal’s growth to slow to 2.1% in 2026
The World Bank’s latest Nepal Development Update forecasts Nepal’s economic growth slowing from 4.6% in 2025 to 2.1% in 2026, primarily due to political instability following the September protests. Growth is expected to rebound to 4.7% in 2027, aided by reconstruction efforts. Finance Minister Rameshore Prasad Khanal highlighted the government’s initiatives, including a Reconstruction Fund, to boost business confidence. The World Bank urged improvements in public investment management to meet infrastructure needs.
Gold price surges by Rs 5,900 to cross Rs 250,000 per tola
Gold prices surged sharply, with the Federation of Nepal Gold and Silver Dealers’ Association setting the rate at Rs 250,200 per tola for Thursday, up Rs 5,900 from the previous day. The increase follows global trends, with gold exceeding USD 4,200 per ounce. Silver prices also rose by Rs 170 per tola, reaching Rs 3,345.
NRB to revise policy on institutional fixed deposits amid declining interest
The Nepal Rastra Bank (NRB) is preparing to amend its policy on institutional fixed deposits after commercial banks showed reluctance to participate in the mandatory bidding process. A senior NRB official noted that while the bidding system worked during liquidity shortages, it is now counterproductive amid high liquidity. The revision will allow institutional depositors to place funds in their chosen bank without bidding, similar to individual deposits. Institutional deposits currently make up 47.9% of the total Rs 7.505 trillion deposit base.
NRB orders 420 million new Rs 50 notes from China
The Nepal Rastra Bank has contracted the China Banknote Printing and Minting Corporation to print 420 million new Rs 50 banknotes. The contract followed a bidding process initiated on July 25, and the Chinese firm was chosen for offering the lowest bid, in accordance with the Public Procurement Act, 2007, and the Procurement Directive, 2010.
NEA restores power to 21 industries
The Nepal Electricity Authority (NEA) has reconnected electricity to 21 of 25 industries that had their supply cut on October 21 after paying the first installment of disputed premium fees, totaling Rs 174.6 million. Jagdamba Steel Company, with the highest payment of Rs 57.2 million, was among them. Four industries remain disconnected. The disagreement between NEA and industrialists continues over whether the payment counts as a deposit or installment.
IRD notifies seven DTAA countries about tax law changes
The Inland Revenue Department (IRD) informed seven nations—Norway, Thailand, Sri Lanka, Austria, Pakistan, China, and South Korea—about updates to domestic tax laws. The notification clarifies the Income Tax Act, 2002, which replaced the 1974 act. The move aims to prevent “treaty shopping” by denying treaty benefits if 50% or more of an entity’s ownership is held by foreign individuals or institutions.
Madhesh Province economy grows 3.88% in FY 2024/25
According to the National Statistics Office, Madhesh Province’s economy expanded by 3.88% in FY 2024/25, driven mainly by increased food grain and vegetable production. The province’s GDP at consumer prices reached Rs 804 billion, with agriculture, forestry, and fishing contributing 36.7%. Per capita income is estimated at USD 932.
Bagmati Province loses 12,214 tons of paddy due to unseasonal rain
Unseasonal rainfall caused by Cyclone Montha destroyed 12,214.26 tons of paddy across 10 districts in Bagmati Province, affecting 5,465.35 hectares of farmland. The loss is estimated at Rs 222.4 million. Overall paddy production in the province is expected to fall by 44,850 tons, reducing productivity from 3.9 tons/ha last year to 3.6 tons/ha this year. The Ministry of Agriculture has requested Rs 50 million in relief funds.
Karnali Province invests Rs 211.2 million in Shey-Phoksundo trekking trail
Karnali Province is investing Rs 211.2 million to improve infrastructure for tourism at Shey-Phoksundo Lake in Dolpa. Chief Minister Yam Lal Kandel laid the foundation for the trekking trail project from Sangta to Phoksundo. The project includes walkways, 16 shelters, two truss bridges, a museum, and a park, scheduled for completion by 2027.
Nepal government exempts MCC contractors from income tax for current FY
Contractors working on the Millennium Challenge Corporation (MCC) project are exempted from paying income tax for FY 2025/26. The exemption applies to income earned from MCC-funded projects by entities registered in Nepal, following a Cabinet decision made under former Prime Minister KP Sharma Oli on August 3.
Nepal Airlines begins staff reduction to improve financial health
Nepal Airlines Corporation (NAC) has started reducing staff to cut costs and improve efficiency. Following instructions from Prime Minister Sushila Karki, NAC terminated contracts for six employees in the first phase. NAC confirmed that its Twin Otter aircraft are now fully operational after maintenance.
Development banks’ NPLs rise to 5.74% on average
National-level development banks reported an average non-performing loan (NPL) ratio of 5.74% in Q1 of the current fiscal year, up from 4.08% last year. Jyoti Development Bank had the highest NPL at 7.97%, followed by Lumbini Bikash Bank at 7.78%. Slow loan recovery, economic slowdown, and the September Gen-Z protests contributed to the rise. Net profit for these banks fell to Rs 535.5 million from Rs 1.17 billion last year.
Physical Infrastructure Reconstruction Fund allocates Rs 75 million for damages
The Physical Infrastructure Reconstruction Fund, set up to repair damages from the September 8–9 Gen Z protests, has accumulated Rs 75.2 million. The Physical Reconstruction Committee, chaired by Finance Minister Rameshore Khanal, approved the allocation on Monday. Around Rs 35 million is designated for detailed engineering designs and reconstruction reports for damaged government structures, Rs 30 million for immediate repair of public infrastructure to resume services, and the remaining Rs 5 million for economic rehabilitation and relief programs.
All industries with premium fees resume electricity supply
The Nepal Electricity Authority (NEA) has restored power to all industries that had their electricity cut over unpaid premium fees for dedicated and trunk lines. NEA Spokesperson Rajan Dhakal confirmed that electricity was resumed after the first installment of 28 total installments was paid. Currently, no industry faces power disconnection solely due to premium fee disputes, although three industries remain offline for failing to pay regular outstanding charges. NEA Executive Director Manoj Silwal noted that industrial clients may still pursue legal remedies through the Electricity Regulatory Commission or the courts.
Bharatpur tax office pursues defaulters and launches compliance campaign
The Inland Revenue Office (IRO) in Bharatpur has begun contacting non-compliant taxpayers who did not submit income details for the last fiscal year. IRO Chief Punya Bikram Khadka noted that nearly 50% of mandated taxpayers are defaulters. A public awareness campaign will run from November 17–21. By mid-October, the office collected Rs 5.51 billion against a target of Rs 5.65 billion for the current fiscal year. Legal action, including claiming immovable property, is being initiated against over 5,000 taxpayers owing approximately Rs 1.55 billion in back taxes.
Pokhara promotes skydiving as key adventure tourism draw
Skydiving continues as a key part of Pokhara’s “Nature, Culture, and Adventure” tourism strategy. Insky Skydive Company conducts dives from 13,000 feet at the Avia Club ground in Pame, Laurak, in coordination with Simrik Air. Operator Nirmal Pande said 52 foreigners and Nepalis are scheduled to participate this season, running from November 1 until Saturday. The company is urging the Civil Aviation Authority of Nepal (CAAN) to grant a regular Recreational Aviation Operating Certificate (RAOC) instead of the current 15-day permits.
Kumari Bank passes FY 2024/25 financials; no dividend declared
Kumari Bank approved its FY 2024/25 financial statements during a Board meeting on Wednesday evening and will submit the report to Nepal Rastra Bank (NRB) for approval. The board also decided not to distribute dividends for the period. Kumari Bank’s paid-up capital stands at Rs 26.225 billion. The Annual General Meeting date has yet to be announced.
Resunga Airport resumes four weekly flights with Twin Otter
Resunga Airport has resumed four weekly flights after the repair of Nepal Airlines Corporation’s (NAC) Twin Otter aircraft. For the past five months, service had been limited to one flight per Thursday. NAC Resunga Station Chief Suman Thapa said the 19-seater will now operate on Sundays, Tuesdays, Thursdays, and Saturdays. Flights are scheduled in the early morning due to high wind pressure later in the day, with fares at Rs 7,500 from Kathmandu to Gulmi and Rs 7,300 for the return.
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