KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economic landscape reflects mixed financial momentum, with the NEPSE index posting only a marginal decline despite sectoral gains, while gold and silver prices continue to rise amid global volatility that also boosted Nepal Rastra Bank’s Rs 91 billion capital gains. Investment activity shows contrasting trends: FDI approvals reached Rs 36.68 billion across diverse sectors, and major hydropower projects—including Baten Karnali, Arun-3, and West Seti—secured government clearance, while Karnali Province advanced a new co-investment model.
However, signs of structural strain persist—loan demand remains subdued despite lower interest rates, SEBON employees are pressing for regulatory reforms, and the National Cooperative Bank faces a severe governance-driven crisis. Fiscal execution and service delivery remain uneven, with KMC spending only 12.94% of its quarterly budget and DDC Biratnagar nearing shutdown due to unpaid farmer dues, contrasted by positive developments such as Nepal Bank’s digital expansion in Dolpa and rising herbal exports from Nepalgunj.
Overall, the economy shows pockets of resilience driven by investment and exports but is weighed down by governance failures, weak credit appetite, and operational bottlenecks.
NEPSE index slips by 0.93 points
The Nepal Stock Exchange (NEPSE) recorded a slight downturn on Thursday, with the benchmark index edging down by 0.93 points. Total transactions for the day reached Rs 4.69 billion. Market movement was mixed: share prices dropped for 138 companies, increased for 112, and remained unchanged for 6. Dhaulagiri Laghubitta delivered the strongest returns for sellers, while Bunga Hydropower resulted in the highest losses. Despite the minor overall dip, several sectoral indices—such as hotels and tourism, hydropower, and microfinance—posted gains, showing resilience in selective industries.
Gold price rises by rs 700 per tola
The domestic price of hallmark gold climbed by Rs 700 per tola on Thursday. According to the Federation of Nepal Gold and Silver Dealers’ Association, hallmark gold now trades at Rs 243,000 per tola, compared with Rs 242,300 on Wednesday. Silver prices also increased by Rs 35 from the previous day’s rate of Rs 3,150 per tola. The continuing fluctuations highlight ongoing volatility in the domestic precious metals market, pushing gold prices to relatively high levels for buyers and investors.
NRB posts capital gains of Rs 91 billion
Nepal Rastra Bank (NRB) reported capital gains totaling Rs 91 billion in fiscal year 2024/25, largely driven by surging gold prices and a stronger US dollar. The central bank earned Rs 46.88 billion from gold revaluation and Rs 45.02 billion from appreciation of foreign exchange reserves. By the end of the fiscal year, NRB held 9,234.19 kg of gold, 120,037.90 kg of silver, and USD 24.14 billion in foreign reserves. The sizeable profit reflects the bank’s effective reserve management amid volatile global markets.
ADB support sought for trolleybus study
Energy Minister Kulman Ghising has requested support from the Asian Development Bank (ADB) for feasibility studies on operating electric trolleybuses along Kathmandu’s ring road and key highways, including Kathmandu–Dhulikhel, Pokhara–Mugling, Butwal–Narayan Ghat, and Butwal–Bhairahawa. The initiative plans to deploy 250 electric vehicles to promote sustainable public transport and boost domestic electricity consumption. The estimated project cost is USD 16 million (Rs 2.256 billion), including a USD 10 million concessional loan from ADB and USD 4 million in zero-interest financing. Local governments will implement the project through infrastructure banks and municipal coordination. Preparatory studies are underway to revive the historic trolleybus service, inactive since 2009–10.
Rs 36.68 billion FDI approved in first quarter
By November 16, Nepal had cleared Rs 36.68 billion in foreign direct investment (FDI) for 382 projects across eight sectors. Agriculture and forest-based industries attracted the highest investment, with Rs 21.88 billion for 13 projects. Tourism drew Rs 8.94 billion for 118 projects, services received Rs 3.09 billion for 23 projects, and the ICT sector saw 205 projects but only Rs 87.43 million in investment. In Kartik alone, 71 industries registered Rs 154.39 million in FDI.
SEBON asks Finance Ministry to reconsider benefit cuts
The Securities Board of Nepal (SEBON) submitted a three-point proposal to the Ministry of Finance (MoF) concerning the grievances of its protesting employees. The key recommendation calls for revising the August 18 directive that mandated cuts and recovery of employee benefits. SEBON also proposed scrapping the current employee work procedures and integrating them into the rules to improve operational efficiency. The final recommendation seeks amendments to existing laws to protect SEBON’s institutional autonomy. Although staff have resumed work following an agreement, they continue a one-hour daily protest until the unresolved issues are fully addressed.
Finance Ministry to prioritize technical expertise in bids
The Ministry of Finance announced that infrastructure contracts will now favor technically capable firms over those offering merely low prices. According to Dhaniram Sharma, chief secretary of International Economic Relations, competent contractors could reduce project timelines from 15 years to around 5. Foreign loans will also be issued either in their original currency or in Nepali rupees rather than solely in US dollars. Ongoing reforms include eliminating 323 positions across 38 agencies, implementing online customs valuation, and pushing for efficient, tech-driven governance to ensure cost-effective project execution.
Loan demand remains weak despite 7 percent rate
Even with commercial bank base rates falling to around 7 percent, credit demand has not picked up. Average lending rates have dropped by 1.83 percentage points over the past year—from 9.33 percent to 7.5 percent—due to abundant liquidity. Deposit rates have slid to 5.04 percent. Industrialists, discouraged by past high interest rates, the economic slowdown, and disruptions linked to the Gen Z protest, remain hesitant to seek new loans. Analysts say lower interest rates alone cannot revive borrowing as banks continue to face capital stress and rising non-performing loans.
National Cooperative Bank hit by financial distress
Nepal Rastra Bank has identified major governance lapses at the National Cooperative Bank, including misuse of depositor funds and politically driven lending. The bank’s total capital adequacy ratio has fallen to 0.82%, far below the mandatory 8%, with primary capital at just 0.34%. It posted losses of Rs 4.25 billion in fiscal year 2024/25. With high levels of non-performing loans, the central bank is preparing detailed corrective measures. Political interference and poor management have pushed the institution into crisis, calling for urgent reforms to restore stability and proper oversight.
Investment Board approves four major hydropower schemes
The Investment Board has approved the 439 MW Baten Karnali reservoir project, estimated at Rs 9.34 billion. It also cleared the 669 MW Lower Arun, 900 MW Arun-3, and 800 MW West Seti hydropower projects, authorizing the issuance of required permits and the drafting of agreements. The Baten Karnali project will include employee investment. The board reviewed progress for fiscal year 2024/25 and endorsed the annual plan for 2025/26. Additionally, a Rs 16 billion Auto Service Eco-Industrial Park project received approval to move forward with detailed project reports and survey permissions. Prime Minister Sushila Karki, Finance Minister Rameshore Prasad Khanal, and Energy Minister Kulman Ghising participated in the meeting.
Karnali Province moves ahead with hydropower co-investment framework
Karnali Province has introduced a co-investment model enabling provincial, local, and private entities to jointly invest in hydropower development. The provincial government plans to select 20 projects of up to 20 MW for feasibility studies, for which Rs 5 million has been allocated. Priority will be given to identifying, repairing, and upgrading rural small-scale hydropower systems. Earlier, on January 3, 2025, the province committed Rs 410.49 million in shares for the 106 MW Gadulla reservoir project. Limited backing for infrastructure and slow approval of study permits have discouraged local and private investors, prompting the province to plan an investment conference to attract large hydropower projects under the co-investment scheme.
KMC uses only 12.94 percent of its budget in first quarter
Kathmandu Metropolitan City spent Rs 3.25 billion out of its Rs 25.11 billion budget in the first quarter of FY 2025/26—Rs 2.13 billion in recurrent expenses and Rs 1.11 billion for capital projects. Among wards, Ward 19 recorded the highest spending at 19.41%, while Ward 11 used just 0.38%. The spending level is similar to previous fiscal years, which hovered around 12–13% during the same period.
US Bangla appeals compensation ruling at Patan High Court
The Patan High Court has scheduled hearings on US Bangla Airlines’ appeal challenging compensation awards for the families of 17 victims of the March 12, 2018 Kathmandu plane crash. Lower courts had ordered payouts ranging from USD 44,290 to USD 277,548 per victim, taking into account factors such as age and occupation—covering MBBS students, doctors, and nurses. The families filed the case in 2019 under provisions of the 1929 Warsaw Convention.
DDC Biratnagar at risk of shutdown over unpaid farmer dues
The Dairy Development Corporation’s Biratnagar Distribution Project is on the verge of closure after farmers stopped supplying milk due to long-overdue payments. Three chilling centers in Ilam—including Lakshmipur, which collected 1,400 liters daily—have already ceased operations. Collection at Puwakhola and Fikkal, each providing around 1,000 liters, has also stopped. Only seven of the 11 chilling centers remain functional. Farmers have not received payments since April 28, 2024, with outstanding dues reaching Rs 180 million. Daily milk intake has plummeted from 200,000 liters pre-COVID to just 12,000–13,000 liters.
Nepal Bank introduces ATM service in remote Dolpa
Nepal Bank Limited has inaugurated ATM services at its Dunai branch in Dolpa to mark the institution’s 89th anniversary. The facility was launched by Karnali Province Chief Dinesh Prasad Paudel, who highlighted the importance of equal digital banking access for Dolpa residents and those in major cities. The Dunai branch has operated since 1975. Local leaders welcomed the expansion and requested easier access to collateral-based loans. The bank has begun issuing ATM cards to customers in the region.
Nepalgunj exports more than 5.5 million kg of herbs
Herbal exports through the Nepalgunj border reached 5,563,770 kg in FY 2024/25, up from 4,649,929 kg the previous year, according to the Nepal Herb Business Association. Major exported items included 1,898,194 kg of Chutro, 1,464,380 kg of Ritha, 577,867 kg of Timur, 224,997 kg of Tejpat, and significant quantities of Pashanbhed, Padmachal, Kaulo pods, and Chutro pods. A total of 44 herb varieties were exported, including 42,750 kg of Jatamasi to Dubai and Pakistan. The surge in exports has boosted incomes for farmers, collectors, and traders in western Nepal.
Ashok Steel pays second installment to NEA
Ashok Steel Industries of Simara, Bara, has paid Rs 6.3 million as its second installment for the use of a dedicated feeder and trunk line, matching its first installment amount. The company still owes Rs 170.58 million. Earlier, the Nepal Electricity Authority (NEA) disconnected power to 25 industries on October 21 and 24 over unpaid bills. From 35 industries, NEA has so far recovered Rs 230.87 million out of a total outstanding amount of around Rs 5 billion, with most firms having settled at least their first installment.
Comment