KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s current economic landscape presents a complex mix of progress, caution, and persistent structural issues. Despite increased trading activity in the stock market, investor sentiment appears fragile as the NEPSE index recorded a marginal dip.
Concurrently, gold and silver prices surged to record levels, signaling investor hedging and inflationary pressures. The government has intensified efforts to secure foreign loans and grants, notably for infrastructure, while development partners like ADB and JICA push for sustainable, climate-resilient growth.
However, concerns persist over poor budget utilization in provinces, inflated share mortgage lending, and weak foreign aid absorption. Regulatory interventions—from managing excess liquidity to tightening oversight on financial agreements and loan defaulters—highlight the state’s attempt to stabilize fiscal and financial systems.
Meanwhile, sector-specific initiatives like the spring paddy program and women agriculture volunteers in Madhesh underscore a growing focus on long-term self-sufficiency, though implementation capacity and accountability remain key challenges.
NEPSE index dips slightly despite 18% increase in turnover
The Nepal Stock Exchange (NEPSE) index experienced a minor decline of 1.07 points on Wednesday, closing at 2,653 points. This drop occurred despite a significant 18% rise in trading volume, with total transactions reaching NPR 9.08 billion, up from NPR 7.65 billion the previous day. Among the 248 listed companies, 88 saw their stock prices increase, 159 experienced declines, and one remained unchanged. Sector-wise, hydropower stocks led with a 0.74% gain, followed by manufacturing and processing at 0.37%, the ‘others’ category at 0.19%, and life insurance at 0.14%.
Silver hits all-time high; gold prices also surge
Silver prices in Nepal reached a new peak on Wednesday, climbing to Rs 2,225 per tola, up from Rs 2,160 on Tuesday and Rs 2,165 on Monday. Gold also saw a steep increase, with prices rising by Rs 900 per tola. The Federation of Nepal Gold and Silver Dealers’ Association set Wednesday’s gold rate at Rs 195,900 per tola, compared to Rs 195,000 the day before.
Nepal to secure NPR 51 billion in foreign loans and grants
The Government of Nepal has approved a plan to obtain NPR 51 billion in foreign loans and grants to support various development projects. The decision was made during the Cabinet meeting held on June 16. As part of this arrangement, Nepal will receive a concessional loan of NPR 20.79 billion from the World Bank for the improvement and maintenance of bridges across the country. Additionally, another NPR 29.72 billion loan from the World Bank will be used to enhance Nepal’s strategic road network and trade routes.
ADB unveils 2025–2029 strategy for Nepal focusing on green and resilient growth
The Asian Development Bank (ADB) has introduced a new Country Partnership Strategy for Nepal, effective from 2025 to 2029. The strategy emphasizes green, private sector-led, and climate-resilient development to support Nepal’s economic transformation. Its three strategic pillars include promoting employment-generating green economic transformation led by the private sector, developing quality human capital, and strengthening public services and climate-resilient infrastructure.
NRB withdraws NPR 90 billion in a single day to manage liquidity
Nepal Rastra Bank (NRB) has withdrawn NPR 90 billion from the banking system in one day to address the current liquidity surplus. This action follows previous instances where NRB has removed up to NPR 80 billion in a single day. The central bank issued a 21-day auction notice, inviting participation from banks and financial institutions, with the auction scheduled for 3 PM on Wednesday.
Nepal receives less than half of expected foreign aid over five years
Despite the government’s projections of high foreign grants in each budget, data from the Ministry of Finance indicate that Nepal has received less than half of the expected amount over the last five years. The highest aid received during this period was NPR 21.29 billion in FY 2079/80 (2022/23), still falling short of targets.
JICA team inspects 140 MW Tanahun Hydropower Project in Tanahun
A team led by Matsuzaki Mizuki, Chief of the Japan International Cooperation Agency (JICA) Nepal office, conducted an on-site inspection today of the ongoing 140 MW Tanahun Hydropower Project in Jhapatar, Rishing Rural Municipality-1, Tanahun district. JICA has invested in this hydropower project. The team reviewed the progress of construction work under packages 1 and 2, inspecting the structures at the site and holding discussions with the project chief and the chief of the project supervision consultancy. The visit aimed to monitor the project’s development and ensure its timely completion.
Electricity Regulatory Commission seeks formal approval of India power deal
The Electricity Regulatory Commission has requested the Nepal Electricity Authority (NEA) to obtain a board decision approving the Nepal–India Power Exchange Committee agreement signed on Magh 30, 2081 B.S. (February 12, 2025) by former NEA chief Kulman Ghising. NEA had resubmitted the agreement without board approval, prompting the commission to again request formal ratification. Energy Minister Deepak Khadka and current NEA Managing Director Hitendra Dev Shakya have yet to table the agreement for board approval.
Surge in share mortgage loans as other sectors stagnate
While credit expansion in other sectors has struggled, share mortgage lending has surged by 46% in the past year, according to Nepal Rastra Bank. As of mid-April last year, banks and financial institutions had disbursed NPR 85.95 billion in such loans. By mid-April this year, that figure had reached NPR 125.52 billion. This sharp increase in share-based loans, while other sectors remain stagnant, has sparked debate over whether such lending should continue to be relaxed.
Microfinance institutions yet to align loan rates with base rate as deadline passes
Nepal Rastra Bank’s midterm review of the monetary policy for FY 2081/82 (2024/25) had mandated that microfinance institutions must set interest rates in line with their base rates by the end of Jestha (mid-June). However, despite the deadline having passed, the new system of interest rate determination has yet to be implemented.
Private sector welcomes budget, but implementation doubts persist
The private sector has welcomed the upcoming fiscal year’s budget but remains skeptical about its implementation. A notable reason for the positive response is the government’s commitment to study the introduction of a multiple VAT rate system—a long-standing demand of the private sector. VAT reform is viewed as a key part of Nepal’s broader economic reform strategy.
Banks begin publishing names of credit card and phone loan defaulters
Banks have started publicly disclosing the names of customers who fail to repay credit card and phone loans on time. The aim is to warn and pressure delinquent borrowers who misuse such facilities. Laxmi Sunrise Bank published a list of 50 such defaulters on Tuesday, citing their failure to clear dues on time after availing of phone loan services.
No tax exemption on imports for foreign aid projects
The government has decided not to grant import tax exemptions for construction materials required for foreign-aided infrastructure projects. Instead, exemptions on VAT and excise duties will be provided if the projects use domestically produced materials such as cement, steel, and pipes. This policy, introduced in the FY 2025/26 budget by Finance Minister Bishnu Prasad Paudel, aims to promote the use of locally manufactured materials in donor-supported projects.
Nagdhunga–Sisne Khola tunnel expected to open by early 2026
Nepal’s first road tunnel, the Nagdhunga–Sisne Khola tunnel, is anticipated to begin operations by Poush 2082 (late December 2025 to mid-January 2026). The contractor claims construction will be completed before Dashain. According to Senior Divisional Engineer Sanjay Panthi of the Nagdhunga Tunnel Project, the tunnel will open once a managing agency is appointed through a competitive bidding process, expected to conclude by mid-January 2026.
Paragliders must register within 3 months, says Civil Aviation Authority
The Civil Aviation Authority of Nepal (CAAN) has mandated that all solo and tandem paragliders be registered within three months. All companies operating recreational paragliding under authorization from the Ministry of Culture, Tourism, and Civil Aviation must register their equipment with CAAN’s Flight Safety Standard Department and renew their operating certificates accordingly by the start of FY 2082/83 (2025/26).
Bagmati Province spends under 50% of budget with one month left
Bagmati Province has utilized only 48.68% of its allocated budget for the fiscal year 2081/82 (2024/25), with just one month remaining. Out of the total annual allocation, Rs 31.41 billion has been spent so far. Three months ago, only 32.51%—or Rs 20.98 billion—had been used.
Madhesh government to launch women agriculture volunteer program
To boost agricultural self-reliance and support farmers, the Madhesh provincial government is planning to deploy women agriculture volunteers. Modeled after the effective network of women health volunteers, this initiative aims to address agricultural challenges, expand access to information and resources, and empower rural women in areas such as food security, education, and reproductive health.
Kailali Customs collects Rs 7.81 billion in revenue over 11 months
The Kailali Customs Office has generated Rs 7.81 billion in revenue during the first 11 months of the current fiscal year, according to spokesperson Khim Prasad Aryal. This includes Rs 2.89 billion from customs duties, Rs 2.91 billion in VAT, Rs 195 million from excise duties, and Rs 1.8 billion from other categories.
Government targets rice self-sufficiency in two years through spring paddy
In its FY 2025/26 budget, the government has pledged to achieve rice self-sufficiency within two years by promoting the cultivation of Chaite Dhan (spring paddy). A program aims to produce 1.2 million tons of spring rice across 22 Terai and Inner Madhesh districts. While the government has set support prices to incentivize farmers, the harvested paddy has yet to secure a market.
Discrepancies in Madhesh Province budget raise concerns
Questions have been raised over inconsistencies in the Madhesh Province government’s FY 2025/26 budget figures. Finance Minister Sunil Kumar Yadav announced a total budget of Rs 46.58 billion, but the combined allocations for recurrent and capital expenses actually amount to Rs 46.98 billion. The official document also incorrectly cites the total as Rs 46.98 billion, indicating a critical typo and accounting lapse.
NMB Bank to fund 17.85 MW Upper Mewa Khola hydropower project
NMB Bank has signed a financing agreement for the 17.85 MW Upper Mewa Khola Hydropower Project in Mewa Khola and Meringden Rural Municipality, Taplejung. The deal was signed between Dinesh Dulal, Chief of Sustainable Energy Banking at NMB Bank, and Ganesh Prasad Subba, Managing Director of Kang Hydropower Company, which is promoting the project.
Blacktopping starts on Kakarbhitta–Laukahi section of Asian Highway
The blacktopping of the Kakarbhitta–Laukahi stretch of the Asian Highway has officially commenced. The project aims to strengthen road connectivity among Asian countries. According to Jagat Prajapati, head of the western section based in Itahari, one lane began being blacktopped from Lakshmimarga on Tuesday. Around 23% of the work has been completed 15 months into the project.
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