KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Nepal’s economy is showing a sharp contrast between positive macroeconomic signals and weak real-sector performance. While remittances, exports, and reserves have grown, underlying production and investment activity remain stagnant due to policy uncertainty, unrest, and declining confidence.
The lingering effects of the Gen Z protests have depressed the stock market and disrupted industries, while FATF’s decision to keep Nepal on its grey list highlights institutional weaknesses. At the same time, structural challenges persist—ranging from electricity disconnections and slow industrial credit growth to capital flight driven by youth migration.
Yet, there are pockets of progress: the approval of major power and hydropower projects, rapid adoption of electric vehicles, rising insurance penetration, and record tourism and digital payment growth. Overall, Nepal’s current economic landscape reflects a fragile recovery dependent on external inflows rather than domestic productivity, underscoring the urgent need for stable governance, stronger private sector engagement, and targeted reforms to convert macro stability into sustainable growth.
Economy shows positive indicators, but real activity remains weak
Despite favorable economic data—such as rising remittances, exports, and foreign exchange reserves—Nepal’s actual economic momentum remains subdued. Private sector credit growth is minimal, industries are struggling, and consumer demand is weakening. In the first two months of the fiscal year, remittances jumped 33%, yet domestic investment and employment generation have stagnated. Losses from the Gen Z movement, estimated at Rs 240 billion, have further eroded investor confidence. Analysts argue that Nepal needs policy stability, a pro-business environment, and stronger private sector engagement to convert these macroeconomic gains into tangible growth.
NEA cuts electricity to 18 more industries over unpaid bills
The Nepal Electricity Authority (NEA) has disconnected electricity supply to 18 additional industries since Friday night after they failed to pay dues related to dedicated and trunk line services. This follows earlier power cuts to six other firms. Among the affected companies are Panchakanya Steel, Goenka Foods, Cosmos Cement, Bishal Cement, and Jagdamba Synthetic Textiles. NEA spokesperson Rajan Dhakal reported that total arrears have surpassed Rs 8 billion. Some companies have begun paying installments, while others have filed legal petitions claiming they never used such lines. The disconnections were carried out in accordance with the Electricity Tariff Collection Rules, 2078 BS, following a public notice issued on September 28.
Stock investors lose rs 282 billion amid post-gen z movement downturn
Nepal’s stock market lost Rs 282 billion in value within six weeks of the Gen Z movement, as the NEPSE index declined from 2,672.25 on September 8 to 2,503.85 on October 19. Market capitalization fell from Rs 4.467 trillion to Rs 4.185 trillion. Brokers attributed the decline to reduced investor confidence driven by unrest, natural disasters, and policy instability. The tourism and hotel industries were hit hardest, while floods and landslides damaged several hydropower plants. Insurance companies now face claims exceeding Rs 25 billion, and banks are struggling with surplus liquidity. Ongoing protests at NEPSE and SEBON have added to the market’s uncertainty.
Govt approves three new power transmission lines this fiscal year
The Government of Nepal has authorized the construction of three new power transmission lines in the ongoing fiscal year. According to the Department of Electricity Development (DoED) under the Ministry of Energy, Water Resources, and Irrigation, approvals include the 75 km Nalgad–Maintada line in the Bheri Corridor—designed to transmit up to 2,400 MW and to be developed by the National Transmission and Grid Company. Additionally, the 33 kV Khurunga Khola (4.8 MW, 4.38 km) and Super Sardi Khola (2.9 MW, 3.68 km) lines have been cleared for construction. So far, 274 transmission line projects have been approved, with eight under survey permission and several awaiting final approval.
FATF keeps Nepal on grey list over money laundering
The Financial Action Task Force (FATF) has decided to keep Nepal on its grey list, citing ongoing weaknesses in efforts to combat money laundering and terrorist financing. Although Nepal made a high-level commitment to FATF and the Asia Pacific Group (APG) in February 2025, the organization said progress remains limited. FATF urged Nepal to strengthen its understanding of ML/TF risks, improve regulation of banks, cooperatives, casinos, and real estate, and take firm action against hundi operators. It also called for greater inter-agency coordination, more prosecutions, and stronger asset recovery systems. The watchdog further advised Nepal to address technical shortcomings in its counter-terrorism and proliferation financing sanctions framework.
DoED approves 10 hydropower projects totaling 241.5 mw in first quarter
The Department of Electricity Development (DoED) has granted construction permits for 10 new hydropower projects with a combined capacity of 241.5 megawatts during the first quarter of the current fiscal year. Key approvals include the 132 MW Lower Barun, 28.9 MW Hongu Khola, 24.92 MW Induwa Khola, and 13 MW Upper Seti I projects. Additionally, the department issued survey permits for 185 projects and has 59 others, totaling 10,532 MW, pending approval. In the solar sector, 12 projects with a total capacity of 84 MW have been authorized for construction. The DoED also revoked permits for 144 projects deemed inactive or non-compliant.
EIA in progress for 335 mw Humla Karnali second hydropower project
Preparatory work for the 335 MW Humla Karnali Second Hydropower Project has begun in Humla district, with the Environmental Impact Assessment (EIA) now underway. The Ministry of Forests and Environment initiated the study on the recommendation of the Ministry of Energy, while Ruru Hydropower Project will handle the construction. Spanning 47.13 hectares across Kharpunath and Sarkegad rural municipalities, the project lies within the glacier-fed Karnali River Basin. It will feature two diversion tunnels measuring 545 and 542 meters in length and 9.5 meters in width. The project is expected to generate 1,794.72 GWh of power annually, which will be transmitted to Mugu via a 20-km 400 kV line.
Social Security Fund coverage expands to 2.57 million workers
The Social Security Fund (SSF) of Nepal has expanded its coverage to 2,576,476 workers under its contribution-based and social protection programs. In the last fiscal year alone, 882,946 new workers joined, along with 22,076 employers. The formal sector accounts for roughly 640,000 enrollees, while participation from the informal sector remains minimal at just 794 workers. More than 1.93 million migrant workers are registered due to mandatory pre-departure enrollment, although regular contributions remain inconsistent. The fund has collected NPR 9.3 billion, most of which remains deposited in banks rather than invested in productive ventures. Health benefits now offer co-payment coverage up to NPR 1 million, and plans are underway to extend family health insurance within four years.
Electric vehicle imports surge as fuel vehicle demand drops
Electric vehicle (EV) imports in Nepal are increasing sharply, driven by rising fuel prices and high maintenance costs for petrol and diesel vehicles. Data from Birgunj Customs shows that 229 electric cars and jeeps worth NPR 68.75 crore were imported during the first three months of FY 2081/82 — a 136% rise from 97 units worth NPR 14.49 crore in the same period last year. Imports of electric motorcycles also climbed from 1,481 to 2,194 units, while petrol and diesel vehicle imports fell by 24%. India’s Tata Motors and China’s BYD remain key suppliers, both expanding their sales and charging infrastructure. Growing EV adoption is expected to gradually lower Nepal’s dependence on petroleum imports.
Govt to cover uninsured losses from janajati protests
Finance Minister Rameshwar Khanal has said the government will compensate for damages caused by the Gen-Z protests of September 8 and 9 that are not covered by insurance or other financial mechanisms. Speaking at an event hosted by the Nepal Economic Journalists’ Forum (NAFJ), Khanal noted that while some losses are covered through loans and insurance, other damages remain outside market-based compensation systems. Official assessments of the total losses are ongoing, after which the government plans to assist affected businesses with grants or concessional loans. He added that the administration aims to ensure full economic recovery within its term and lay the foundation for sustainable policies for the next government.
Fuel imports worth Rs 4.48 billion pass through Kakarvitta in first quarter
According to the Mechi Customs Office, petroleum imports worth over Rs 4.48 billion entered Nepal via the Kakarvitta border checkpoint in Jhapa during the first quarter of fiscal year 2025/26. Imports included petrol, diesel, LPG, aviation turbine fuel (ATF), and kerosene. Petrol led the list, with 26,320 kiloliters valued at Rs 2.32 billion, followed by diesel worth Rs 1.26 billion. LPG imports amounted to Rs 620.81 million, ATF to Rs 202.6 million, and kerosene to Rs 37.9 million. Total imports rose by 1.3% year-on-year, while revenue from petroleum products grew 3.2%, reaching Rs 68.09 million.
Hyatt Regency Kathmandu shuts down indefinitely after protest damage
Hyatt Regency Kathmandu, a prominent five-star hotel near Boudhanath, has announced an indefinite closure following severe vandalism and arson during the Gen Z protests on Bhadra 23–24. The incidents caused major damage to the hotel’s infrastructure, equipment, and security systems. Management has suspended all operations until repairs are completed and has instructed employees to remain home for safety reasons. Established in 2000 with 303 rooms, the hotel has been a major venue for international guests, conferences, and government events, employing around 500 staff. Its closure is expected to deal a major blow to Nepal’s tourism and hospitality industries.
Nepali Army deploys over 9,000 troops to protect national parks and wildlife
The Nepali Army has stationed 9,046 personnel across 12 national parks, one wildlife reserve, and one hunting reserve to enhance conservation and anti-poaching operations. Director of Operations Manoj Thapa stated that the deployment includes eight battalions, two forest and environmental protection battalions, and seven independent companies. In the current fiscal year, authorities have confiscated 42 firearms, 1,976 nets, 1,965 improvised weapons, 335 vehicles, and 16 hunting trophies. Increased protection measures have contributed to notable rises in wildlife populations—Nepal’s tiger count has reached 355, and rhinos now number 752. The Army, which has lost 116 personnel in conservation service, continues its mountain-cleaning campaigns to preserve Nepal’s natural environment.
Cross-border QR payments in Nepal surpass Rs 40 crore monthly
A year after the launch of cross-border QR payments, foreign visitors are spending more than Rs 40 crore each month using digital platforms.
The Nepal Rastra Bank (NRB) currently permits only foreigners to make QR-based payments in Nepal, primarily through India’s Unified Payments Interface (UPI) and China’s Alipay and WeChat Pay systems.
In the first two months of the current fiscal year, around NPR 77 crore in payments were made—mainly at hotels and restaurants in Kathmandu, Pokhara, and other tourist centers. QR payment adoption is highest in Bagmati and Gandaki Provinces, mirroring key tourism routes.
Nepal accelerates COP-30 preparations to highlight climate loss and adaptation
As the 30th UN Climate Change Conference (COP-30) approaches—scheduled for November 10–21 in Belém, Brazil—Nepal has intensified its preparations. Key focus areas include fossil fuel reduction, biodiversity conservation, sustainable agriculture, social equity, and technology transfer. Nepal plans to showcase findings from the Sagarmatha Dialogue, highlighting issues of Himalayan ecosystem protection, climate loss and damage, adaptation, carbon finance, and Paris Agreement Article 6 implementation. The national position paper is nearing completion, and the delegation will likely be led by Agriculture and Livestock Development Minister Dr. Madan Prasad Pariyar. Experts urge Nepal to advocate for global compensation mechanisms for climate-affected nations.
Nepal’s insurance sector expands over 81% in a single month
Nepal’s insurance industry recorded extraordinary growth, with total premium collections increasing by more than 81% between Shrawan and Bhadra in fiscal year 2082/83. According to the Insurance Authority, total premiums reached Rs 44.28 billion by Bhadra, up from Rs 24.41 billion in Shrawan. Life insurance premiums grew by 79.77%, and non-life insurance by 88.62%. Likewise, life policies rose 84.81%, while non-life policies more than doubled (101.16%). Officials attribute this growth to heightened public awareness and a surge in disaster-related coverage. As of Bhadra, 49.19% of Nepal’s population has insurance coverage, up from 42.92% last year.
Record numbers of Nepali youth seek foreign employment
Due to limited job opportunities, political uncertainty, and poor investment prospects, a record number of Nepali youths are pursuing employment abroad. Over 90,000 Nepalis received labor permits in just the first two months of the current fiscal year, while remittance inflows soared 33.1% to Rs 352.08 billion. Despite abundant human capital, Nepal continues to lack the policy environment needed to retain its workforce. Experts warn that persistent bureaucratic inefficiency, corruption, and weak policy execution are pushing both capital and talent overseas. Without reforms in governance and education, the country risks losing its most vital demographic advantage.
Record tourist influx in Mustang after Tihar: over 6,800 visitors in a single day
The Mustang District saw a record 6,859 tourists on Friday—the first day after Bhai Tika—including 6,506 domestic and 353 international travelers entering via the Beni–Jomsom road, according to police data.
On that day alone, 2,168 vehicles entered the district. Between October 17–23, Mustang hosted 20,509 tourists, bringing total arrivals since Shrawan to 118,589. Crowds thronged Muktinath Temple, where security, volunteers, and medical staff were deployed for crowd management. Despite the surge, around 300 local hotels struggled to accommodate guests. FNCCI member Rajup Prasad Lalchan noted that improved road connectivity and festival tourism have cemented Mustang’s reputation as a top holiday destination.
Hotels in Simkot and Hilsa earn Rs 70 million during Kailash–Manasarovar pilgrimage season
Hotels in Simkot and Hilsa collectively earned about Rs 70 million during this year’s Kailash–Manasarovar pilgrimage season, lasting four and a half months. According to Hotel Entrepreneurs’ Association President Mim Bahadur Tamang, 6,407 pilgrims—mostly from India—traveled through Humla between April and early July, spending at least Rs 10,500 each on accommodation. Hotel earnings ranged from Rs 1.05 million to Rs 7.875 million, with Hotel Potal reporting the highest income at Rs 7.8 million. Entrepreneurs described the season as a strong recovery from the COVID-19 slump. The Hilsa border, reopened on April 30, 2024, has revived the scenic Humla route favored by Indian pilgrims.
Farmers in Banke adopt modern harvesting machines for rapid paddy collection
Farmers in Banke District are using modern combine harvesters for rapid paddy harvesting as post-monsoon weather improves.
With 36,500 hectares under cultivation, many have turned to mechanized harvesting to address labor shortages and ensure timely collection ahead of the Tihar and Chhath festivals. These machines can simultaneously cut, thresh, clean, and collect grains, dramatically reducing manual work. Farmer Loknath Burma from Nepalgunj said the technology saves both time and effort despite high initial costs.
According to the Agricultural Knowledge Centre, Banke, mechanization is expanding across Khajura, Kohalpur, and Duduwa, helping farmers secure harvests efficiently and reduce post-harvest losses.
Comment