KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
In the aftermath of the Gen Z-led protests, Nepal is cautiously transitioning back to normalcy under a new interim government, but the economic and institutional impacts remain significant. While foreign direct investment has shown a slight improvement and financial operations are gradually resuming, major sectors like tourism and tea exports have incurred heavy losses, and inflation is burdening consumers ahead of the Dashain festival.
Reconstruction of damaged infrastructure is underway, and the government is attempting to stabilize key economic functions—including revenue collection, payments, and market liquidity—amid ongoing challenges such as a persistent trade deficit and delayed IPOs. The private sector is showing resilience, but sustained recovery will depend on political stability, swift policy reforms, and coordinated efforts between public institutions and industry stakeholders.
Foreign direct investment sees slight improvement
Foreign Direct Investment (FDI) into Nepal has seen a modest uptick, signaling cautious optimism. Despite the increase, the country continues to face hurdles in drawing significant international investment. In response, the government is working on policy reforms aimed at improving the investment climate, particularly in sectors such as hydropower, tourism, and technology.
Finance ministry resumes partial services after unrest
The Ministry of Finance has begun restoring operations following damage during the protests. Although some departments are currently offering only limited services, a spokesperson confirmed that key financial systems, including those for budgeting and taxation, remain secure and operational. Customs services are available again, while the Inland Revenue Department is continuing services online. The ministry is currently evaluating the full extent of the damage.
Normalcy returns as Nepal recovers from unrest
Nepal is slowly regaining a sense of normalcy as former Chief Justice Sushila Karki takes charge as the interim prime minister. With curfews now lifted, stability is beginning to return. The interim government faces the dual challenge of restoring peace and reviving the economy. Earlier claims of Rs 3 trillion in losses and 10,000 jobless individuals remain unconfirmed and appear to be based on unverified or anecdotal sources. Verified economic impacts are currently limited to tourism-related figures.
Protest victims recognized as martyrs; relief announced
One of Prime Minister Sushila Karki’s first decisions in office was to officially recognize those killed in the recent Gen Z-led demonstrations as martyrs. She also authorized free medical treatment for the injured and pledged financial assistance of Rs 1 million to each bereaved family.
Government resumes payments and revenue operations
The Ministry of Finance has confirmed that government payment systems resumed on Sunday. Most customs and tax offices are now operational, although some remain closed due to extensive damage. With payment systems back online, government employees are assured of receiving their salaries before the Dashain holiday. As of Saturday, government revenue collections totaled Rs 146.92 billion. However, the FNCCI has warned that damage to the private sector may hinder the government’s ability to meet its revenue goals.
New leadership vows to aid private sector recovery
Expressing sympathy for the damage to public and private assets during the protests, Prime Minister Karki has promised government support for affected businesses. She stated that the government is ready to provide soft loans and other forms of assistance to help companies recover. She commended business owners for their determination to rebuild despite the significant losses incurred.
Dashain currency exchange proceeds despite earlier uncertainty
Nepal Rastra Bank has begun distributing new and clean banknotes for the upcoming Dashain festival, with the exchange running through September 26, 2025. Despite concerns following recent protests, the bank confirmed that operations were not disrupted. Currency can be exchanged at the Thapathali-based Currency Management Department and provincial offices of the central bank.
Stock market responds to political developments
The Nepal Stock Exchange has shown sensitivity to political events in the past. While some research indicates quick market corrections, a Nepal Rastra Bank study found that instability can lead to abnormal returns and market volatility. The recent change in government has fueled investor speculation about potential policy shifts that may affect share prices and trading volumes in the coming days.
Central bank to inject liquidity into banking system
Nepal Rastra Bank is planning to invest Rs 1.2 billion in fixed deposits across various financial institutions, using funds from its pension and gratuity reserves. Applications are open until September 15. Of the total amount, Rs 1.04 billion will go to Class “A” commercial banks, Rs 195 million to Class “B” development banks, and Rs 65 million to Class “C” finance companies.
Insurance regulator orders firms to resume full operations
The Nepal Insurance Authority has instructed all insurance companies to fully resume operations starting Sunday. With the security situation improving and curfews lifted, the regulator emphasized the need for branch offices and headquarters to operate at full capacity. The Authority had earlier directed companies to expedite insurance claim settlements for damages caused during the protests on September 8 and 9.
Gold retreats from record high as silver edges upward
Gold prices in Nepal have fallen by Rs 700 per tola from Friday’s all-time high, now trading at Rs 215,100 per tola, according to the Federation of Nepal Gold and Silver Dealers’ Association. In contrast, silver prices increased by Rs 5, reaching Rs 2,570 per tola. These changes reflect ongoing fluctuations in the global precious metals market.
Tourism industry hit hard as stakeholders look to rebuild
Nepal’s tourism sector has suffered major losses following the Gen Z protests on September 8 and 9. The Hotel Association Nepal (HAN) estimates damages exceeding Rs 25 billion, with the unrest disrupting the beginning of the peak tourist season and leading to widespread booking cancellations. Despite the financial impact, tourism leaders remain optimistic, noting the industry’s history of bouncing back from previous crises.
Local businesses reopen as stability returns
Shops and businesses across the country have resumed operations amid signs of returning normalcy. Retail chains such as Bhatbhateni are now operational in key areas. The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has urged the newly formed government to provide a stable environment to support reconstruction. The private sector is stepping up to assist with recovery efforts in regions most affected by the unrest.
Tea exports disrupted after customs office destroyed
Nepal’s tea export industry has taken a hit after protesters set fire to the Mechi Customs Office in Jhapa on September 9, destroying 25,000 kilograms of tea prepared for export to India. The Himalayan Orthodox Tea Producers Association (HOTPA) confirmed the tea belonged to five factories. Although tea processing has resumed, the loss has caused significant setbacks. In the first month of the current fiscal year alone, tea exports were valued at Rs 37.48 million.
Damaged infrastructure sees start of reconstruction
Efforts to repair public and private property damaged during the protests are now underway. The Ministry of Finance reported several of its offices were vandalized, while HAN stated that nearly 24 hotels sustained damage. These repairs will require extensive resources, and a coordinated response is being rolled out to restore key facilities and commercial buildings.
Consumer prices surge ahead of Dashain
As markets reopen, consumers are now facing rising prices for everyday essentials, just before the Dashain festival. Many low-income earners and daily wage workers, who lost income during the unrest, are struggling with affordability. The Nepal Retailers Association reported that cooking oil prices have risen by Rs 10 per liter, while pulses and legumes are up by Rs 5–10 per kilogram. Retailers claim these hikes began before the protests, but the recent disruption has worsened their impact.
Freight movement resumes at Nepal–India border
Customs clearance for freight trucks at the Nepal–India border has restarted after being stalled for several days due to security issues and staff shortages at Nepal’s customs offices. The resumption has eased the flow of essential goods into the country. Although Indian authorities had kept their side of the border open and requested support, hundreds of trucks had been stuck due to delays on the Nepali side.
Trade deficit persists despite rise in exports
Nepal’s trade deficit remains substantial, particularly with India and China. However, a recent boost in exports—mainly of processed edible oils—has helped raise total foreign trade above Rs 2 trillion in the last fiscal year. While this marks a record high, economists have expressed concerns about the country’s heavy reliance on re-exports to drive trade growth.
SY Panel Nepal delays IPO due to unrest
SY Panel Nepal Limited has postponed its upcoming share issuance for residents of Chitwan and Nepalis working abroad. The IPO was initially scheduled to begin Sunday, but the company cited the current national situation as the reason for the delay. SY Panel has asked prospective investors for patience and announced that a new date will be communicated when conditions improve.
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