KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economic and governance landscape presents a complex picture marked by sluggish capital expenditure, market volatility, and increased regulatory interventions.
The NEPSE index continued its downward trend for the fifth straight day, reflecting investor uncertainty despite gains in specific sectors like tourism. Falling gold and silver prices further highlighted shifts in domestic economic sentiment.
Meanwhile, the government’s capital expenditure remains critically low at just over 34% with only two months left in the fiscal year, raising questions about fiscal management.
The Auditor General’s report brought to light several issues, including NPR 8.65 billion in unpaid telecom dues, over NPR 100 million in idle medical equipment in public hospitals, and controversial tax exemptions worth Rs. 100 billion granted to industrialists.
High-profile developments such as the NPR 3.21 billion corruption case against a former minister, irregular hiring at the SEZ, and questions over dividend tax exemptions in corporate mergers point to rising scrutiny of institutional practices.
In parallel, Prime Minister Oli’s commitment to merit-based appointments and the Revenue Advisory Committee’s call for broader taxation underscore efforts toward governance reform.
On the infrastructure front, the signing of a Rs. 15.19 billion investment deal for the Marsyangdi Hydropower Project and JICA’s tentative grant for BP Highway reconstruction signal continued momentum in development projects.
While initiatives like Mahabharat Rural Municipality’s clean audit offer a model of financial discipline, budget preparation in Gandaki Province is being hampered by political tensions.
Private sector expansion, such as LIC’s dividend announcement, Arya Hotel’s launch in Thamel, and Garima Bank’s branch openings, shows that despite systemic challenges, business confidence and long-term investment continue to grow.
Nepal stock market drops for fifth day in a row
The Nepal Stock Exchange (NEPSE) index fell by 8.41 points on Thursday, ending the week at 2,611 points, continuing its losing streak for the fifth straight session.
Although the market declined overall, 82 companies posted gains, 164 declined, and one remained unchanged. Daily trading volume dropped to NPR 7.08 billion from NPR 8.73 billion. The Hotel and Tourism sector rose 4.91%, buoyed by strong quarterly earnings, while the Trading sector edged up 0.70%. Development banks saw the sharpest fall, down 2.12%.
Gold price falls by Rs. 3,500 per tola in domestic market
The price of hallmark gold dropped by Rs. 3,500 per tola on Thursday, reaching Rs. 181,800. Silver also saw a decrease, falling from Rs. 1,960 to Rs. 1,925 per tola, according to the Federation of Nepal Gold and Silver Dealers Association.
Nepal Oil Corporation slashes fuel prices
The Nepal Oil Corporation (NOC) has announced a reduction in the prices of petrol, diesel, and kerosene. According to NOC, the price of petrol has been lowered by Rs. 1, while the prices of diesel and kerosene have been reduced by Rs. 3 per litre. The revised prices came into effect from today.
CIAA files NPR 3.21 billion corruption case against Mohan Basnet, others
The Commission for the Investigation of Abuse of Authority (CIAA) has filed a corruption case against Nepali Congress lawmaker and former minister Mohan Bahadur Basnet and 15 others.
The case, filed in the Special Court, seeks NPR 3.21 billion in penalties. They are accused of misconduct during the procurement of the Telecommunication Traffic Monitoring and Fraud Control System (TERAMOX) while Basnet was in office.
PM Oli says NRB governor appointment will be based on merit
Prime Minister KP Sharma Oli has emphasized that the next Governor of Nepal Rastra Bank will be selected purely on merit. Speaking at the launch of the Former Planners Forum Nepal, Oli stated that the appointment would prioritize competence over personal loyalty, highlighting that efficient leadership benefits the entire nation.
Revenue advisory committee submits tax reform report to Finance Minister
The Revenue Advisory Committee has presented its report to Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel. The report, delivered by committee chair and Revenue Secretary Dinesh Kumar Ghimire, suggests widening the tax base, introducing digital services tax, improving data management for international providers, and taxing sectors like real estate.
Capital spending reaches only 34% with two months left in fiscal year
Government capital expenditure has reached just 34.16% of the allocated NPR 352.35 billion budget with only two months remaining in the fiscal year. As of Baisakh’s end, NPR 120.37 billion had been spent.
Total government spending stood at NPR 1.157 trillion, including 67.79% in current expenses and 71.96% in financial management, according to the Office of the Financial Comptroller General.
Telecom industry owes NPR 8.65 billion in unpaid dues
Nepal’s telecom sector owes around NPR 8.65 billion in unpaid fees, as reported in the 62nd Annual Report of the Auditor General. Auditor General Toyam Raya presented the report to President Ram Chandra Paudel. Though the companies involved—believed to be United Telecom and Smart Telecom—weren’t named directly, the report calls attention to the challenge of recovering these large sums.
SEBON asks IPPAN to submit proof of commission demands in IPO process
The Securities Board of Nepal (SEBON) has asked the Independent Power Producers’ Association, Nepal (IPPAN), to provide evidence supporting its claims that SEBON officials demanded commissions for approving hydropower IPOs. While SEBON awaits documentation, IPPAN Secretary-General Balram Khatri said he had no knowledge of the letter and believed the issue had already been resolved.
DPM Singh says parliament building extension hinges on action plan
Deputy Prime Minister and Urban Development Minister Prakash Man Singh stated that the deadline for completing the Federal Parliament Building will only be extended if a concrete and actionable plan is submitted. His remarks followed a review meeting with a parliamentary oversight committee monitoring national directives and responsibilities.
Investment deal signed for 90 MW Marsyangdi Hydropower Project
An agreement to finance the 90 MW Marsyangdi Semi-Reservoir Hydropower Project was signed on May 14. The project, to be built by M.A. Power Pvt. Ltd., spans three districts along the Marsyangdi River. Kumari Bank leads the financing consortium, which includes multiple banks and financial institutions investing a total of Rs. 15.19 billion.
Auditor General questions tax relief on dividends from mergers
Concerns have been raised by the Office of the Auditor General regarding tax waivers given on dividends issued to shareholders of merged companies. Although such dividends are tax-exempt for two years post-merger under the Income Tax Act 2058, the auditor recommends a closer look at tax compliance, especially for shareholders of acquiring and newly formed entities.
JICA agrees in principle to fund BP Highway repair
The Japan International Cooperation Agency (JICA) has tentatively agreed to provide a grant of 2.8 billion Japanese Yen (approx. NPR 2.59 billion) to reconstruct a damaged segment of the BP Highway. Talks are ongoing with Nepal’s Ministry of Physical Infrastructure and Transport to finalize project responsibilities, land issues, and environmental assessments.
Auditor General flags irregular SEZ staff appointments
The Office of the Auditor General has questioned the recruitment process at the Special Economic Zone Authority (SEZ), noting that temporary and contract-based hires replaced the mandated civil service posts. The 62nd annual report revealed that 18 people were hired for just five approved positions, breaching legal requirements under the SEZ Act, 2016 and the Civil Service Act, 1993.
LIC announces dividends for shareholders
Life Insurance Corporation (LIC) has declared a 10.526% dividend from last year’s profits. This includes a 10% bonus share and a 0.526% cash dividend to cover taxes. The distribution awaits approvals from the Insurance Regulatory Authority and the company’s next general meeting.
Government grants Rs. 100 billion in tax waivers to industries last year
The Auditor General’s latest report reveals that the government offered industrialists tax exemptions totaling Rs. 100 billion in fiscal year 2080/81 BS. Of this, Rs. 79.87 billion came from customs duty waivers. These exemptions were legally allowed under various provisions of the Finance Act, 2080.
Millions in medical equipment unused in public hospitals
Government hospitals are leaving expensive medical equipment idle, leading to wasted resources. The Auditor General’s report highlights unused ventilators and diagnostic devices worth over NPR 100 million across multiple hospitals, including Koshi Hospital and BP Koirala Institute of Health Sciences.
Gandaki Province drafts budget amid political tensions
The Gandaki provincial government is preparing a new budget under scrutiny, as previous infighting and delays have disrupted fiscal planning. Despite prior disagreements, the ruling coalition of Nepali Congress and CPN-UML aims to present a categorized and priority-based budget for the upcoming fiscal year.
Mahabharat Rural Municipality reports zero irregularities
Mahabharat Rural Municipality in Kavrepalanchok has achieved a clean audit with no financial irregularities reported. The Auditor General credited this to strict adherence to procurement laws, regular employee training, and a collective culture of compliance, making it an outlier among 753 local units.
KMC Automobiles wins bid to supply vehicles to Supreme Court
KMC Automobiles Pvt. Ltd. of Jhamsikhel has secured a contract to deliver 61 vehicles to the Supreme Court for NPR 200.7 million. The court selected the company based on the lowest evaluated and responsive bid under public procurement law. Each vehicle costs NPR 3.395 million, including VAT.
Arya Hotel & Spa opens in Thamel showcasing Nepali culture
Arya Hotel & Spa, a cultural boutique hotel reflecting Nepali art and traditions, has opened in Thamel. Owned by Krishna Simkhada, a Non-Resident Nepali who lived in Japan for 25 years, the hotel aims to tap into Nepal’s growing tourism sector.
Garima Development Bank opens new branches in Syangja
Garima Development Bank has launched new branches in Biruwa and Arjun Chaupari of Syangja district. Local government representatives and bank officials jointly inaugurated the branches, which aim to improve financial services for residents and businesses.
Comment