KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s recent economic landscape reflects a mix of volatility and structural challenges, as seen in the significant drop in NEPSE index amid sluggish investor activity, coupled with a rise in gold and silver prices indicating a possible shift toward safer assets.
The Nepal Rastra Bank’s liquidity withdrawal and findings on Madhesh Province’s economic vulnerabilities highlight ongoing fiscal adjustments and developmental gaps.
Trade dynamics remain pressured, with a sharp fall in cement exports to India due to regulatory delays and persistent reliance on imported food grains despite high agricultural engagement.
Infrastructure execution appears inconsistent, as seen in the delayed road upgrades and inclusion of underfunded projects in the national budget.
On the positive side, Nepal is making strides in energy exports and financial liberalization—evident in power sales to Bangladesh and eased FDI rules for NRNs. Fintech adoption is growing with Alipay integration, and efforts like ‘Investment Guru’ aim to boost financial literacy.
However, internal policy friction on IPOs, falling product sales like mustard oil, and environmental oversight concerns in local development underscore the need for stronger governance, strategic planning, and sustainable growth initiatives.
Share market drops over 30 points at week’s opening
The Nepal Stock Exchange (NEPSE) index fell significantly by 32.93 points, closing at 2,595.97 on the week’s first trading day. Market activity remained subdued, with shares worth NPR 914 million traded and 21.5 million units exchanged. Only 23 stocks saw gains, while 225 declined. Among top performers, Joshi Hydropower investors saw a gain of Rs 31.62 per share, Sapta Koshi Development yielded Rs 50.33 per share, and NIC Asia Debentures delivered Rs 60 per share to holders.
Gold price rises by Rs 500 per tola, silver also up
Gold prices in Nepal rose by Rs 500 per tola on Sunday, climbing from Rs 194,700 to Rs 195,200 per tola, according to the Federation of Nepal Gold and Silver Dealers Association. The price of hallmark gold per 10 grams also rose to Rs 167,355. Meanwhile, silver prices increased from Rs 2,150 to Rs 2,160 per tola.
NRB to pull Rs 60 billion from banks on Monday
Nepal Rastra Bank (NRB) plans to withdraw Rs 60 billion from the banking system on Monday through a competitive bidding process. The central bank has been reducing surplus liquidity since the start of fiscal year 2024/25. In response to increased deposits, an online auction is scheduled to absorb the excess funds and maintain monetary balance.
NRB identifies economic weaknesses in Madhesh Province
Nepal Rastra Bank’s recent study of Madhesh Province highlighted several economic concerns. The report recommends formalizing local economic activities and broadening the tax base. Additionally, due to inadequate healthcare infrastructure, many residents rely on Indian hospitals, creating strong demand for Indian currency in border areas.
Petroleum imports via Birgunj hit Rs 174.9 billion in 11 months
Nepal imported petroleum products worth Rs 174.9 billion through the Birgunj checkpoint in the first 11 months of the current fiscal year. These include diesel, petrol, LPG, aviation turbine fuel, and furnace oil. Compared to last year, import values dipped by Rs 106 million, though revenue collection rose by 11.66%, totaling Rs 764 million.
Iran-Israel conflict disrupts global trade, Nepal faces ripple effects
As the Iran-Israel conflict adds to global instability alongside the ongoing Russia-Ukraine war, oil prices have surged due to concerns over Middle East tensions. This price volatility is already impacting Nepal. If the conflict escalates, it could hinder foreign aid, reduce remittance flows, and affect overseas job opportunities. While direct trade with Iran is limited, trade with Israel and other global markets may also be disrupted.
Tensions rise over IPO rules between two parliamentary panels
A disagreement has intensified between the Public Accounts Committee (PAC) and the Finance Committee regarding IPO criteria. PAC instructed the Securities Board not to approve IPOs from companies with a per-share net worth under Rs 90 (as of December 28, 2023), while the Finance Committee stated on June 2 that this requirement lacks legal basis. Though the board has resumed IPO approvals for 12 companies, delays remain. PAC reaffirmed its directive on June 19 and demanded a progress update, prompting the board to seek legal clarity.
Small projects still included in budget despite official policy
Although the cabinet and Finance Minister had committed to excluding projects below Rs 3 million from the federal budget, the Ministry of Physical Infrastructure and Transport has included 28 projects with just Rs 100,000 each allocated. The budget lists 220 projects, most with allocations around Rs 500,000, primarily for permanent bridge construction.
Nepal’s cement exports to India drop 37% due to BIS certification delay
Cement exports from Nepal to India have fallen sharply, primarily due to delays in renewing Bureau of Indian Standards (BIS) certification. In the first 11 months of the current fiscal year, cement exports amounted to only Rs 2.66 billion—a 37.46% decline compared to the same period last year, representing a drop of about Rs 1 billion.
Heavy reliance on imported food persists despite large farming population
Despite 62% of households being engaged in agriculture, Nepal remains dependent on importing key food grains. Customs data shows significant imports of rice, millet, maize, buckwheat, wheat, and barley. In the current fiscal year (up to mid-June), Nepal spent NPR 5.758 billion on importing just these six crops.
Monsoon upgrade delayed on landslide-prone Nagdhunga–Muglin road
Essential repair work on the Nagdhunga–Muglin road—key to Kathmandu access—has only just begun, despite the monsoon season already underway. The 94.66 km route is prone to landslides, with nearly 500 incidents recorded last year alone, causing fatalities and significant road blockages.
Tourists from 10 countries now able to pay in Nepal via Alipay
Alipay QR payments have been introduced in Nepal for tourists from 10 countries, aiming to boost tourism. According to Kitipong Kitiprapapong, Alipay Plus Country Director, the service—already used by 1.7 billion users across 70 countries—offers more than just payment functionality and is expected to enhance the tourist experience.
NRNs allowed to invest in joint ventures without prior FDI approval
Non-Resident Nepalis (NRNs) can now remit funds for investment in joint venture companies in Nepal without obtaining prior approval for foreign direct investment (FDI). This change follows Nepal Rastra Bank’s fourth amendment to the Foreign Investment and Loan Management Regulations, 2021. The updated provisions also clarify sector-specific restrictions and procedural requirements for foreign investment.
Nepal starts exporting 40 MW of electricity to Bangladesh
From June 15, Nepal began exporting 40 megawatts of electricity to Bangladesh under a seasonal agreement that runs through November 15. According to Rajan Dhakal of the Nepal Electricity Authority (NEA), Nepal is currently exporting a combined 500 to 600 MW to both India and Bangladesh.
Musikot locals resist road project over lack of environmental review
Residents of Musikot Municipality–1 are protesting a proposed road connecting Upper Chhinggaon via Kalideu due to the absence of an environmental impact assessment (EIA). Locals argue that the project was not adequately prioritized, causing delays and community opposition.
Mobile phone imports generate Rs 6 billion in customs revenue
In the first 11 months of the fiscal year, Nepal earned about Rs 6 billion in customs revenue from importing nearly 1.98 million mobile phones, valued at Rs 32.08 billion. This marks an increase from the same period last fiscal year, when 1.7 million units generated Rs 4.9 billion in customs income.
Swastik Microfinance gets nod to issue IPO worth Rs 231 million
Swastik Microfinance Financial Institution has received approval from the Securities Board of Nepal to issue an IPO of 2.31 million ordinary shares valued at Rs 231 million. Nabil Investment Banking Limited will manage the share issuance. This makes Swastik one of 12 companies cleared for IPOs so far this fiscal year.
Asian Life Insurance receives approval to issue rights shares
Asian Life Insurance has been authorized to issue rights shares in a 1:0.42 ratio (1 share for every 0.42 shares held). The company is set to begin the rights offering from Ashar 25 (July 9), following recent approval from the Securities Board of Nepal.
‘Investment Guru’ launched to promote financial literacy in Nepal
A new initiative called ‘Investment Guru’ has been launched in Kathmandu to educate Nepali investors about the stock market. The inauguration featured Loktantrik Samajwadi Party Chairperson Mahanta Thakur and financial analyst Anupama Sangroula. Sangroula expressed confidence that the program would help foster a more informed investment community.
‘Dhara’ mustard oil sales fall by 13% in one year
Sales of the popular ‘Dhara’ mustard oil brand, produced by Saurabh Oil Agro & Industries, dropped by 13% in 2024 compared to the previous year. After posting Rs 2.44 billion in sales in 2022, the company’s revenue declined to Rs 1.95 billion in 2023 and further dipped to Rs 1.84 billion in 2024.
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