Economic Digest: Nepal’s Business News in a Snap

KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.

Despite severe flood damage to private hydropower plants cutting 105 MW in capacity, the Nepal Electricity Authority (NEA) has assured uninterrupted power supply during Tihar, when electricity demand is expected to peak at 1,600 MW. The confidence reflects NEA’s reliance on unaffected state-owned plants and its improved crisis preparedness, with nationwide teams on standby to respond to outages.

This operational stability contrasts with broader economic disruptions caused by recent floods and Gen Z protests, highlighting the strategic role of public infrastructure in maintaining essential services. Notably, NEA’s Rs 8.64 billion in electricity exports during the first two months of FY 2024/25 also signals the sector’s resilience and growing regional significance.

NEA assures uninterrupted power supply during Tihar despite flood damage to private plants

Nepal Electricity Authority (NEA) has assured consumers that power supply will remain uninterrupted during Tihar, the festival of lights. Electricity demand is expected to peak at approximately 1,600 MW during Laxmi Puja, akin to last year’s peak. NEA spokesperson Rajan Dhakal said that officials nationwide have been instructed to stay on standby to handle any disruptions. This assurance comes despite recent floods damaging over a dozen private power plants and reducing production capacity by 105 MW. Meanwhile, staterun plants remain unaffected. In the first two months of FY 2024/25, Nepal earned Rs 8.64 billion from electricity exports to India and Bangladesh—a 10.5 % increase.

Govt moves to terminate 17 longstalled road and bridge contracts, including 14year Kankai Bridge project

The government has initiated the termination of 17 road and bridge construction contracts that have languished for years without completion. The Postal Road Directorate, the Federal Road Supervision and Monitoring Office and road division offices in Biratnagar, Chandranigahapur and Itahari have issued public notices asking contractors to offer justification. The largest affected project is the 723-metre Kankai Bridge in Jhapa, contracted in 2011 for Rs 510 million but with only 55 % progress to date. Minister Kul Man Ghising has directed decisive action to end the era of idle contractors, warning of blacklistings and recovery of government dues.

Nepal’s inflation falls to 21-year low as weak demand, political turmoil and migration slow economy

Nepal’s inflation rate has dropped to 1.87 % in mid-September, a 21year low, reflecting weak domestic demand amid political instability, corruption and rising youth outmigration. The last time inflation was this low was in 2003–04. Central bank officials attribute the decline to sluggish consumption and business disruptions caused by floods and the Gen Z protests. Despite record-high foreign exchange reserves of US $20.41 billion, much of the liquidity remains idle in banks. Food prices fell by 1.34 %, while non-food inflation stood at 3.70 %. Economists caution that the low inflation figure masks deeper structural issues such as falling incomes, rising unemployment and rural distress.

26 industries seek proof before paying NEA trunk and dedicated line dues

Twenty six Nepali industries embroiled in a dispute over trunk and dedicated-line electricity charges have petitioned Prime Minister Sushila Karki for transparent proof of actual consumption. They have pledged to pay dues—whether Rs 4 billion or Rs 40 billion—if verified consumption data is provided. The Nepal Electricity Authority billed the industries without sharing Time-of-Day (TOD) meter data, prompting the appeal. The NEA has threatened power cuts by November 3 if arrears are not settled; the disputed charges relate to consumption from Magh 2072 to Baisakh 2075, with monthly instalment options up to 28 months offered.

Gen Z protests, floods push Nepalese banks into recovery crisis

Nepali banks are facing unprecedented stress as many borrowers affected by the September Gen Z protests and October floods struggle even to meet interest payments. Bankers say businesses cite disrupted operations, property damage and bureaucratic delays as causes of default. Data from the Nepal Rastra Bank show direct losses of Rs 37 billion on approved loans of Rs 104 billion, with numerous projects stalled. Banks are lobbying for an additional month of grace on interest collection to stave off new non-performing loans. CEOs warn that the recovery outlook for the first quarter is the worst in recent memory, with both loan recovery and fresh investments severely dampened.

Gen Z protests cause Rs 3.7 billion loss; government and banks launch relief package

The Gen Z protests of Bhadra 23–24 inflicted widespread damage on private businesses and residences, resulting in losses totalling Rs 3.7 billion. Of Rs 15.4 billion in bank credit used by 612 affected enterprises, this amount was damaged and partially covered by insurance. Major properties including the Hilton Hotel, CG Digital Park and several cable car facilities, along with 68 bank branches, 100 ATMs and 73 extension counters, were hit. In response, the government and Nepal Rastra Bank launched a relief package offering 50 % customs exemptions on reconstruction imports, advance insurance claims, loan restructuring until Poush 2082 and payroll protection schemes to revive business and protect employment.

Govt lifts budget reallocation limits for reconstruction, relief, and elections

The interim government has removed the cap on budget reallocations in order to cover reconstruction of public infrastructure damaged during the Gen Z protests on Bhadra 23–24, as well as relief, economic recovery, public service continuity and the upcoming elections. Previously, under the Appropriation Act the maximum reallocation was capped at four times the originally approved amount within a programme, but a Gazette notification has now abolished these restrictions for emergencies and special circumstances. The new directive allows funds to be moved beyond standard limits within the fiscal year for reconstruction, relief, disaster response and critical projects in order to expedite service restoration and stabilise the economy.

NRB tightens rules on suspicious transactions, updates STR/SAR guidelines

Nepal Rastra Bank has strengthened its regulatory regime for reporting suspicious transactions by updating its STR/SAR (Suspicious Transaction/Activity Report) guidelines in line with the Money Laundering Prevention Act, 2064. The revised guidelines categorise red flags into three types—general risks, entity-specific risks and risks related to associated offences. The update also spotlights new high-risk sectors including AI and emerging technologies, hire-purchase companies and automobile sales firms. Detailed requirements cover reporting procedures, timelines and mandatory data fields, all geared toward enhancing the quality of STR/SAR filings and supporting investigations into money-laundering and related offences.

Nepal’s tourism struggles to recover after Gen Z protests, signs of revival emerge

Nepal’s tourism sector—which plays a critical role in the economy—was heavily disrupted by the Gen Z protests in September, coinciding with the peak autumn travel season. Iconic destinations such as Thamel and Chitwan experienced occupancy rates of only 30–50 %, as high-spending foreign tourists cancelled trips amid travel advisories. Domestic and international bookings plunged, yet there are now early signs of revival: tourists are returning and adventure operators report steady upticks. The Nepal Tourism Board and Prime Minister Sushila Karki have launched confidence-building campaigns highlighting visitor safety. Although challenges remain, the sector remains optimistic, hoping restored stability will reignite tourism momentum.

Floods and landslides devastate tourism and agriculture in Ilam, Panchthar and Taplejung

Far-eastern districts of Ilam, Panchthar and Taplejung suffered severe setbacks to both tourism and agriculture following the October 5 floods and landslides—compounding losses from the recent Gen Z movement. The Mechi Highway—a key route for domestic and foreign tourists—was blocked, leaving hotels, homestays and trekking trails deserted. Popular sites such as Mai Pokhari, Timbung Pokhari, Sandakpur and Pathibhara Temple saw dramatic drops in visitor numbers. Transport disruption also halted exports of Taplejung’s prized cardamom, and local entrepreneurs warn that without immediate government intervention and infrastructure repair, the regional economy could take years to recover.

Banks see safe haven in gold-backed loans

Gold prices in Nepal reached a historic high of Rs 250,900 per tola on Thursday—up by Rs 2,000 from the previous day. Ten grams of gold now cost Rs 215,105. Underpinned by global uncertainty, a weaker U.S. dollar and regional tensions, investors are turning to gold as a safe-haven asset. Nepali banks are increasingly offering gold-backed loans—short-term, low-risk financing for individuals and small businesses—with interest rates ranging between 9–12 %. In the first two months of FY 2082/83, banks disbursed Rs 284 crore in gold-collateral loans, a 38 % increase over last year—highlighting gold’s role as a stable, secure investment amidst economic volatility.

Banks cut interest rates on personal fixed deposits for Kartik; average falls to 5.20%

Nepalese commercial banks have lowered interest rates on personal fixed deposits for the month of Kartik, following a trend initiated in Ashwin. According to the Nepal Bankers’ Association, 14 out of 20 banks cut rates, while six held them steady. The average rate on personal fixed deposits fell from 5.46 % in Ashwin to 5.20 % in Kartik. Among the notable changes, NIC Asia Bank reduced its personal deposit rate to 5.75 % (from 6 %) and Prabhu Bank lowered it to 4.95 % (from 5.35 %). Institutional deposit rates also saw slight reductions. Banks cite monetary-policy considerations and ample liquidity as the drivers of the cuts. Rates among banks now vary from approximately 4.95 % to 6 % for personal deposits.

Nepal’s economic indicators strong on paper, real activity lags amidst Gen-Z fallout

Despite favourable macro-indicators—rising remittances, improving exports and bolstered foreign reserves—Nepal’s real economic activity remains sluggish. As of mid-Bhadra, inflation stood at 1.87 %, private sector credit growth at only 0.9 %, and industrial investment and consumer spending remained muted. Remittances hit Rs 3,52,08 crore in two months (33 % y/y growth), while foreign reserves rose 7.6 % to Rs 28,81,35 crore. Exports surged 88.6 % but imports also rose 16.2 %, leaving trade gaps. Digital payments showed strong growth. Yet damage totalling Rs 2,40,00 crore from the Gen Z unrest hit investor confidence and dampened GDP prospects. Experts stress that policy stability, private-sector activation and investment-friendly reforms are needed to translate macro gains into real growth.

Govt mandates licensed brokers for real estate deals above Rs 3 crore in major cities

The government has announced that any real estate transaction over Rs 3 crore in major metropolitan and submetropolitan cities must now be conducted exclusively through brokers licensed by the Ministry of Land Management. While individuals may still buy or sell property directly, companies, developers or corporate-to-corporate transactions exceeding the threshold must engage a registered broker. The gazette notification outlines a formal licensing and registration framework, thereby introducing part of the broker-system long advocated by property developers. Officials say this measure will institutionalise the high-value property market, promote scientific pricing and transparent accounting, safeguard government revenue and reduce unregulated direct dealings.

NRB directs banks on interim financial statement publication

Nepal Rastra Bank (NRB) has issued a circular to key banks—Bank A, B, C, D and the Infrastructure Development Bank—concerning interim financial-statement publication for FY 2082/83. The directive states that interest income accounted on a pro-rata basis—excluding interest received by Kartik 15, 2082—must be designated for income tax, employee bonuses, statutory funds (such as general reserves and CSR reserves), and the remainder transferred from retained earnings to the regulatory reserve. The circular also extends deadlines for submission of monthly and quarterly reports to NRB and sets the publication date for interim financial statements at Kartik 21, 2082.

Finance Minister Khanal meets Singapore president, IFC officials on Nepal’s economic priorities

Rameshore Khanal, Nepal’s Finance Minister, met with Tharman Shanmugaratnam, President of Singapore, on the sidelines of the World Bank Group annual meeting on Friday. According to the Nepalese Embassy in Washington D.C., discussions covered Nepal’s political developments and economic priorities. President Shanmugaratnam highlighted five key growth areas for Nepal: human capital, infrastructure, energy, trade and liberalism. Minister Khanal also met with International Finance Corporation (IFC) Acting Regional Vice-President Allen Forlemu to explore expanded IFC partnership and private-sector support for Nepal. The Nepal Finance Ministry, NRB and IFC officials attended the meeting.

Manang farmers turn to hybrid apples for higher yields and faster income

Farmers in the Manang district are increasingly adopting hybrid apple varieties, drawn by higher yields and earlier fruiting compared to native types, which take four to five years to mature. According to farmer Sol Bahadur Gurung of Tachai, hybrid apples start producing within just one year and boost income, though transport difficulties due to poor road infrastructure remain a challenge. Agricultural experts report the majority of farmers in the area are shifting from native to hybrid apples. Despite increasing production, many apples spoil on-farm because inadequate roads delay market access. Farmers believe that reducing apple imports could make Nepal self-sufficient and lower retail prices.

Pokhara to begin modern slaughterhouse construction after Tihar amid rising demand for hygienic meat

In Kaski district, which has among the highest meat consumption in Nepal, there is still no modern slaughterhouse despite thousands of kilograms of meat being sold daily. In Pokhara alone, around 500 meat shops operate without modern hygiene facilities, forcing consumers to buy meat cut in open, unsanitary conditions. Entrepreneurs and civil-society groups have long urged enforcement of the 1998 Meat Inspection and Slaughterhouse Act. Mayor Dhana Raj Acharya announced that a modern slaughterhouse will be constructed after Tihar under a publicprivatepartnership (PPP) model, to meet hygiene and technical standards and resolve years of inaction and land disputes.

KMC intensifies market monitoring during festivals, warns action against unhygienic eateries

Kathmandu Metropolitan City (KMC) has stepped up market inspections during the festival season in coordination with the Department of Food Technology and Quality Control. Inspections around New Baneshwor revealed many hotels and restaurants operating below minimum hygiene standards. KMC’s Agriculture & Livestock Department Chief Nur Nidhi Neupane said illegal and unhygienic establishments have been ordered to comply immediately or face legal consequences. Emphasising the risk of disease spread due to negligence, KMC Food Hygiene & Quality Advisor Santosh Giri added that the city is prioritising empowerment, regular monitoring and strict enforcement of hygiene regulations during this festival period.

Over 19,000 students’ answer sheets lost in Gen Z arson

At least 19,000 students’ answer sheets from the Council for Technical Education and Vocational Training (CTEVT) and Tribhuvan University (TU) were destroyed in arson during the Gen Z movement on September 8–9 when protesters set fire to police stations where the materials were stored. CTEVT reported the loss of 60,000 answer sheets belonging to 16,883 students, while TU lost over 1,500 sheets for 652 students. Re-examinations will begin on November 16 (CTEVT) and November 20 (TU). Some students have called for internal reviews instead of retests, citing stress and hardship, but CTEVT insists that exams are crucial for academic integrity despite the Rs 4 million cost.