KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
The recent developments in Nepal’s financial and economic sectors highlight ongoing challenges and some positive shifts. The share market continues its decline, with the NEPSE index recording consecutive losses, suggesting investor concerns and market instability.
Meanwhile, the price of gold surged, reflecting a shift towards safer investments amidst market volatility. In the regulatory landscape, the Nepal Insurance Authority’s decision to align with Nepal Rastra Bank’s operational framework aims to streamline operations, offering a more unified regulatory approach.
On the banking front, the growing surplus funds at Nepal Rastra Bank reflect a slowdown in loan investments, posing concerns about liquidity management. The Auditor General’s office has raised alarms over financial mismanagement, questioning tax exemptions for export industries and the improper use of public funds by local officials, while also highlighting significant delays and inefficiencies in key government projects.
Amidst these financial challenges, sectors such as tourism, biogas distribution, and digital remittance have shown positive developments, with new appointments to the Nepal Tourism Board and the expansion of biogas infrastructure in Jhapa. These mixed outcomes reflect both the potential and the struggles facing Nepal’s economic growth and regulatory landscape.
Share market decline continues this week
The decline in the share market persisted through the final trading day of the week. After four consecutive days of losses, the NEPSE index fell by 8.41 points on Thursday, closing at 2,611.85 points, a 0.32% drop compared to the previous day.
Earlier in the week, the index had lost 12.04 points on Thursday, 12.53 points on Sunday, 14.87 points on Tuesday, and 13.96 points on Wednesday. On Thursday, 82 companies saw their stock prices rise, 164 experienced declines, and one remained unchanged. A total of 78,493 transactions occurred, with shares worth NPR 708.33 million traded, amounting to 17.42 million shares.
Gold price increases by NPR 3,000 per tola
The price of gold rose by NPR 3,000 per tola on Friday, reaching NPR 184,800 per tola for hallmark gold, according to the Federation of Nepal Gold and Silver Traders Association. The previous day, the price was NPR 181,800 per tola. Meanwhile, silver prices also saw an increase, rising from NPR 1,925 to NPR 1,945 per tola.
Nepal Insurance Authority to align with NRB’s operational framework
The Nepal Insurance Authority has decided to adopt the operational framework of Nepal Rastra Bank (NRB) for its regulatory and investigative functions starting in the upcoming fiscal year.
During its 57th anniversary celebration, Chairman Sharad Ojha announced plans to align the Authority’s tasks with the NRB’s system. The Insurance Authority currently operates under various separate directives, but these will be replaced with a single unified directive, similar to NRB’s approach.
Banks deposit more surplus funds in Nepal Rastra Bank
With a slowdown in loan investments, banks are increasing their surplus deposits at Nepal Rastra Bank. According to recent statistics, the amount currently deposited stands at NPR 3.41 trillion. Nepal Rastra Bank uses various monetary tools to withdraw these surplus funds and regulate liquidity in the banking system, taking action when capital is low.
Auditor General questions tax exemptions and benefits for export industries
The Office of the Auditor General, in its 62nd annual report, raised concerns about tax exemptions and various benefits granted to export industries. These industries receive tax breaks and additional incentives, including cash grants. The report called for a review of these benefits, suggesting that such exemptions—especially in customs value-added tax and income tax—should be reassessed according to fiscal law.
SC rejects petition challenging Bishwo Poudel’s qualifications for Governor role
The Supreme Court (SC) dismissed a writ petition challenging Dr. Bishwo Poudel’s qualifications for the role of Governor of Nepal Rastra Bank. The petition, filed by advocates Bishal Thapa and Prativa Upreti, was rejected after review, as it failed to meet registration requirements.
The petition had been filed earlier in the week but was ultimately dismissed by the court administration. Advocate Anant Raj Luitel confirmed the decision on Friday morning.
NEA Executive Director discusses power supply issues due to transmission line limitations
Hitendra Dev Shakya, Executive Director of the Nepal Electricity Authority (NEA), pointed out that although power generation is on the rise, the expansion of transmission lines has not kept pace.
In a press briefing at the NEA’s Syuichatar substation on Friday, Shakya warned that if transmission networks are not expanded quickly, even minor issues could lead to power disruptions. He stressed the importance of accelerating transmission line expansion to avoid further problems and crises.
Profits of listed life insurance companies rise by 11%
According to the third-quarter financial report of publicly listed companies, 12 life insurance companies recorded a total net profit of NPR 4.54 billion from mid-July to mid-March, an 11% increase compared to the previous year’s NPR 4.09 billion.
Nepal Life Insurance Company reported the highest profit of NPR 650 million, while Asian Life Insurance saw the largest profit growth, rising by 59% during this period.
Auditor General questions local officials about hiring personal secretaries and advisors
The Office of the Auditor General raised concerns over the hiring of personal secretaries and advisors by local officials, as no such positions or payments are authorized under the Local Officials and Members’ Benefits Act. The audit revealed that 152 local bodies hired advisors and personal secretaries, with NPR 81.23 million spent on these posts in fiscal year 2080/81.
Govt officials exploit tax exemption loopholes, causing financial losses
Government officials have been exploiting loopholes in tax exemption laws, resulting in substantial financial losses to the state. The 62nd report from the Auditor General revealed that tax exemptions were improperly granted on products where such exemptions were not permitted, leading to corruption.
This includes issues with the 15% tax exemption allowed for listed manufacturing industries in the securities market, which is not applicable to all industries.
Status of government’s transformative projects found unsatisfactory
The government’s transformative projects are reported to be in a poor state, according to the Auditor General’s 62nd Annual Report. These key projects, which include major road projects such as the Galchhi-Trishuli-Mailung-Syafrubesi-Rasuwagadhi Road and Narayanghat-Butwal Road, are intended to contribute significantly to Nepal’s development. However, the report indicates that the condition of all major projects is unsatisfactory.
Koshi Province Minister initiates campaign to clear pending advances
Bhupendra Rai, Minister for Physical Infrastructure Development and Health in Koshi Province, has launched a campaign to clear pending advances in the province’s ministries and subordinate offices.
Rai, in collaboration with the Auditor General’s Office, instructed all office heads and accounting chiefs to clear the advances. State Minister Bhumi Rajbanshi highlighted that Koshi Province lags behind other provinces in this matter and emphasized compliance with the Expenditure Act.
Slow or halted construction in 364 projects
The 62nd annual report from the Office of the Auditor General revealed that construction progress on 364 projects has either slowed significantly or completely halted. Some of these projects are partially completed, while others have not progressed at all. Out of 2,116 ongoing contracts by the Department of Roads and its subsidiaries, 355 projects worth NPR 3.01 billion remain unfinished.
NEA’s underground cable project faces delays
The underground cable project in Kathmandu Valley, initiated by Nepal Electricity Authority (NEA) in Falgun 2076 (February/March 2020), has faced multiple delays and remains unfinished. The Auditor General’s 62nd report recommends that the NEA should avoid further extensions and complete the project within the scheduled timeframe and budget.
Korala Immigration Office remains closed long after its inauguration
Despite being inaugurated by Home Minister Ramesh Lekhak on 14th Kartik 2081 B.S., the immigration office at Korala has remained closed and has not resumed operations.
The prolonged closure has negatively affected local traders, with the Nepal-side immigration office still locked and no clear timeline for reopening. Furthermore, essential services such as customs and quarantine facilities have yet to be set up at the border checkpoint.
Two government cement industries shut for privatization
Following a cabinet decision on 15th Baishakh to privatize two government-owned cement industries, both the Udayapur and Hetauda cement factories have been shut down to facilitate the privatization process. The Hetauda Cement factory ceased operations on 20th Baishakh, and the Udayapur Cement factory stopped production after exhausting its coal stock, although they are still open for cement sales.
Biogas from Jhapa to be supplied to 1,000 homes
Biogas produced in Sukedanda, Kankai-2, Jhapa, will soon be supplied to Surunga market and around 1,000 nearby homes through a pipeline. In response to a directive from Prime Minister KP Oli, the Nepal Oil Corporation (NOC) has begun a feasibility study for investing in pipeline-based gas distribution. Dr. Chandika Prasad Bhatta, NOC’s Executive Director, confirmed that the government is working to bring locally produced biogas to homes in Jhapa.
Tourism entrepreneurs appointed to Nepal Tourism Board
Kumar Mani Thapaliya and Narendra Dev Bhatta, both prominent tourism entrepreneurs, have been appointed as members of the Nepal Tourism Board. Minister for Culture, Tourism and Civil Aviation, Badri Prasad Pandey, appointed them to the board’s management committee. Thapaliya and Bhatta will serve a three-year term, filling vacancies left by Milan Devkota and Madan Acharya.
eSewa Money Transfer celebrates five years of service
eSewa Money Transfer marks its five-year anniversary, having focused on providing digital remittance services. The company has partnered with over 100 international remittance companies, allowing Nepalis in over 200 countries to send money to Nepal easily.
Bhimdatta Municipality records highest financial irregularities in Sudurpashchim Province
Bhimdatta Municipality in Kanchanpur has reported the highest financial irregularities in Sudurpashchim Province, amounting to NPR 150.168 million. According to the 62nd Audit Report by the Office of the Auditor General, Bhimdatta Municipality had an irregularity rate of 4.25%, while Mohanyal Rural Municipality in Kailali had the highest percentage of irregularities at 7.23%.
Hyundai launches new electric vehicle in Butwal-Bhairahawa
Laxmi Intercontinental Pvt. Ltd., the official distributor of Hyundai in Nepal, introduced the new electric version of the Hyundai Creta in the Butwal-Bhairahawa region. The launch event received an enthusiastic response and unprecedented participation.
The introduction of the Creta EV is expected to help customers who have been hesitant about electric vehicles to make clearer purchasing decisions. Hyundai Nepal has also started locally manufacturing the petrol-powered Creta model.
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