KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s recent economic and infrastructure developments reflect a complex landscape of progress, opportunity, and persistent structural challenges. While the Nepal Stock Exchange has surged due to lower interest rates, signaling investor optimism, issues like prolonged infrastructure delays—as seen in the Butwal–Narayanghat road project—and contractor non-compliance hinder development momentum.
The country’s hydropower sector shows dual trends: rising electricity exports and long-delayed projects like Upper Karnali finally gaining traction, yet remains vulnerable to climate risks, prompting IPPAN’s flood alerts. Meanwhile, financial inclusion is expanding, with formal saving on the rise despite low mobile money adoption, suggesting untapped potential in digital finance.
Tourism is being prioritized through a sustainability-focused NTB budget, and ICAN’s new leadership promises institutional reforms. However, systemic issues persist, including increased blacklisting due to economic strain, misuse of telecom networks, and overreliance on narrow sectors such as tobacco. Collectively, these developments underscore Nepal’s balancing act between growth ambitions and the need for better execution, regulation, and resilience across sectors.
NEPSE climbs 138.83 points as banks reduce interest rates
The Nepal Stock Exchange (NEPSE) index jumped by 138.83 points last week, spurred by banks and financial institutions lowering interest rates. This shift followed a directive from Nepal Rastra Bank tied to the implementation of the Monetary Policy for fiscal year 2025/26, boosting investor confidence. The index rose from 2,731.80 to 2,870.63 points, while total market turnover grew by 43.4%, reaching Rs 59.63 billion. All 13 trading sectors recorded gains, led by microfinance institutions, development banks, and hydropower companies. Market capitalization increased by Rs 232 billion, totaling Rs 4.783 trillion. Among listed companies, Three Star Hydropower posted the highest gain at 21.92%, whereas Bhagawati Hydropower saw the largest drop at 10.12%.
Government revokes licenses of 37 contractors for non-renewal
The Ministry of Physical Infrastructure and Transport has cancelled the licenses of 37 construction firms for failing to renew their permits. The list includes three class ‘A’ companies, five class ‘B’, and the remainder classified as ‘C’. Notable names affected include Ganapati Group of Construction, Valley Star Builders, Deluxe The Brave Warrior of Construction, and International Infra Builders. Companies from Kathmandu, Lalitpur, Jhapa, Dang, Siraha, and Kanchanpur were among those penalized. The ministry stated the decision aligns with efforts to enforce regulatory compliance in the construction sector.
Over 38,600 blacklisted by banks and financial institutions in Nepal
As of mid-July 2081, a total of 38,685 individuals have been blacklisted by Nepali banks and financial institutions, a significant increase from last year, according to the Credit Information Center. From July 1 to 17 alone, 2,947 people were blacklisted—up sharply from 1,096 in the same period last year. Around 70% of these cases are due to cheque bounce, while the rest are related to loan defaults. Experts attribute the rise to an economic slowdown, increasing non-performing loans, and weak financial discipline. They warn that without broader economic recovery, the number of blacklisted individuals may continue to grow, despite ongoing restructuring efforts.
Nepal records Rs 17 billion in electricity exports in FY 2081/82
Nepal achieved a record Rs 17 billion in electricity exports to India and Bangladesh in the fiscal year 2081/82, according to the Ministry of Energy, Water Resources, and Irrigation. In the same period, imports stood at approximately Rs 16.9 billion, reflecting Nepal’s progress in lowering its dependence on imported power. Nepal exported up to 941 MW and imported about 1,000 MW under existing agreements with India, with exports peaking during the monsoon and imports rising during the dry season. Additionally, Nepal began exporting 40 MW to Bangladesh in U.S. dollars, marking a significant expansion of its hydropower export market.
IPPAN urges hydropower projects to stay alert amid heavy rain warning
The Independent Power Producers’ Association Nepal (IPPAN) has advised all hydropower projects to remain on high alert from July 18 to 20, following forecasts of intense rainfall. Referencing warnings from the Department of Hydrology and Meteorology, IPPAN pointed to the heightened risk of flooding in major rivers such as the Koshi, Tamor, Arun, and Mahakali. Potential flood impacts are expected in areas including Kathmandu, the Narayani basin, and several central and western districts. The association urged both operational and under-construction sites to implement immediate safety protocols, citing the recent Bhote Koshi flood that caused significant infrastructure damage. IPPAN emphasized the need for preparedness to avoid loss of life, property, and electricity supply disruptions.
Minister Pandey calls for alternative Everest route to enhance safety
Tourism Minister Badri Prasad Pandey has advocated for the development of a safer route to summit Mt. Everest (Sagarmatha), citing growing dangers on the traditional Khumbu Icefall path. During a meeting at the Ministry of Culture, Tourism and Civil Aviation, Pandey emphasized the importance of finding a secure, eco-friendly, and sustainable alternative for climbers. French mountaineer Mark Mari Batart and Nepali climber Sping Kaji Sherpa shared their research and photographs supporting an alternate route they’ve championed since 2018. With Everest attracting thousands of climbers yearly, the minister underlined the urgency of reducing risk on the mountain.
GMR’s Upper Karnali project advances after 18 years
After nearly two decades of delays, construction on the 900 MW Upper Karnali Hydropower Project has officially begun. On July 8, GMR issued tenders for three major components, including a 2.4 km tunnel and a 150-meter bridge. The project, with an estimated cost of Rs 146 billion, is now backed by a consortium of GMR, India’s SJVN, IREDA, and the Nepal Electricity Authority. While the project previously faced legal challenges and lost a 500 MW export agreement with Bangladesh, it has since secured court approval and restructuring. Under a 25-year BOOT (Build-Own-Operate-Transfer) model, the plant will supply 108 MW to Nepal’s domestic grid.
Nilbahadur Saru Magar elected president of ICAN; Sharma named VP
Nilbahadur Saru Magar has been unanimously chosen as the new president of the Institute of Chartered Accountants of Nepal (ICAN) during the organization’s 10th council meeting held on Ashad 32. Anand Raj Sharma Wagley was elected vice president. Both were sworn in on Friday, with Saru Magar taking the oath administered by Auditor General Toyam Rai. After serving as vice president for one year, Saru Magar pledged to bridge generational gaps and implement ICAN’s newly introduced five-year strategic framework. Outgoing president Praveen Kumar Jha highlighted the institution’s achievements, including the addition of 208 new chartered accountants this year.
NTA flags misuse of telecom networks for illegal SMS bypass
The Nepal Telecommunications Authority (NTA) has warned of the increasing exploitation of local telecom networks by unauthorized parties to illegally reroute foreign verification messages from platforms such as Facebook, Google, WhatsApp, Microsoft, and TikTok. This “SMS bypass” technique involves using licensed operators like Nepal Telecom and Ncell, leading to revenue losses for both service providers and the government. The practice mirrors earlier cases of illegal “BOIP bypass” related to international voice calls. NTA has urged those involved in these illicit terminations of international Application-to-Person (A2P) SMS to stop immediately, reaffirming that only licensed entities are authorized to handle international messages under the Telecommunications Act 2053.
Only 6% of Nepali adults use mobile money, but formal saving habits grow: World Bank
According to the World Bank’s Global Findex 2025 report, although over 80% of Nepali adults own mobile phones, just 6% use mobile money services. However, 35% now save through formal channels, a trend linked to increased access to financial tools via mobile technology. The report notes progress in digital payments, debit card use, and remittance digitization, but also highlights persistent challenges such as limited bank access and high transaction costs. Gender disparities remain in account and card ownership. The World Bank stressed the importance of expanding digital finance in an inclusive and secure way to empower individuals—especially women—and drive economic growth.
Nepal secures Rs 6.5 billion in foreign investment proposals for FY 2081/82
Nepal received foreign investment proposals worth around Rs 6.5 billion in fiscal year 2081/82, the Department of Industry reported. By mid-July, 840 proposals were submitted—Rs 6.03 billion for 389 industrial projects and Rs 461 million for 451 non-industrial ones. The tourism sector topped the list with Rs 2.68 billion in proposed investments, followed by services (Rs 3.09 billion), IT (Rs 185 million), manufacturing (Rs 384 million), agriculture (Rs 146 million), and infrastructure (Rs 5 million). While most registered ventures are small in scale, the projects are projected to create nearly 20,000 jobs. Foreign investors also plan to repatriate Rs 961 million in dividends and royalties.
Butwal–Narayanghat road project delayed again, completion now expected in 2026
More than seven years after construction began, only 70% of the Butwal–Narayanghat road upgrade has been completed. The Chinese contractor, China State Engineering Corporation, has repeatedly missed deadlines, prompting the government to extend the contract for a fourth time—now set to expire in mid-2026. Originally slated for completion by mid-2022, the 113-kilometer highway remains unfinished, with 100 kilometers blacktopped so far. The Daunne stretch is in the worst condition, often causing traffic congestion during rain. Despite delays, authorities insist the project cost will stay at Rs 17 billion. The upgrade includes expansion to four and six lanes across two segments.
Surya Nepal sees slight revenue decline amid tobacco market pressures
Surya Nepal Private Limited reported a modest revenue decline to Rs 28.81 billion for FY 2023/24, down from Rs 28.99 billion the previous year, according to CARE Ratings Nepal. Backed by India’s ITC Limited, the company remains financially strong due to its popular cigarette brands and wide distribution network. However, CARE raised concerns about rising tobacco taxes and the growing popularity of unregulated, lower-cost alternatives like gutkha. With more than 35 years in the market, Surya Nepal continues to lead the formal tobacco industry in Nepal, though its heavy reliance on cigarette sales and limited business diversification were identified as key risks.
NTB allocates Rs 1.59 billion for sustainable tourism push in FY 2025/26
The Nepal Tourism Board (NTB) has announced a Rs 1.59 billion budget for FY 2025/26, aiming to boost tourist arrivals and revenues by 15%. Around 70% of the budget will go to global marketing, including the launch of a permanent office in India. The plan also includes heritage site development, regional tourism promotion, digital campaigns, skill training, and travel trade events. A major focus will be on promoting “Nepal: A Lifetime Experience” and supporting the ASEAN Tourism Year 2026. NTB emphasized sustainability, climate resilience, and public-private collaboration as key pillars of its “Smart Tourism Nepal” vision.
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