KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economy is showing mixed and often conflicting signals, with the government pushing new financing instruments such as Rs 3 billion in savings bonds even as structural weaknesses intensify across sectors. Senior policymakers—including the finance minister and NRB governor—warn that policy instability, excessive borrower blacklisting, weak credit demand, and poor investor confidence are constraining growth, prompting calls for regulatory reforms and a more supportive business environment.
Provincial data reflect uneven performance: Lumbini’s industrial capacity has declined, Gandaki’s service-sector lending is falling despite heavy tourism exposure, and agricultural output in Makawanpur is weakening due to land loss and ecological stress. Governance lapses are evident in stalled infrastructure—exemplified by the eight-year delay on the Kobang–Jomsom road—and in rising land encroachment in Bardiya, while Nepal Telecom’s billing system tender remains stuck amid investigations.
Meanwhile, financial indicators show selective strengths, including a 22% rise in life-insurance premiums and steady dividend announcements from development banks. With Nepal approaching LDC graduation in 2026 amid political unrest, economic fragility, and institutional shortcomings, experts warn that without decisive reforms and stability, the country risks entering the post-LDC phase without adequate resilience.
Government issues Rs 3 billion in savings bonds with attractive five-year rates
The Public Debt Management Office has launched two new five-year savings bonds: the Citizen Savings Bond-2087 worth Rs 2.5 billion and the Foreign Employment Savings Bond-2087 worth Rs 500 million. Applications are open until December 11, with interest rates set at 6.5% and 7.5% respectively. Interest will be paid semi-annually, and both Nepalis and NRNs can apply through the DOMS system or the investor portal. Deputy Secretary Prakash Pudasaini said applications worth Rs 800 million have already been received, noting the bonds will be issued on a first-come-first-served basis. The bonds are tradable, easily liquidated, and accepted as collateral.
Finance Minister stresses need to safeguard market-oriented liberal economy
Finance Minister Rameshore Khanal has warned that Nepal’s economic structure is gradually shifting due to policy instability and political pressures. Speaking at an NRB seminar marking the 100th birth anniversary of former governor and finance minister Dr. Yadav Prasad Pant, he said external and internal pressures continue to disrupt the economy. He pointed out that industrial output is shrinking while services and production sectors are expanding, but expressed confidence that improved loan disbursement could help achieve targeted growth. Former finance ministers Prakash Chandra Lohani, Yubraj Khatiwada and Rup Jyoti also urged strengthening domestic production, reducing political interference and promoting entrepreneurship.
NRB governor questions “unreasonable” 150,000 blacklisted borrowers
Nepal Rastra Bank Governor Dr. Bishwonath Poudel has criticized the blacklisting of more than 150,000 individuals in a country with only around one million entrepreneurs, calling the figure “unreasonable.” Speaking at CBFIN’s sixth AGM in Kathmandu, he said that criminalising cheque bounce may have contributed to the problem and noted that the central bank is assessing whether excessive blacklisting is dampening credit demand and worsening liquidity at BFIs. He pledged reforms to loan-loss provisioning and other regulatory hurdles. CBFIN Chair Upendra Poudyal and other leaders highlighted the need for recapitalisation support, increased SME and agriculture lending, improved financial access, and better policies to strengthen the financial sector.
NRB governor says solutions being explored for blacklisted entrepreneurs, calls for better business climate
Governor Dr. Bishwonath Poudel stated during a CBFIN event that the central bank is working to address challenges faced by blacklisted entrepreneurs. He said investor confidence has weakened and emphasised that strict punitive measures alone cannot foster entrepreneurship. Poudel hinted at revising the loan-loss provisioning framework and aligning future policies with global standards. He added that smaller operational tasks currently handled by NRB will soon be transferred to BFIs, and reaffirmed the bank’s commitment to digitalisation and improving the overall business environment.
Nepal Telecom billing system tender halted amid delays and ongoing probe
Nepal Telecom’s tender for a new billing system—originally involving Huawei and other global companies—has been suspended due to “special circumstances.” Although Huawei passed the technical evaluation, the financial bid opening scheduled for Aswin 29 was postponed. The Ministry of Communications and IT has formed a seven-member committee to investigate the process. Meanwhile, the current AsiaInfo-operated system, extended through September 2027, continues to face technical issues. Acting MD Sabina Maske noted that at least 24 months are required for a full system migration, leaving only 22 months before the current contract expires. Supreme Court orders have ensured safeguards to prevent conflicts of interest and data misuse during the tender process.
Lumbini’s industrial capacity utilisation falls to 50.6%, NRB report shows mixed economic signals
Industrial capacity utilisation in Lumbini Province has dropped to 50.60% in FY 2024/25 from 56.36% a year earlier, according to Nepal Rastra Bank’s Provincial Economic Activities Study. Among 28 industries surveyed, synthetic fabric production rose by 170.77%, while aluminium product output plunged by 67.01%. Industrial lending grew by 6.93%, with agriculture, forestry and beverage industries receiving the most credit. Employment dipped slightly to 4,988 workers. Lumbini’s economic growth is estimated at 4.70%, contributing 14.23% to national GDP. Tourism indicators declined significantly, while crop and livestock production improved despite reduced agricultural lending.
Mustard fields brighten Makawanpur, but farmers warn of declining yields
Mustard fields across Makawanpur—including Hetauda, Hatiya, Harnamadi, Padampokhari, Suping, Bakaiya, Bagmati, Manahari and Makawanpurgadhi—are in full bloom, transforming the landscape with golden hues. Farmers say the bright flowers, buzzing bees and clear skies have created a lively rural atmosphere. However, production has dropped compared to last year. Farmer Narayan Ghimire attributes the decline to reduced farmland caused by rapid urbanisation and excessive pesticide use, which has reduced bee activity critical for pollination.
Encroachment attempts increase on Cotton Development Committee land in Bardiya
Encroachers have again targeted three bighas of Cotton Development Committee land in Durgapur, Madhuwan Municipality-8, Bardiya. Over the past five months, two major attempts were made to seize the land after the municipality removed protective fencing while constructing a road, cutting down 27 sagun and sissoo trees in the process. On October 31, more than 150 people associated with the Nepal Shuddha Landless Independent Party set up temporary shelters to occupy the area. Executive Director Birendra Raj Parajuli said weak municipal coordination has intensified the problem. The committee, established in 1980, owns 1,320 bighas across Bardiya, Banke and Dang, much of which remains vulnerable due to longstanding land disputes and squatter issues.
Life insurance premiums rise nearly 22% in Q1, Bagmati tops provincial share
Life insurance premiums grew by almost 22% in the first quarter of FY 2082/83, with Bagmati Province contributing the largest share. Bagmati’s share rose by 2.96 percentage points to 46.07%, while the remaining provinces saw slight declines of 0.08% to 0.82%. All provinces, however, posted double-digit growth, averaging 17.89%. Bagmati recorded the highest rise at 30.32%, followed by Karnali at 18.56%. Growth was primarily driven by a 28% increase in first-year premiums. By mid-Ashoj, life and micro-life insurers had collected Rs 50.37 billion in total premiums, including Rs 10.66 billion in first-year contributions.
Six development banks declare dividends for FY 2081/82
Six NEPSE-listed development banks—Shine Resunga, Mahalaxmi, Miteri, Garima, Muktinath and Kamana—have announced dividends for FY 2081/82. Miteri declared a 10% cash dividend and scheduled its AGM for Mangsir 6. Garima declared 10.53% (6% bonus, 4.53% cash) and held its 19th AGM on Kartik 27. Muktinath announced 18.2% (13.53% bonus, 4.67% cash), while Kamana declared 15.7895% (10% bonus, 5.7895% cash). Shine Resunga and Mahalaxmi declared 13% and 10.37% respectively, with both including bonus and cash components. Book-close dates for some banks are yet to be announced.
Experts urge reconsideration as Nepal nears LDC graduation amid instability
Nepal is expected to graduate from the UN’s Least Developed Country category in November 2026, but recent Gen Z–driven protests have exposed serious political and economic vulnerabilities. Demonstrations triggered by a social media ban escalated into broader unrest against corruption and unemployment, damaging infrastructure and shaking investor confidence. With Nepal set to lose concessional loans and preferential trade benefits after graduation, experts warn that current instability, weak institutions and slowing economic growth could hinder a smooth transition. Some argue that Nepal should request a deferral, as Bangladesh previously did, to stabilise governance and build resilience before graduation.
Tourism dominates bank lending in Gandaki, but total investment continues to fall
Loan data shows that tourism remains the largest beneficiary of bank lending in Gandaki Province, with hotel and tourism investment exceeding one trillion rupees. However, overall annual lending is declining. Service-sector loans dropped by 0.07% this year to Rs 1 trillion 11 billion 55 crore, following a 0.24% decline last year. Service-sector loans account for 31.26% of total provincial lending, with wholesale and retail trade receiving 52.58%, tourism 21.42%, finance–insurance–real estate 18.49%, transport–storage–communication 3.85%, and other services 3.65%. While lending to finance–insurance–real estate increased by 23%, transport–storage–communication loans fell by 9.65%.
Kobang–Jomsom road section delayed for eight years due to contractor issues
The Kobang–Jomsom section of the national pride project connecting north–south Nepal has remained unfinished for eight years because of contractor delays. On the 74-kilometre Beni–Jomsom road, nearly 17 kilometres in this section remain incomplete, despite the Ghansa–Upper Mustang stretch being paved. The road, part of the Kali Gandaki Corridor, was awarded in FY 2073/74 to the Pappu–Gaudi–Parvati–Koshi & Nyaupani JV for Rs 70 crore to build an 11-metre-wide asphalt road. While initial work progressed, construction soon stalled. Authorities have begun disciplinary action against the contractor for prolonged non-performance.
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