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 a blend of policy shifts, financial strain, and evolving investment dynamics. Despite the Nepal Rastra Bank’s (NRB) recent pro-market measures—including a reduction in the risk weight of share-backed loans to stimulate credit flow—the Nepal Stock Exchange has continued to decline, indicating weak investor confidence.
Simultaneously, gold prices have dropped, adding to financial market uncertainty. While the current account and balance of payments show significant surpluses, and insurance companies possess large pools of investable capital, structural inefficiencies persist—such as delays in distributing farmer ID cards and smart driving licenses.
The government’s intention to raise income tax exemption thresholds and the rise of foreign hotel chains signal efforts to stimulate consumer spending and tourism. However, export hurdles due to BIS certification delays and strained energy trade agreements with India underscore ongoing external challenges.
Industrial sentiment is further dampened by restrictive IPO policies for hydropower and concerns over ineffective tax incentives. Overall, while macroeconomic indicators are improving, fragmented implementation and policy disconnects continue to hinder inclusive growth and investor morale.
NEPSE declines by 5.21 points on Monday
The Nepal Stock Exchange (NEPSE) index on Monday fell by 5.21 points, closing at 2,674 points. This marks the second consecutive day of decline, despite recent policy measures aimed at boosting investment.
Just a day earlier, the Nepal Rastra Bank (NRB) had released its third quarterly review of the monetary policy, reducing the risk weight on all types of share loans (margin lending) from 125% to 100%. This move was expected to ease credit flows to the equity market, but the anticipated boost in investor sentiment has not materialized.
Gold price drops by Rs 700 per tola on Monday
Gold prices in Nepal fell by Rs 700 per tola on Monday, with the new rate set at Rs 191,100, down from the previous day’s Rs 191,800. Earlier, on Baisakh 9, gold had hit an all-time high of Rs 197,900 per tola. Meanwhile, silver prices remained steady, trading consistently at Rs 2,005 per tola in recent days.
NRB reduces risk weight of share mortgage loans by 25 percentage points
The NRB has announced a 25-percentage-point reduction in the risk weight of share mortgage loans, amounting to about Rs 100 billion in credit. In the third quarterly review of the monetary policy for the fiscal year 2081/82, released Sunday, NRB declared that the risk weight for share-backed loans will be reduced from 125% to 100%.
Currently, share-backed loans up to Rs 5 million carry a 100% risk weight, while those above that threshold carry 125%. Now, all share mortgage loans will carry a uniform 100% risk weight.
NRB adopts flexible policy for stock market under new leadership
Just five days after appointing Dr. Bishwo Nath Poudel as its new Governor, the NRB has adopted a more flexible approach toward the stock market. The third quarterly review of the monetary policy for FY 2081/82 includes investor-friendly changes.
Despite delays due to the late appointment of the governor, investors welcomed the policy shift. The relaxed provisions particularly benefit large investors who take loans using shares as collateral.
Nepal’s current account surplus reaches Rs 210 billion in first nine months
Nepal recorded a current account surplus of Rs 210.22 billion in the first nine months of the current fiscal year, according to the third quarterly review of monetary policy by NRB. The balance of payments surplus during the same period was Rs 346.23 billion. In comparison, last year’s figures were Rs 179.83 billion and Rs 365.16 billion respectively. Goods exports increased by 65.2% to Rs 188.20 billion, while imports rose by 12.2% to Rs 1.309 trillion.
IPO only after project completion frustrates hydropower investors
The government’s plan to allow hydropower companies to issue initial public offerings (IPOs) only after project completion has disheartened private energy developers.
They argue that once projects are completed and revenue begins to flow, there is little need to raise public investment. Prakash Dulal, Deputy General Secretary of the Independent Power Producers’ Association Nepal (IPPAN), said such policies could lead to local unrest and hinder construction progress.
Govt to increase income tax exemption threshold in FY 2082/83 budget
The government, in the final phase of drafting the budget for FY 2082/83, is planning to raise the income tax exemption threshold. The move aims to boost consumer purchasing power and stimulate economic activity.
Currently, individuals earning up to Rs 500,000 (single) or Rs 600,000 (couple) are taxed at 1%. The Ministry of Finance plans to raise these thresholds to Rs 600,000 and Rs 700,000 respectively, still maintaining the 1% rate.
Long wait for smart licenses nears end for Nepali drivers
The long-standing ordeal for many Nepali citizens awaiting smart driving licenses is finally coming to an end. For years, service-seekers who had passed the trial but did not receive licenses were forced to carry receipts as temporary proof.
The root of the delay was a shortage in printing capacity, with the Department of Transport Management operating with only one machine capable of printing smart licenses. As a result, nearly 2.8 million smart licenses remain pending. The department currently needs to print around 5,000 licenses daily to meet the demand.
Surge in foreign chain hotels in Nepal reflects hospitality sector growth
In recent times, Nepal has witnessed a rapid increase in foreign-brand chain hotels. In fact, there’s a growing fascination with such international hospitality brands. Currently, more than a dozen five-star hotels in Nepal are operated under foreign chains.
This trend indicates rising confidence in foreign brands within Nepal’s hospitality industry and contributes to the promotion of tourism. With the increasing presence of international chain hotels and the potential of Nepal’s tourism sector, investment in hospitality infrastructure—ranging from homestays to star hotels—is also growing rapidly.
BIS delays by India curtail Nepal’s export of key products
Delays in certification from India’s Bureau of Indian Standards (Bis) have led to a decline in Nepal’s exports of key goods. Bis certification is mandatory for export, but India has been slow in renewing or issuing new certificates.
As a result, exports of products like cement, steel, sanitary pads, and plywood have declined. In the first 10 months of the current fiscal year, exports of cement, clinker, steel, and sanitary products have all decreased.
NEA pays for Indian power as per February agreement that cost Kulman his job
Nepal Electricity Authority (NEA), under Kulman Ghising’s leadership, paid for electricity imported from India based on rates agreed in the Nepal–India Power Exchange Committee (PEC) meeting.
Despite adhering to the agreement, Ghising was removed from his post amid criticisms that the deal was expensive. As per Nepa sources, Rs 80 million was paid to Uttar Pradesh at INR 8.1/unit. A payment of Rs 180 million to Bihar is also being processed under the same rate.
Govt fails to distribute ID cards to over 1.9 million registered farmers
Despite registering over 1.9 million farming households across Nepal, the government has not yet issued identity cards to them. In FY 2080/81 alone, 1.4 million families were enrolled, with another 518,000 added this fiscal year.
However, the 62nd report from the Office of the Auditor General states that ID cards are still pending distribution. Although the Right to Food and Food Sovereignty Act promises related benefits and pensions, these remain unimplemented.
Tax exemptions are increasing government debt, says NPC Vice Chair
Dr. Shivaraj Adhikari, vice chairperson of the National Planning Commission (NPC), warned that rising government debt is being fueled by tax exemptions. Speaking at a forum focused on supporting returnee migrants and domestic employment, he argued that tax relief should be limited to projects that create meaningful employment. He criticized the current practice of granting exemptions to ventures that do not even employ two people.
Nearly 1.7 million elderly receive social security allowance in Nepal
Nepal’s most recent census shows that out of its nearly 29.3 million population, about 1.7 million senior citizens—approximately 5.8%—are beneficiaries of the old-age allowance. Introduced in 1994 (2051 B.S.) by the UML-led government in 20 districts, the scheme initially provided Rs 100 monthly to individuals aged 70 and above. It has since expanded nationwide, with the age threshold lowered to 68 and the monthly payment increased to Rs 4,000.
Few labor complaints lodged in Madhesh Province’s labor office due to lack of awareness
The Labor and Employment Office in Madhesh Province reports a low number of worker complaints. Many employers and business owners are unaware that this office handles issues such as unpaid minimum wages, lack of accident insurance, and other worker rights. This situation was confirmed by Diwakar Bhujel, the chief of the Janakpur-based labor office.
Bankers running their own businesses with bank loans is a myth, says FNCCI President
Chandra Prasad Dhakal, President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), has refuted claims that businessmen establish banks to fund their own companies. Addressing lawmakers during a discussion on banking legislation at the House Finance Committee, he labeled such claims misleading. Dhakal maintained that only a small number of business owners use loans from banks they are affiliated with to run their enterprises.
Panchakanya Group’s business declines by 26 percent
Panchakanya Group, one of Nepal’s largest industrial companies, has reported a 26% year-on-year drop in business for 2024. Combined revenue from major subsidiaries—including Panchakanya Plastic Industries, Panchakanya Plast Pvt. Ltd., Panchakanya Steel, and Panchakanya Rotomold—totaled NPR 5.84 billion in 2024. That figure was down from NPR 7.86 billion in 2023 and NPR 10.10 billion in 2022.
Shivam Cement launches second phase of ‘No Compromise’ campaign
Shivam Cement has rolled out the second stage of its popular brand initiative, “No Compromise.” This phase emphasizes the message: “It’s not easy to make a promise of no compromise, but those who do walk with pride.” The campaign aims to further highlight the company’s long-standing dedication to high-quality production. Since its inception, Shivam Cement has exclusively manufactured OPC cement, upholding a strict no-compromise policy.
Mechi customs collects over NPR 12.94 billion in revenue
From Shrawan to Baisakh of the current fiscal year 2081/82, the Mechi Customs Office in Kakarbhitta collected NPR 12.94 billion in revenue—91.51% of its annual target of NPR 14.14 billion. Last fiscal year, it had achieved only 76.85% of its goal for the same period. Information Officer Ishwar Kumar Humagain credited this year’s improvement to stronger compliance and better customs administration.
Private cold stores at risk of collapse due to NEA inaction
Cold storage facilities across Nepal, backed by significant private investment, are on the verge of shutting down due to inaction by the Nepal Electricity Authority (NEA).
More than 70 such units, each with a 500-metric-ton capacity and some also used for milk chilling, were promised a 50% discount on electricity costs. However, the discount has reportedly not been implemented properly, leaving these businesses financially vulnerable.
Deepak Kunwar elected president of Housing Developers’ Association
Engineer Deepak Kunwar, managing director of CD Developers Pvt. Ltd., has been elected president of the Nepal Land and Housing Developers Association (NLHDA). The leadership change occurred during the association’s 18th annual general assembly, which also selected a new 15-member executive team.
Key roles were filled by Purushottam Paudel (first vice-president), Sumit Kumar Agrawal (second vice-president), Roshan Bhoyadyo (third vice-president), Tulsi Prasad Adhikari (general secretary), Barun Kumar Acharya (secretary), and Nishchal Bahadur Shrestha (treasurer).
Insurance companies sitting on NPR 850 billion in investable capital
By the end of Chaitra, Nepalese insurance companies held over NPR 850 billion in funds available for investment—equivalent to 45.43% of the national budget for the current fiscal year.
In response to this capital surplus, many insurers have formed their own investment firms over the past two years. The government has also expanded the range of sectors available for insurance sector investment and now allows these firms to create specialized capital companies.
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