KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economic landscape in 2081 BS was marked by a fragile recovery overshadowed by deep-rooted structural challenges, including weak public finance, underwhelming industrial output, and stalled infrastructure projects.
While some indicators—like low inflation, increased remittances, a stable credit rating, and a surging stock market—offered optimism, systemic issues such as underperformance in capital expenditure, sluggish credit growth, and regulatory bottlenecks in key sectors like hydropower and foreign investment persisted.
Government efforts, including 29 legal reforms and proposed economic overhauls, aimed to revitalize investor confidence and private sector engagement, but shortfalls in revenue collection and policy inconsistencies continued to hinder economic momentum.
The sharp contrast between growing domestic tourism and declining industrial productivity reflects an economy in transition, urgently in need of coordinated reforms and strategic investment to unlock its full potential.
Economic landscape in 2081 BS: Slow revival amid deep-rooted structural issues
Nepal’s economic performance in 2081 BS showed a cautious rebound but remained burdened by entrenched structural problems. While external financial indicators stayed steady, domestic hurdles, particularly in public finance, persisted.
Despite sufficient liquidity and low interest rates, credit issuance lagged, signaling weak investor sentiment. Nepal’s inaugural sovereign credit rating of ‘BB-‘ with a stable outlook was a positive step, yet the return to the FATF grey list highlighted lingering issues in governance and regulation.
Meanwhile, the public debt swelled to Rs 2.676 trillion, amounting to 46.91% of GDP, influenced by currency fluctuations.
The Nepal Investment Summit failed to attract meaningful commitments due to bureaucratic bottlenecks.
Inflation dropped to 3.75%, and remittances increased by 9.4%, reaching Rs 1.051 trillion and strengthening foreign reserves.
Nonetheless, underperformance in capital spending and credit growth curbed momentum.
Global gold prices soared due to international tensions, while Nepal formed a National Cooperative Regulatory Authority to address financial irregularities.
Despite tech advances and global fintech trends, Nepal’s economy urgently requires structural reforms to maintain growth and investor trust.
Revenue collection misses target by Rs 176 billion in first nine months
The government’s revenue intake fell significantly short of expectations in the first nine months of the current fiscal year.
Against a target of Rs 1.016 trillion from Shrawan to Chaitra, only Rs 840.91 billion was collected—creating a gap of Rs 176 billion.
Achieving the annual goal would require a 38% year-on-year increase, but growth has remained at just 9%. Although some months saw growth spikes up to 20%, the pace slowed considerably by Chaitra, pointing to ongoing inefficiencies in domestic resource mobilization.
NEPSE index jumps 31.5% in 2081, though weak stocks spark investor warnings
In 2081 BS, Nepal’s stock market experienced a strong upswing, with the NEPSE index rising by 31.5%, from 2,023 to 2,662 points by the start of 2082. At its peak, on Shrawan 31, it reached 3,000 points—still shy of its all-time high of 3,198 from 2078 BS.
Despite the overall positive trend, certain stocks surged by up to 300%, mostly from companies lacking strong financial fundamentals. Market experts warn that such speculative gains carry substantial risk.
Finance Minister Paudel asserts economic confidence rises with 29 legal reforms
Finance Minister Bishnu Paudel highlighted that the revision of 29 private sector-related laws has sparked renewed economic confidence in Nepal.
Addressing a gathering of entrepreneurs and industrialists in Rupandehi regarding the upcoming fiscal year 2082/83’s budget and revenue policy, Paudel said these legal adjustments have revitalized private sector morale.
“Following the formation of this administration, we promptly amended 29 laws via ordinance to resolve private sector issues. This move has injected fresh enthusiasm into the broader economy,” he said.
Paudel stressed that the government remains dedicated to creating a business-friendly atmosphere and is open to feedback from the private sector. He noted that the reforms are already influencing the economy positively and boosting investor confidence.
Hydropower sector in jeopardy as share issuances worth Rs 24.5 billion remain frozen
Nepal’s hydropower sector is facing a severe funding crisis, with share issuances totaling Rs 24.5 billion stalled for over 20 months due to a Public Accounts Committee directive.
This freeze has affected 53 hydropower companies and delayed crucial projects. The Independent Power Producers’ Association has urged Prime Minister KP Sharma Oli to intervene, warning that the stagnation threatens Nepal’s energy goals for 2035.
Industrial output slumps to eight-year low
Nepal’s industrial capacity utilization dropped to 48.3% in FY 2023/24—its lowest point in eight years, according to Nepal Rastra Bank. Despite some recovery post-COVID, industries continue to struggle with rising costs, subdued demand, and liquidity shortages.
Some sectors like refined oil and pashmina saw gains through exports and promotional efforts. However, persistent power outages and erratic policies hamper broader industrial progress.
Manufacturers are calling for stable electricity and strategic policy reforms. New business registrations show uneven trends across provinces.
Domestic travel booms as Nepali New Year 2082 boosts hotel bookings nationwide
The start of Nepali New Year 2082 has led to a surge in domestic tourism, with hotels across the country nearing full occupancy. A mix of pleasant spring weather, school holidays, and official leave encouraged travel, drawing large crowds to destinations like Pokhara, Sauraha, and Nagarkot.
Popular trekking routes and religious locations saw a spike in visitors, and campaigns such as “Visit Nagarkot Year 2082” aim to maintain momentum. However, challenges in air travel and tourism infrastructure continue to pose long-term concerns.
Indian investments dwindle as political uncertainty, policy gaps persist
Indian foreign direct investment (FDI) in Nepal, once robust, has significantly declined—except in the hydropower sector—due to political instability, regulatory hurdles, and intellectual property issues.
A report from the Nepal-India Chamber of Commerce and Industry highlighted these challenges, noting that firms like Dabur Nepal and ITC have faced bureaucratic and legal obstructions.
While India remains Nepal’s largest investor, its interest has waned, with China increasingly stepping in. Reforms are urgently needed to restore Indian investor confidence.
Nepal Airlines clears over Rs 530 million in aircraft loan repayments
Nepal Airlines Corporation repaid over Rs 530.9 million in aircraft loan installments at the end of Chaitra 2081.
The payments covered dues for two narrow-body planes and partial dues for two wide-body planes.
Spokesperson Subash Dangi said the loans were taken from the Employees Provident Fund and Citizen Investment Trust. Under current management, total repayments have reached Rs 7.39 billion by Chaitra’s end.
Shesh Ghale to develop luxury resort in Bhaktapur’s Gundu area
Former NRNA President Shesh Ghale, in collaboration with Amrit Ratna Shakya of Summit Hotel, is launching a luxury five-star “Swanig:” Resort in Gundu, Bhaktapur. The resort, spread over 100 ropanis, will feature 60 villas and promote Nepali culture and wellness tourism.
Estimated at NPR 6 billion, the project aims to be completed in three years and will target affluent tourists.
Nepal Rastra Bank elevates three senior officials to Executive Director roles
Three senior directors at Nepal Rastra Bank have been promoted to Executive Director status. Chet Prasad Uprety, Roshan Kumar Sigdel, and Dr. Ramsharan Kharel were all elevated from Officer First Class to Officer Special Class.
Uprety will serve in the Non-Bank Financial Institutions Supervision Department, Sigdel in Assets and Services Management, and Dr. Kharel in Banks and Financial Institutions Regulation.
Economic reform panel proposes major overhaul for post-pandemic recovery
A high-level commission led by former Finance Secretary Rameshwor Khanal has submitted a sweeping economic reform plan aimed at long-term recovery post-COVID. The proposals focus on private sector development, job creation, and improving fiscal stability.
Key suggestions include eliminating outdated laws, improving public enterprises, and cutting bureaucratic red tape. The panel also emphasized integrating Nepal’s economy with global markets to sustain growth and competitiveness.
20th Fewa New Year Festival kicks off in Pokhara to attract tourists
Pokhara has launched the 20th Fewa New Year Festival to mark the start of 2082 and boost tourism. Organized by the Hotel Association Pokhara, the event began Saturday and will continue for three days, with Lakeside roads closed for festivities.
Pokhara Mayor Dhanraj Acharya, who inaugurated the festival, emphasized the city’s appeal in terms of nature, adventure, and culture, urging tourism businesses to help visitors discover these unique qualities.
Budget constraints stall six major road projects in Myagdi
Six ongoing road upgrade projects in Myagdi under the Gandaki Province government have been suspended due to funding shortages. Contractors halted operations despite having completed up to 50% of some works, including the Beni–Pakhapani and Darbang–Dharapani roads.
Officials revealed that the annual budget has been depleted, leaving Rs 139 million in unpaid dues. Lawmakers criticized scattered budget allocations and called for better prioritization to avoid delays.
Nagdhunga Tunnel work resumes under police protection after local blockade
Construction of the Nagdhunga–Sisnekhola tunnel has resumed after a 28-day suspension caused by local protests. Residents from Chandragiri Municipality–2 had stopped work from Chaitra 3, citing unmet demands.
Despite earlier agreements, residents continued blocking access. After repeated efforts to negotiate failed, authorities resumed work with police protection.
Senior Engineer Sanjay Panthi said officials had forwarded the new demands and reopened work with support from the District Administration.
Karnali Province begins selecting projects for Rukum West
Karnali Province has started selecting development projects for Rukum West through the Project Bank process.
A local committee, with input from representatives and technical offices, proposed initiatives for the next fiscal year.
Among the recommended projects are 206 from the Forest Division, 69 from Industry and Consumer Protection, and several from agriculture and livestock sectors. These will now be submitted for provincial government approval.
Sagarmatha Lumbini Insurance proposes 15% dividend with tax deduction
Sagarmatha Lumbini Insurance has proposed a 15% cash dividend for shareholders, including tax deductions, for the previous fiscal year. The board’s decision, made on Chaitra 28, requires approval from the Insurance Board and ratification at the upcoming AGM before it is disbursed.
Unseasonal rain devastates wheat crops in Banke
Unseasonal rainfall has severely damaged wheat crops in Banke district, with farmers expressing concern over their losses. Surya Lal Yadav from Dudhua Rural Municipality reported that the rain destroyed ready-to-harvest wheat and impacted even unharvested crops.
Farmers are now calling for government support or compensation for the damage.
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