KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s recent economic developments reflect a mix of fiscal underperformance, sector-specific pressures, and cautious optimism. Capital budget absorption remains critically low, with only 31.9% spent by 22 ministries just a month before the fiscal year ends—highlighting persistent inefficiencies in public spending.
Simultaneously, financial markets show volatility, as the NEPSE index dipped and gold prices dropped sharply, while traders lobbied against a new luxury tax. Structural issues continue to strain key sectors: foreign aid has declined, internal revenue generation remains weak at provincial levels, and infrastructure projects like the Golbazar–Lagadi–Gadiyani road face long delays.
However, foreign direct investment has crossed Rs 60 billion, energy exports are up with monsoon-driven hydropower production, tourism is rebounding with over 500,000 arrivals in five months, and hotel investments are booming in Rupandehi—signaling targeted growth areas amid broader economic challenges.
NEPSE index drops by 3.90 points amid sharp decline in trading volume
On Tuesday, the Nepal Stock Exchange (Nepse) index fell by 3.90 points, closing at 2,654 points. The total trading volume also decreased significantly, from NPR 13.18 billion the previous day to NPR 7.65 billion. Despite the overall market downturn, 99 companies saw their share prices rise, while 148 experienced declines. The microfinance sector led the gains with a 1.10% increase, followed by the hydropower and trading sectors, which rose by 0.27% and 0.11%, respectively.
Gold price drops by Rs 2,500 per tola in a single day
On Tuesday, the price of gold fell by Rs 2,500 per tola, settling at Rs 195,000 from the previous day’s Rs 197,500. This marks a notable dip from the all-time high of Rs 197,900 recorded on April 22. Silver also declined, dropping Rs 5 to Rs 2,160 per tola.
Gold and silver traders urge PM Oli to reconsider 2% luxury tax in budget
Leaders of gold and silver trade associations have met with Prime Minister KP Sharma Oli to request the removal of the proposed 2% luxury tax on gold and silver transactions in the upcoming fiscal year’s budget. They argue that the tax would severely impact their businesses and have urged the government to reconsider its implementation.
Govt decides to privatize failing and closed public enterprises
The government has decided to privatize or form public-private partnerships for seven major state-owned enterprises under the Ministry of Industry, Commerce, and Supplies that have been operating at a loss or have been closed. This decision aims to improve efficiency and reduce the financial burden on the state.
Over Rs 60 billion in FDI pledged in first 11 months of FY 2024/25
Nepal received foreign direct investment (FDI) commitments totaling NPR 60.60 billion during the first 11 months of the fiscal year 2024/25. Of the 717 projects, half of the investment, amounting to NPR 30.44 billion, was directed towards the services sector.
NRB governor warns of immediate action against banks involved in fraud
Dr. Biswo Nath Poudel, Governor of Nepal Rastra Bank, has issued a stern warning that any bank found engaging in fraudulent activities will face immediate punitive measures. He emphasized the central bank’s commitment to protecting public assets and ensuring that banking services are accessible to a broader population.
IPPAN accuses finance minister of undermining energy sector via backdoor PPA clause
The Independent Power Producers Association, Nepal (IPPAN), has accused Finance Minister Bishnu Paudel of attempting to weaken the energy sector by including a “take-and-pay” Power Purchase Agreement (PPA) clause in the upcoming fiscal year’s budget without consultation with the Ministry of Energy. IPPAN claims this move bypasses standard procedures and could harm the sector’s development.
Foreign aid to Nepal declines by Rs 61 billion over four years
Over the past four years, foreign aid to Nepal has decreased by approximately Rs 61 billion, encompassing both concessional loans and grants. This decline is attributed to the government’s limited capacity to utilize allocated funds and weak project implementation performance.
Melamchi water to flow in Kathmandu even during monsoon this year
The government has taken measures to ensure the continuous supply of Melamchi water to Kathmandu residents during the monsoon season by blending it with water from the nearby Ribarma River. This initiative aims to prevent the disruptions experienced in previous years due to high turbidity caused by rainfall.
One year of RBC implementation in insurance: Progress, challenges discussed
An interaction program was held in Kathmandu to review the first year of implementing Risk-Based Capital (RBC) regulations in Nepal’s insurance industry. The event focused on assessing achievements, identifying challenges, and gathering feedback from insurers to shape the future roadmap for RBC implementation.
Banks disburse Rs 368 billion loans in first 10 months of current fiscal year
Banks and financial institutions in Nepal have disbursed loans totaling NPR 368.68 billion during the first 10 months of the fiscal year 2024/25. This represents a 7.3% increase compared to the same period last year but falls short of Nepal Rastra Bank’s target of NPR 682 billion for the year.
Electricity production surges with monsoon; Nepal begins exporting 350 MW daily
With the onset of the monsoon, run-of-the-river hydropower projects in Nepal have ramped up electricity production. The surplus electricity, averaging 350 megawatts daily, is being exported to neighboring countries, marking a significant step in Nepal’s energy sector development.
Only 31.9% of capital budget used by 22 ministries with one month left in fiscal year
With just a month remaining in the fiscal year, only 31.9% of the capital budget allocated to 22 development-oriented ministries has been spent. Among them, 19 ministries have used less than half of their allocated funds, while the remaining three have spent under 55%. The Ministry of Physical Infrastructure and Transport leads with Rs 75.92 billion (54.25%) spent from its Rs 140 billion allocation for FY 2081/82 (2024/25).
Hike in customs duty on MS wire rod hits iron industries hard
Industrialists have expressed concerns over the recent increase in customs duty on the import of MS wire rods from 5% to 10%. They argue that this hike negatively affects over two dozen iron-based industries, particularly those involved in manufacturing iron mesh and related products, and claim the policy favors only a few sectors.
Energy producers may soon get direct market access under new NEA transmission policy draft
The Electricity Regulatory Commission has prepared a draft of the “Open Access Directive,” which would allow energy producers to sell electricity directly to consumers using Nepal Electricity Authority (NEA)’s transmission lines. Consultations with relevant stakeholders are underway to finalize the policy.
Over 500,000 foreign tourists arrived in Nepal in first five months of 2025
Nepal welcomed 501,264 foreign visitors between January and May 2025, according to data from the Nepal Tourism Board. Monthly tourist arrivals were: 79,991 in January, 96,880 in February, 121,800 in March, 116,490 in April, and 86,216 in May—showing a consistent flow of international tourists into the country.
Kalika Municipality records lowest audit irregularities in Chitwan
Kalika Municipality in Chitwan has reported the least amount of audit irregularities among the district’s seven local governments, as per the annual audit report from the Office of the Auditor General. The report highlights the municipality’s comparatively strong financial discipline.
All provinces face challenges in increasing internal revenue
All seven provincial governments unveiled their budgets for fiscal year 2025/26 on Sunday, identifying federal grants, revenue sharing, and carry-forward funds as their primary income sources. Despite setting targets to boost internal revenue, provinces continue to struggle due to limited authority and capacity to broaden their revenue base.
Hotel investment surges in Rupandehi with focus on Indian tourists
Hotel construction in Rupandehi has surged following the opening of the international airport in Bhairahawa. The boom targets Indian pilgrims and tourists visiting Lumbini and traveling to destinations like Pokhara, Muktinath, Chitwan, and Kathmandu. Once concentrated in Butwal, Bhairahawa, and Lumbini, hotel investments now span the entire district, covering a range from budget to luxury accommodations.
Golbazar–Lagadi–Gadiyani road remains incomplete after five years
Construction on the 28-kilometer Golbazar–Lagadi–Gadiyani road has remained unfinished for nearly five years, despite being scheduled for completion within two. Connecting Siraha Municipality, Arnama Rural Municipality, and Golbazar Municipality, the prolonged delay has left residents dealing with persistent dust and mud issues.
Relekhola hydropower project in Myagdi linked to national grid
The 6 MW Relekhola Hydropower Project, built in Narchyang, Annapurna Rural Municipality-4 of Myagdi, has started supplying electricity to Nepal’s national grid. Developed by Hyum Consult Pvt. Ltd., the project began generation after successful internal testing of its systems and transmission infrastructure.
Ministers discuss low spring paddy prices following farmer complaints
After farmers raised concerns about not receiving fair prices for Chaite Dhaan (spring paddy), a meeting was held between Agriculture Minister Ramnath Adhikari and Industry Minister Damodar Bhandari. Discussions focused on reasons behind the low prices, rice imports from India, and current stock levels of paddy and rice in the country.
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