KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economic landscape reflects a mix of market volatility, fiscal challenges, and ongoing infrastructure and agricultural issues. The NEPSE index slipped below 2,600 despite a rise in turnover, indicating cautious investor sentiment, while HIDCL and Reliance Spinning Mills continue to offer investor opportunities through dividends and IPOs. Persistent tax arrears of Rs 94.95 billion highlight weak revenue mobilization, even as the NRB moves to withdraw Rs 35 billion to control excess liquidity.
Structural reforms, such as the model budget law for local governments and revised foreign loan policies, aim to strengthen fiscal discipline and reduce currency risk. Meanwhile, infrastructure projects—from wildlife-friendly flyovers on the East-West Highway to delayed bridges in Achham, Bajura, and Tanahun–Chitwan—face delays and cost overruns, underscoring implementation inefficiencies.
Agricultural concerns persist, with Morang’s rice output declining, Kailali farmers selling below government prices, and Jumla promoting organic indigenous crops to sustain production. On the corporate and market front, Nepal Telecom plans standalone 5G deployment, ending its Huawei partnership, and gold prices reached record highs amid silver price declines, reflecting broader economic uncertainties and shifting investment preferences.
Share market slips below 2,600 amid Rs 4 billion turnover
The Nepal Stock Exchange (NEPSE) index fell below the psychological 2,600 level on Sunday, dropping by 12.50 points to settle at 2,594. Despite the decline, market activity improved, with total turnover rising to Rs 4 billion from Rs 3.49 billion in the previous session. The downturn was widespread, as share prices of 197 companies declined while only 56 advanced. Sectoral indices moved within a narrow range of less than 1 percent, with the banking sub-index remaining unchanged. Swastik Laghubitta and SY Panel stood out as top performers, each recording a 10 percent rise in their share prices.
Unrecovered tax arrears reach Rs 94.95 billion, excluding disputed dues
Outstanding tax arrears, including interest, penalties, and late fees, climbed to Rs 94.95 billion by the end of fiscal year 2024/25. This figure does not include an additional Rs 180.1 billion currently under dispute, either at the Inland Revenue Department (IRD) or in the courts. The IRD reported weak recovery performance in the previous fiscal year, collecting only 38.29 percent of its income tax arrears target of Rs 22.76 billion and 63.28 percent of its VAT arrears target of Rs 16.33 billion.
Gold price hits record high, silver slips
Gold prices surged to a new record on Sunday, with fine gold per tola (11.66 grams) reaching Rs 258,800, up Rs 2,200 from the previous day’s closing of Rs 256,600. The rise is attributed to delayed price adjustments during the Tihar festival and US dollar appreciation. Conversely, silver fell by Rs 80 to Rs 3,825 per tola, down from its previous record of Rs 3,905.
NRB to mop up Rs 35 billion to curb excess liquidity
Nepal Rastra Bank (NRB) has announced plans to withdraw Rs 35 billion from the banking system over a 10-day period starting Sunday, using its deposit collection instrument (DCI) through competitive bidding. The move aims to address persistent excess liquidity, with total deposits in the financial system exceeding Rs 7.5 trillion. Participation in the DCI is limited to licensed ‘A’, ‘B’, and ‘C’ class banks and financial institutions, and interest rates will be determined through bidding. The principal and accrued interest will be repaid on December 24. NRB is authorized to use this structural open market tool for managing long-term liquidity for up to six months.
Foreign loan policy revised to prevent exchange-rate losses
The Ministry of Finance has introduced a new foreign aid mobilization policy requiring procurement contracts financed by foreign loans to be denominated in the same currency as the loan agreement. The change is intended to reduce losses caused by currency fluctuations, which have in some cases turned concessional loans with 1 percent interest into effective costs of up to 6 percent. Previously, loans taken in currencies such as the Japanese yen or Chinese RMB were often disbursed in US dollars, creating costly mismatches. Under the new policy, contracts may be set in either the loan currency or Nepali rupees.
Cooperative crisis deepens as committee fails to release Rs 39.93 billion in savings
The government committee formed to resolve Nepal’s major cooperative scam has itself become dysfunctional. The Problematic Cooperative Management Committee has failed to make progress in returning Rs 39.935 billion in frozen deposits belonging to 62,760 savers. The committee has declared 27 cooperatives problematic but operations stalled after victims laid siege to the office on November 20 and 21, prompting officials to stop reporting to work. While some depositors with balances below Rs 100,000 have received refunds, most savings remain locked, leaving thousands in financial distress.
Model budget law sent to local governments to enforce fiscal discipline
The Ministry of Federal Affairs and General Administration has circulated a model law on economic procedures and financial accountability to all 753 local governments. The law requires local units to justify policies, programs, and budgets based on measurable outcomes and priorities. New capital expenditure projects must now be proposed only after approval of a feasibility study with technical and financial justification. The reform aims to end ad hoc budgeting practices, address concerns raised by the Office of the Auditor General, and promote inclusive budget planning through greater involvement of ward committees and community representatives.
Rs 14 billion wildlife-friendly flyover planned on East-West Highway
The Department of Roads plans to build two kilometers of wildlife-friendly tourist flyovers along the Narayanghat–Hetauda–Pathlaiya section of the East-West Highway using a concessional loan from the Asian Development Bank (ADB). The flyovers will be constructed in the Tikauli forest area of Chitwan and Amlekhgunj in Bara, marking the first such structures in Madhesh Province. Estimated to cost nearly Rs 14 billion, the project allows vehicles to travel above while enabling animals to pass safely underneath, aiming to reduce frequent wildlife deaths. The department has indicated it may request the ADB to convert the loan portion into a grant due to the high cost.
Minister warns of contract termination over delayed Rs 95.6 million bridge
Physical Infrastructure and Transport Minister Kulman Ghising has warned that the contract for the Ghumaune Motorable Bridge will be cancelled if construction does not resume within a month. The bridge, spanning the Trishuli River and connecting Tanahun and Chitwan, was awarded in fiscal year 2013/14 to Mrit Sanjeevani Construction Company for Rs 95.6 million. Despite an original deadline of April 2022, only about half of the work has been completed. Once finished, the 105-meter bridge will reduce travel distance from Gandaki Province to Narayangad by 23 kilometers.
Birgunj clears B.P. area to make way for Rs 700 million park
Birgunj Metropolitan City has removed more than 250 temporary vendors from the B.P. Udyan area near Ghantaghar Chowk as part of an urban management drive. Mayor Rajesh Man Singh said the operation, carried out with police support, was intended to improve order in the city’s core area. The metropolis plans to develop a green public park at the site, with an estimated budget of Rs 700 million. Displaced vendors have been relocated to designated spaces along Railway Road in Chhapakaiya.
Government removes investment cap under automatic FDI route
The government is preparing to lift the upper limit on foreign direct investment approvals under the Automatic Route, allowing investments of any size to receive online clearance within days. The reform follows commitments made during the April 2024 Investment Summit and eliminates the previous Rs 500 million cap. The forthcoming regulation, to be published in the Nepal Gazette, is based on the Foreign Investment and Technology Transfer Act, 2019, and aligns with the government’s broader economic reform agenda aimed at improving Nepal’s investment climate.
Delays push Achham and Bajura road costs up by Rs 184.9 million
Four road projects in Achham and Bajura districts have experienced cost overruns of Rs 184.9 million due to prolonged delays. Originally contracted at Rs 987.6 million, the total cost has risen to more than Rs 1.18 billion. Projects such as the Jayagadh–Majhethana–Ramaroshan and Sera–Aatichaur–Thamlek roads have seen completion rates ranging from just 43 percent to 78 percent, despite multiple deadline extensions. Sudurpaschim Chief Minister Kamal Bahadur Shah has pledged stricter monitoring and completion of 12 long-delayed projects by mid-July 2026.
Rice output in Morang drops by over 2,000 metric tons
Rice production in Morang district declined by 2,084 metric tons this year compared to last year, totaling 336,919.41 metric tons. The decrease is attributed to unseasonal rainfall in mid-Kartik that damaged crops ready for harvest. According to the Agriculture Knowledge Center, yield per hectare fell slightly to 4.85 metric tons from last year’s 4.88. Farmers have also expressed concern over falling market prices, which dropped to Rs 1,200–1,300 per man, down from Rs 1,700–1,800 last year.
Jumla hosts food fair to promote organic indigenous crops
An Agricultural Biodiversity and Food Fair was held in Jumla to encourage the cultivation, consumption, and marketing of locally grown, organic indigenous crops. Farmers from Chandannath Municipality, Pataraasi, and Tatopani Rural Municipalities displayed seeds and traditional dishes. Organized by Chandannath Municipality in collaboration with the World Food Programme and the Agriculture Development Office, the event aims to reduce reliance on market-bought food and revive local crop consumption. Officials emphasized the importance of such fairs in sustaining Jumla’s status as Nepal’s first organic district, declared in fiscal year 2007/08, despite challenges like land loss from road expansion and youth migration.
Nepal Telecom to deploy standalone 5G, ending Huawei partnership
Nepal Telecom (NT) has announced plans to implement its 5G network using the Standalone (SA) mode, which does not rely on existing 4G infrastructure. The network will be supported by a new cloud-native 5G Core. This decision effectively ends NT’s long-standing infrastructure partnership with Huawei and associated contractors such as ZTE, who built and maintain NT’s 3G and 4G networks. NT will conduct open competitive bidding for 5G technology while emphasizing a thorough review to mitigate national security risks. The operator has requested 80 MHz of 5G spectrum free of cost from the Nepal Telecommunications Authority.
Kailali farmers forced to sell paddy at below government rate
Paddy farmers in Kailali are selling their coarse rice to local traders at Rs 23 per kilogram, well below the government’s fixed rate of Rs 34.63 per kg. The Food Management and Trading Company stopped direct purchases after reaching its reduced regional quota of 35,000 quintals, down from 55,000 last year. Farmers, concerned about stored paddy spoiling, are compelled to sell quickly at low prices. Meanwhile, the Food Company has met the national quota of 170,000 quintals and is now sourcing rice from traders via tender, leading to suspicions of price manipulation.
Construction of 18 postal highway bridges delayed over funding
Eighteen bridges along the Postal Highway have stalled due to persistent budget constraints, disrupting local transport and economic activity. Although the Postal Road Project Office in Janakpurdham has submitted detailed proposals for bridges estimated at Rs 30 million each for three years, approval has not been secured. While 342.68 km of the highway has been blacktopped, residents continue to face dangerous river crossings during the monsoon. The office requires Rs 1.5 billion for road and bridge completion this fiscal year but has received only Rs 599 million.
Reliance spinning mills to issue IPO at Rs 820.80 per share
Reliance Spinning Mills will open its IPO to the general public on December 22, issuing 924,768 shares. Previously, Nepalis working abroad received 115,596 units. Using the book-building method, the public share price has been set at Rs 820.80, with a minimum application of 50 shares requiring Rs 41,040. This is the second instance of a Nepalese company using the book-building method to set its IPO price, following Shivam Cement.
HIDCL announces 3.5% dividend, totaling Rs 491.1 million
Hydroelectricity Investment and Development Company (HIDCL) declared a total dividend of 3.5% for shareholders, comprising 1.5% bonus shares and 2% cash payout, totaling Rs 491.1 million. The company’s annual general meeting is scheduled for January 5, 2026, and the shareholder register will close on December 23. Currently, the company’s share price is around Rs 266 per unit.
Comment